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The Legal Observer.

MONTHLY RECORD FOR JULY, 1837.

Quod magis ad NOS

Pertinet, et nescire malum est, agitamus."

HORAT.

PARLIAMENTARY DEBATES RELATING TO THE LAW.

IMPRISONMENT FOR DEBT BILL.

Mr. Richards said:-A wrong impression has gone before the public with respect to what passed on a former evening, on the occasion of the second reading of this bill. The Attorney General, in bringing forward this measure, is not only bound to shew that imprisonment for debt is an evil, per se, but he is also bound to shew that his measure will remedy that evil. Has he done this? I contend that he has not. He has not even thought it necessary to explain these enactments.

It is well known that the creditor has, by the law as it stands at present, the power of arrest; and it is generally admitted, that if the debtor be not insolvent, in ninety-nine cases out of a hundred, he pays the money rather than go to prison. The learned gentleman takes away the power of arrest, and proposes as an equivalent, that, in debts under 1007., the creditor shall bring his action, and if he gets judgment, he is then to be in the situation of a judgment creditor. But it must be remembered, that from four to twelve months, according as the action is defended, will elapse before he gets judgment; during which the debtor may, if he is so minded, dispose of all his effects. Under this bill, then, the judgment creditor will, after obtaining judgment, have to apply for the debtor to give in a schedule of his effects. Now, as the law stands, execution can issue immediately after judgment, either against the body or goods; but the learned gentleman takes away the right of execution against the body, and gives as an equivalent this schedule. If the judgment creditor supposes the schedule is incorrect, he has the power of applying to a commissioner to examine the debtor upon oath. If that examination is not considered satisfactory, the commissioner has then the power of committing the debtor to prison. But, look at the VOL. XIV.-No, 411.

expense of all this. Attorneys and counsel must be employed. The attorney must rigidly inquire; that enquiry will be opposed; and I have consulted a respectable solicitor on the subject, and he informs me, that before these proceedings could be terminated, the whole expenses on both sides might be calculated at 2001. or 300, or in some cases as much as 400., for the chance of recovering a debt of 50. The creditor, after having had held out to him at this time the vain and delusive hope of recovering his debt, and having been defeated by his debtor, having nothing left to pay with, would be left without any sort of redress, and would not only lose his original debt of 50%, but would be out of pocket from 1007. to 2001. in expenses. But the Attorney General says, the judgment creditor has still the power, if the debtor happen to have any, of coming upon his estate. This is very true;-but he would first have to search out whether any judgment was already on that estate. would be another expense, and probably, with the same result. But the learned gentleman provides that the judgment creditor may take the book debts of the debtor; and if these book-debtors refuse to pay, (which they probably would) he has the power to proceed against them in the same way, and with every probability (as any assistance in the way of information from the debtor would be out of the question) of finding in each instance a verdict given against him, and thus would he be saddled, not only with the enormous costs I have already mentioned, but with the whole costs of these proceedings in addition. And this is the sort of boon which the Attorney General bestows on the commercial world.

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But this is not all. If the clause of which the Attorney General has given notice to follow the 17th should pass into a law, another gross injustice would be done to the 50%. creditor. In that clause, the Attorney General proposes, that where a man is a creditor for 1007., he shall have the power, unless his debt be paid within twenty-one days, or the debtor can give approved security (for which he will

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Parliamentary Debates relating to the Law.

Sir F. Pollock.-1 am anxious to call the attention of the committee to the bearing of this clause. For my own part, I am not an advocate for anything like an arrest for debt except in extreine cases; and I am therefore decidedly in favour of abolishing imprisonment for delt, so far as is practicable. I must, however, admit that my learned friend opposite, has not carried out the recommendations of the Common Law Commissioners in this particular, and I really cannot go along with

have to offer two sureties) of making the debt- | now merely say, that to this 12th clause, I or a bankrupt on the 22d day. Now, it is give a decided negative, and I move that it be evident, that in all cases where the 100% cre. struck out of the bill. ditor possesses this power, he will exercise it, if he thinks that he cannot get his money as soon as he wants 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 are most particular in guarding against-namely, the giving of an undue preference to a particular creditor. But the Attorney General from his desire to conciliate some great men in the city, gives the 1007. creditor this monstrous power of making his debtor bankrupt, if his own in-him in agreeing with the policy of this clause. dividual debt be not paid within three weeks. Well, but," the Attorney General may say, supposing the debtor to be made a bankrupt by the 1007. creditor, the 501. creditor will come in for his share of the estate, as well as the man who makes the bankrupt." This will be very true, if matters come to bankruptcy; but of course this will be the very thing which the debtor would wish to avoid, and in 99 cases out of 100, where there are any effects, the debtor will, at any loss, pay the 100/. creditor his debt in order to avoid the Gazette, while the 50. creditor, at the end of two or three years | of litigation, will be left without recovering a farthing of the money owing to him, and greatly out of pocket by the expenses of prosecuting his claim. Why should more indulgence be given to the great than to the small creditor?

