The Sun.
London, England, 1859-02-08 00:00:00

The LORD CHANCELLOR, in rising to call theatten-
tion of the house to the subject of the law of debtor and
creditor, said he feared he shouldbe obliged to trespass upon
their lordships' attention for a longer period than he could
have wished. The subject was one of great importance to
all, for the community might fairly be divided into two
classes, debtors and creditors, and therefore it was necessary
that the law relating to it should be made as perfect as pos-
sible. Their lordships might remember that at the close of
last session he had laid upon the table a bill which at the
time he said must not be regarded as embodying the ulti-
mate views of the Government, but rather as the redemption
of a pledge that some bill should be produced during that
session. That bill had been prepared by the learned Attor-
ney-General, and it was more wonderful, notwithstanding
his known industry and ability, that his hon. and learned
friend had found time amid his multifarious occupations to
draw any bill than that that bill should have failed to satisfy
all parties. In fact, he (the Lord Chancellor) had invited
their lordships to accept that bill rather as a guide to the
general direction in which the Government proposed to
legislate than as a complete and perfect measure. During
the recess the attention of the Government had been be-
stowed upon this important subject, and he hoped they
had succeeded in preparing a measure which would receive
the sanction of Parliament. Upon this subject there ware
many conflicting opinions to meet, hostile interests to
reconcile, and various views, both of theorists and practical
men to be considered ; but he hoped the result of the
deliberation of the Government would be found satisfactory
to Parliament and the mercantile community. In order
that their lordships should clearly understand the questions
to be considered, he would briefly state what was the state
of the existing law. At present the laws relating to
insolvents and their estates were administered by two dis-
tinct and independent tribunals—the Insolvent Debtors'
Court, and the Court of Bankruptcy. The Insolvent Court
might be regarded as having had its authority renewed and
confirmed upon its present footing by three acts of Parlia-
ment passed during her Majesty's reign—the Ist and 2d of
Victoria, cap. 110, popularly known as the Prisoners' Act,
because only persons in custody could have the benefit of
its provisions, and two other acts of the sth and 6th of Vic-
toria, and the 7th and Bth of Victoria, generally known as
the Protection Acts. Under the Ist and 2d of Victoria a
prisoner in actual custody might, within 14 days from the
commencement of his imprisonment, apply by petition to the
Commissioner for his discharge. In the petition he must
pray that all his property of every description might be vested
in the provisional assignee. Upon that petition a vesting
order was made, and within 14 days from that time the peti-
tioner was required to file a schedule containing the amount
and particular description of all his property of every kind,
including debts due to him, and also a list of the debts owing
by him, with the names and descriptions of the creditors.
Notice was given to every creditor entered in that schedule
of a day appointed for a final hearing. Upon that day if the
creditors offered no opposition, or if they opposed unsuccess-
fully, an order was made for the insolvent's discharge ; but
before his adjudication he was required to execute a warrant
of attorney, under which the creditors would be enabled to
issue execution against any property which he might subse-
quently acquire. There was no compulsory power in the
Court to force an insolvent to file a petition, but if he did not
do so within 21 days a creditor had the power to present a pe-
tition to the Court, praying that the property of the prisoner
Sight be vested in the provisional assignee. Upon that
petition a vesting order would be made, and then it became
the duty of the debtor to file a schedule, but there was no
power to compel him to do so ; therefore, if a debtor was
obstinate, and chose to stop in prison, he could act in defi-
ance of his creditors, and spend his property as he pleased.
That act applied to persons of every description, whether
traders or not, and whatever the amount of their debts
might be. Shortly alter its passing the Protection Acts
were introduced. The jurisdiction under those Acts was at
first given to the Bankruptcy Courts, but by an Act of the
10th and 11th of Victoria it was transferred to the Insol-
vent Court in London and to the county courts in the
country. The mode of proceeding under those Acts was,
that a debtor presented a petition applying for protection,
at the same filing a schedule of all his debts and assets as
under the Prison Act. This petition ought also to contain
a proposal of some mode of liquidating his debts. Upon
the filing of the petition the propertyof the debtor was ipso
facto vested in the official assignee. A day was then ap-
pointed for the hearing, and notice given to all the creditors.
Upon the appointed day, if the conduct of the debtor had
been blameless, or his debts had not been incurred within
any of the prohibitions of the Act, the Commissioner was
empowered to award final protection ; but if dissatisfied with
the insolvent's conduct, he might refuse to appoint any day
for the final hearing, or upon the day of final hearing he
might refuse to grant day final order. The debtor might
afterwards apply for a protecting order, which the Commis-
sioner could grant or withhold at his discretion. During
the withholding of protection the debtor would be at the
mercy of his creditors, but the Act contained a provision
that no insolvent should be detained in custody at the suit
of any creditor entered in the schedule for a longer period
than 12 months. Those Acts applied both to traders and
non-traders, the latter being unrestricted as to the amount
of their debts, but traders owing less than £3OO were alone
qualified to petition. It might naturally have been sup-
posed that practically the Insolvent Acts applied only to
non-traders and the Bankrupt Acts to traders ; but a com-
munication which he had received from one of the Commis-
sioners of the Insolvent Coort had, to his great surprise,
shown a very different state of facts. It appeared that in
London from Ist Jan. to 12th Dec. last year there were 1,024
protection cases, of which no less than 816 were cases of
traders. In the country the facts were still more surprising,
for it appeared from a return of country cases during 21 years
that of 4,230 applications for protection only 50 were those
of non-traders. Had it not been for the existence of the
Protection Acts all those humble traders would have been
compelled to go to prison in order to obtain the benefit of
the Insolvent Act, or they must have-had their affairs ar-
ranged by the expensive process of bankruptcy. Having
thus explained to their lordships the position in which the
law of insolvency now stood, he should proceed to intro