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According to the report of the commission of which I had the honour to be one, it was recommended that every facility should be given to make the property of the debtor available to his creditors. I must also say that the details of some of the clauses of this bill, do not contain sufficient machinery to carry this object into effect. Any man not arrested for debt, and against whom a judgment has been obtained, finding himself without the means of paying his creditor in full, may, as the law now stands, go to prison and petition the Insolvent Debtors' Court. It is in his power, when pressed by an arrest, or by a demand for the payment of a judgment debt, to make a cessio bonorum for the benefit of his creditors. It is my opinion that the debtor, without going to prison, ought to have the opportunity of Again, it is provided, that if a man makes affi- dividing his property amongst his creditors davit that such and such a person, being a tra- fairly; but that ought to be followed by a der, is indebted to him in the sum of 100%., then clear and undoubted discharge from his liaunless the money be paid within twenty-one bilities, so that he may not be harassed again. days, or the trader find two sufficient sureties Now, this clause makes the same provision for the payment of the debt and costs, he is to for one single judgment creditor, which the be declared a bankrupt. I believe it was So-law has never created before, except for the lomon who said, "Be surety for no man." purpose of dividing the debtor's property Suppose any man-and I think few men will among all his creditors, and giving the debtor be found willing to become surety-(not for himself a release from the engagements which the surrender of the debtor, as it is at present, he has contracted. If a person of large probut for the payment of the whole debt and perty should be sued for a judgment debt, and costs) were to make an affidavit, that an hono- the debt be not instantly paid, by this clause, rable member of this house owed him 10,000, not all his creditors, but one individual ereand that honorable member were a trader; he ditor, may call upon him for a schedule of promight be worth 30,000.. and yet be unable to perty sufficient to satisfy that particular judgpay 10,000. within twenty-one days, or find inent, but he can call upon him to disclose all sureties for so large an anount, he would his concerns; and if the debtor, on his examinthen be made a bankrupt on an affidavit. This ation, do not fully satisfy the commissioner, he is what must be the inevitable result of the 18th can be brought before a Judge, and sent to clause, if it become law. With regard to the prison till he satisfy the Judge. Now, I do clause at present before the cominittee, I feel not see the great advantage of this course; sure that the 504. creditor would rather waive but I see a very great disadvantage in making his debt than attempt to recover it by proceed every creditor of the party, the investigator ings so expensive and tedious as those which of the debtor's concerns, toties quoties. Every the clause prescribes, Yet this is the measure time a judgment debt is obtained, while the on which the Attorney General so much debtor, except in the case of that particular plumes himself, and for which he expects to creditor obtaining any discharge from his liaget the thanks of the mercantile community.bilities, has to make out a new schedule; for I should also further observe that this 12th clause, except so far as the 18th clause restores then, repeals the whole of the bankrupt laws; while the fraudulent debtor, by the aid of the 6th, 7th, and 8th sections, will be able to concert measures by which he will give an unfair | preference to one creditor over others. I shall

the one will not do for two creditors every time. Constant complaints are at present made; thus the proceedings under a commission of bankruptcy are unnecessarily severe and iuquisitorial; and in the Insolvent Debtors' Court the case is the same, and there the debtor is liable to be remanded time after

Parliamentary Debates relating to the Law.

time, if the schedule is not satisfactory to the commissioners: but he has still this advantage, which this proposed measure takes away:— namely, that if he is called upon to give an account of his effects, he is also to give an account of his creditors, and from whom, under certain restrictions, he is discharged. The system of forcing a debtor to make a complete discovery of his property by sending him to prison if he give dissatifaction, and keeping him there until the Judge is satisfied, ought at least to be followed by some corresponding advantage to him; but he will not, as the clause now stands, be in as good a position as either the insolvent debtor or a bankrupt under the present law; and after successive examinations by separate judgment creditors—after he has been stripped of every farthing, he will be incapable of obtaining fresh credit, if an act of parliament do not give him relief from his liabilities.

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sions of bankruptcy; and sometimes they even realize a surplus. By this clause it is proposed to give the power of enforcing a disclosure of all a debtor's property; by some antecedent clauses the sheriff is empowered to seize and assign all the property to a debtor. Suppose, then, a man to have a debtor for 5007., and that debtor to be found insolvent; the creditor will get his judgment, he will get his assignment-he will try to pay himselfhe will turn every thing he can into moneyhe will sell reversions, remainders, and interests of all kinds, regardless of the imprudence of selling them at unfavourable periods; careless whether one farthing will remain for other creditors, or for the debtor himself, and intent solely on making up his 500/., and the costs of recovering it. This is not the case now, or, if it were, it would behove the Attorney General to meet it-it is the duty of the House of Lords to look into it, and if such an error do now exist, to cure, not to copy it. Insolvent cases I know, are rarely worth pursuing. The insolvent commissioners on their circuits only empty the gaols without benefit to the creditors; but that is not the case in bankruptcies, when once it is thought worth while to issue a fiat. That system may not be perfect, but it is much better than one which will admit the creditors to come in separately. Now, the proceeding itself under the clause, when called for, will be nugatory. I cannot see what difference there is between the warrant of a commissioner, and the writ of a sheriff, by which the former can compel a debtor, unwilling to disclose, to make a disclosure under the threat of doing no more than the latter, namely, sending him to prison. If the object be to give power to the commissioner, you should give him the power of protecting the debtor,-you should do so by enabling him to make the debtor do justice to all. Can it be expected that the debtor will obey the command to disclose for the benefit of one creditor only? No, he will rather declare his Be-intention to go to gaol-he will refuse to be a party to the fraudulent preference against the other creditors proposed to him.

The Attorney General may perhaps object to a cessio bonorum, and has consequently adopted this plan instead of it; but I must object to it as being extremely harsh and severe, and contrary to the principles of the law of England; and I really am astonished that my learned friend should think of giving to a single judgment creditor the whole power of bankruptcy and insolvency to enable him to get his debt paid, and yet afford to the debtor no relief. My learned friend said he wished to abolish imprisonment for debt; but under this clause, where is the difference between the present and the proposed law? Where is the difference to the debtor whether he goes to gaol on a commissioner's warrant, or a sheriff's writ? Is there any magic in the former which will infuse a greater share of candour into the breast of a debtor? If a debtor wishes to defer paying his debts, what will he do? He will say, You ask me for a schedule.-I shall not give it you." He will then be taken before the commissioner, who will ask him, "Will you make a disclosure of your property?" "No." "And why not?" cause 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 iny effects, and sell them in such a manner as will be my ruin." Now, then, are you 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 (cases of fraudulent preference certainly occur sometimes); and then 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 twenty shillings in the pound for all. They may not succeed in doing so in cases of insolvency, but they often do in working commis

I have had the honor of being a member of the Common Law Commission; I joined in the recommendations of that commission; I now see no reason to deviate from those recommendations; but those recommendations have since been accompanied by no practical details. I want to see the machinery by which those recommendations are to be carried into practice. I agree with my honourable friend the Attorney General, that it is expedient to limit imprisonment for debt. I am 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 between 250,000/. and 300,000. I am desirous of seeing the principle carried out; but, because I believe that it will confer no more benefit to the debtor than he possesses now,because I think it will not operate with greater terror on the debtor than the provisions of the present law,-because I think it will give an

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an undue preference to one creditor over an- of cessio bonorum is not more extensively inother, I shall decidedly, as far as I am con- troduced in the scheme and application of this cerned, negative the proposition that this bill. In the former bill it was so-with reclause stand part of the bill. I never will sup-spect to all persons whether in trade or not. port a measure for calling in all the property I am still far from saying, that such an extenof a debtor, at whatever risk, for the benefit of any other than the whole of his creditors. The Attorney General.-I greatly rejoice to learn that my honourable and learned friend's opinion as to the expediency of introducing this bill, remains unchanged. We have now the authority, the high authority, of Sir Frederick Pollock, that it is expedient to do away with arrest on mesne process. My learned friend agrees that the creditor should be invested with a more direct remedy against the property of the debtor; and not disapproving of the previous clauses that put within the reach of judgments, property and interests that were formerly beyond them, he objects to the 12th clause. But it must be obvious that the new remedies would be, in practice, use less, but for the powers under the 12th clause. To give this remedy, however, against the property, would come to nothing, unless you could compel the debtor to declare what his property was. It would be in vain to say that you might go upon his property that is in settlements, or the funds, or other property of that description, unless you can compel the debtor to disclose what that property is. It is merely to enable the creditor to compel this disclosure, that this 12th clause is drawn. It is auxillary to the other clauses. A power is given to call within three weeks, on the debtor, to declare what is the nature and amount of such property, so that it may be transferred for the benefit of the creditor. It must, in all cases, be a debt expressed between the time his judgment was obtained, and the delivery of the schedule. Under the present law, the moment you can snap up a judgment, you may sue out a writ against the debtor, of capins ad satisfaciendum, and incarcerate him. Yet ny learned friend says that, now, because the debtor is not clapped up in a gaol, and this process is substituted for the present bill, they think it a hardship to require that the debtor shall give up a statement of his property, and then be discharged! How this can be said, gravely, to be a hardship on the debtor, is, what I own, I cannot understand. Now, here is a power of great importance. But, how very rarely under this bill, will it be put in force! Only where the creditor has reason to suppose that the debtor has property, which he conceals, will it be resorted to. But, then, it is said, that under this bill no protection is provided for the person of the debtor. I say there is just the same protection for the debtor, as there is at present, when the debtor is discharged under the "Insolvent Debtors Act." His person is protected, but his property remains liable. So, under this bill,-his person is protected, but it is only after giving up any property that may be rendered available to the creditor, that that protection is ensured to him.

My learned friend complains that the system

sion of that system may not prove ultimately beneficial. But it is, at the same time, a very large remedy. Too much, perhaps, was at tempted to be effected under the former bill. I found that it attempted more than I could induce others to concur in. I have found it better to proceed by degrees, and more cautiously. The person of the debtor is protected, I repeat, unless where fraud has been attempted, or is strongly surmised. But my honourable and learned friends say, "Is it not very cruel, that under this bill the debtor is not discharged?" Let me, however, remind them that in every case a man may be arrested, a fiat be sued out, his property be equally distributed among all his creditors, and he begins the world de novo, under the present law. I contend that, under the old law, there is no substitute for this efficient power over the creditor. In the former bill, the substitute for the compulsion upon him to undergo imprisonment was not well detailed. The clause to which the member for Knaresborough has referred, I introduced, at the suggestion of a most respectable deputation, which did me the honour to wait upon me on the subject of this bill, consisting of several directors of the Bank of England, with the governor at their head. An act of bankruptcy, according to that clause, may be compromised by a man who is really insolvent. By that clause, the advantages of such an act will be secured to any party, being a trader, who, having had final judgment signed against him, "shall not, within twenty-one days after demand in writing, personally served upon him, pay, secure, or compound for such judgment debt to the satisfaction of such judgment creditor." The honourable member for Knaresborough says, that it might be the case of only a temporary embarrassment; as if a man owed 1007. upon a bond which he had given, and that this would not amount to an act of bankruptcy. Now, if the honourable gentleman had consulted my honourable and learned friend (Sir F. Pollock), he would have found that under the present law, members of parliament are privileged from arrest; but, at present, they may be compelled to commit an act of bankruptcy, if, on demand, they do not satisfy a debt due from them within a certain lapse of time. The great end of a bankruptcy law should be, to compel an equal distribution of property among the creditors. The great difficulty of our bankruptcy law is, to provide a test to prove that a man is bankrupt. But this is a test; namely, that if, after three weeks have elapsed from the period of its being demanded, a man can neither pay a debt, nor give satisfaction for it, nor compromise with his creditor, there is reason to believe that he cannot meet his engagement, that he is not competent to manage his own affairs, and that his property should be put into the hands of

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that fell from him. We are willing to make this proposition to my learned friend, that there should be a clause or proviso introduced into the bill, giving a party against whom the proceeding by judgment has issued, and upon whom the notice under the 12th section has been served, the power of appealing to the Insolvent Debtors' Court. If he will agree to this, I have no objection to the clause. This is a matter of immense importance, and all legislation upon it should be governed by a constant reference to the state of the existing

trustees. I believe that this argument satisfied the deputation to which the honourable member for Knaresborough has alluded, and they were satisfied that this clause will not prejudice them. On the contrary, it will give them a new remedy. It will give to creditors, generally, a distinct remedy against debtors. It will protect the persons of debtors, unless those debtors be fraudulent debtors. I see no hardship in calling on the debtor who cannot pay a just debt within one month, in requiring him to give up his goods; neither can I see that this liability, in extent, exceeds the hard-law. Under this bill there will be three courts ship which he suffers under the existing law. established, and in operation against the unMr. Richards. In reference to what the fortunate debtor. For, as the clause stands, Attorney General has been speaking of, the there will be first, the Insolvent Debtors' Court; clause allowing creditors whose debts amount because this court will not be abolished, but will to or are more than 100., on their affidavit exist for the purposes of a class of creditors in that twenty one days have elapsed since their all cases of personal wrong, &c. The Bankrupt demand of such debts without the same having Code, applying to all persons engaged in trade; been satisfied, to make such debtor a bank- and this special code, neither applying in one rupt; I beg to assure him, that I am perfectly way nor in the other, but endeavouring to get aware, that under the present bankruptcy law at a sort of tertium quid. The Attorney Genea man must have 1001. of debts against him in ral says that his bill leaves the debtor free from order to bring him within the operation of that the penalty of personal arrest: no doubt it law. But what I complain of is, that the left does;-but he says also, that it leaves the handed justice of the Attorney General pro- debtor only where the existing Insolvent Act poses to give to the great monied leviathans would leave him. Under one of these sections, of the City a summary remedy, if the debts if one judgment creditor have sued, and then due to them (from any single creditor) amount a second, and then a third, another may come to more than 100%., as they generally do. If I and sweep away every thing, if he be in a cerwere speaking for my own especial interests tain position which the learned Attorney Geneand concernment, as the debts due to me are ral has thought proper to favor. Under the seldom less, this clause would answer very well. operation of the Insolvent Debtors' Act, if a But see how the clause operates with those person being a debtor, have been swept out of whose debts are of a less amount. They have prison by an Insolvent Debtors' Act commisbeen I must say, most unfaily dealt with.sion, the people of this country may, if they The creditor, whose debt happens to be under 100%., must be driven to the tedious, the troublesome, the desultory mode of proceeding provided by this bill. And what is the equal benefit which the learned Attorney General talks of, as compared with the remedy provided under the existing law? At present, where the creditor's debt is 100%., the mere threat of an affidavit, will in most cases produce its immediate payment. But this clause, Sir, will not effect any thing like equal distribution of the debtor's property among the creditors. I do not wonder at that deputation from the Bank having waited upon the Attorney General, if they thought it likely that he would be induced to sanction such a clause. The clause is not a remedial clause quoùd the small debtor, but only quoad the debtor above 1007. I do not pretend to dispute the law of the Attorney General, but I have consulted a gentleman who is well skilled in Scotch Law, and he says, that arrest for debt still continues in Scotland for all debts above 81. 2s. My informant tells me, that the Scotch imprison for bills of exchange unpaid, and yet the Attorney General actually boasts, that he has really assimilated the law of the two countries. Why, Sir, he leaves the small debtor totally unprotected, and the great men or great capitalists, provided with an additional remedy.

Sir F. Pollock,-I am anxious to correct the Attorney General in one or two observations

think fit, and deem him worthy of that confidence, give him credit. But why will they do so? Because there is a clause in the Insolvent Debtors' Act which prevents your coming in upon him, except it be upon such a state of facts as that which is supposed by the clause I speak of. The new creditors say, “there is not more in this estate than will pay us, and we shall not touch him." Well, Sir, and the Insolvent Debtors' Court will protect him. But under this new code there is no such protection. It may be too late to throw out this suggestion, but, in my opinion, it would be much better if the Attorney General would consolidate all his code of debtors' law together, and assimilate it to the new law of bankruptcy. The Attorney General says, that a man could be made a bankrupt under the 12th section of this bill. Why, Sir, by making a declaration of insolveney under the existing law, a man may protect himself and his goods; and in this way a trader, if he consider it desirable to do so, may either make himself a bankrupt or may procure others to make him so. But suppose he is not a trader, what becomes of the Attorney General's anxiety to improve the existing law of imprisonment for debt. If you are sincere in your desire to ameliorate it, let all the creditors of a debtor have the benefit of this act. Let all the creditors in common,-yes, and also the unfortunate bankrupt or debtor himself,-derive some

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