duce to their notice the state of the existing law with
respect to the administration of insolvent estates in the
Court of Bankruptcy, which might be considered to have
assumed its present form of jurisdiction in the year 1831.
Previous to that period the estates of a bankrupt were ad-

ministered in London by 70 commissioners, composed of
barristers and solicitors, whose names were distributed
over several lists, any one of which the parties interested in
the bankruptcy might select as that from which they might
choose the commissioner to whom they desired their case to
be submitted. By the Act of 1831, however, those 70 com-
missioners in London were reduced to six, which constituted
at present the maximum number in the metropolis. A
court of review was also established under the operation of
the Act as a court of appeal, from which tribunal, however,
a right of appeal lay to the Lord Chancellor, and under
certain circumstances to the House of Lords, without the
necessity of submitting the case to the Court of Chancery
in the first instance. With respect to the county commis-
sioners, he might state that it was enacted that they should
be appointed by the Lord Chancellor upon the nomination
of the judges of the different circuits, and that in 1842 there
were 700 of those commissioners, who used to reside in 140
district boroughs. He might further state that the court of
appeal had, after a short trial, been found to be useless •
that it had in consequence been abolished ; that its j, •
diction had at first been transferred to a Vice-Chancellor,
and eventually to the Lords Justices and the Lord 'Chan-
cellor, who now, sitting either together, or separately, con-
stituted the court of appeal in bankruptcy. In the year
1840 a Royal Commission had been appointed to inquire
into the state of the bankrupt law, and to suggest the
introduction of such amendments into it as they might
deem to be necessary. They had accordingly issued a very
elaborate report, in which they recommended, among other
i thn gs, that the country commissioners should be reduced
in number, a recommendation which was acted upon, their
number having in 1842 been diminished to a maximum of 12.
The report contained van
ous other recommendations also,
some only of which were adopted. In 1849, however, the
whole of the bankrupt law had been reviewed, andall its
provisions
had been consolidated in one act, which com-
prised the existing code upon the subject. Notwithstanding,
however, the great pains which had been taken in framing
that Act, it had been found to operate in a manner so un-
satisfactory to the commercial portion of the community,
that, within four years after its passing into a law, it had

been deemed expedient to issue a Royal commission
for the purpose of inquiring into the state of the bank-

NT distinct and independent tribunals for the administration \
courts—that of bankruptcy and that of insolvency—under
the operation of one system. As early as 1840 the com-
mission to which he had already adverted had given ex-
-A- •
coofmminseouldv aetniotnsesmadtatees,as and
totthe
pererophriadetybedenp l
acin veryg ablethe t
wr eo-
pression to their opinion on the matter in their very able
report in the following terms :—They said,
"It appears to us that to unite the *it diction on mat-
ters of bankruptcy and insolvency would, upon principle,
tend much to benefit the public ; but this benefit cannot,
we think, be obtained without placing all insolvent estates
under the administration of one uniform system of law.
We can perceive no good reason why the estate of one
debtor who is unable to pay his debts in full should be
administered in a different manner from that of another
debtor under the same disability. All such estates should,
in our opinion, be administered in some one mode which
is best adapted to secure the interests of creditors, by the
examination of the debtor's accounts, and the discovery and
distribution of his property." They then proceeded to say,
" The system of the bankrupt law with the alterations and
further remedies, which we have humbly suggested to your
Majesty, is well adapted to those purposes, but so long as
debtors having no assets are liable to be imprisoned (and
many thousands are imprisoned every year) it is practically
impossible to administer such cases under a law requiring
rigorous investigation of accounts, regular proof of debts,
with audits, and other proceedings."
Their lordships would bear in mind that the report from
which he had just quoted had been issued prior to the time
of the introduction of the Protection Act, so that the only
mode of obtaining the benefit of the Insolvent Act was by
the debtor's going to prison. Now, the commissioners were,
from their report, clearly of opinion that, in order to ac-
complish the object which they had in view of uniting the
Insolvent and Bankruptcy Courts, it would be necessary to
abolish, or at all events to modify in a very considerable
degree, the punishment of imprisonment. They had ac-
cordingly addressed themselves to that point also, and
stated in words which were precisely the same as those
which had been used by the Common Law Commissioners
in 1832 in reference to arrests on mesne process, that—
" The principle of the present law is to do justice by the
use of the strong and compulsory means of arrest and im-
prisonment, applied indiscriminately. The system has
been found to be productive of so much hardship and in-
justice that it was at last deemed necessary to mitigate its
consequences by the enactment of the insolvent law. The
joint operation of the two opposite processes, for the im-
prisonment and enlargement of debtors, has been produc-
tive of so much evil as to tend to the suspicion which seems
to be fully verified by inquiry, that the mischief ought
to be obviated, not by provisions designed for the
mere mitigation of its consequences, but by removing
its cause : that is, by limiting the power of impri-
sonment itself, and confining it to cases where it is
warranted on the plain and just principle of preventing the
debtor from fraudulently absconding, or removing his pro-
perty beyond the reach of justice, or for the punishment of
actual fraud, or compelling the debtor after judgment either
to pay the debt or to make a cession of his property for the
, benefit of his creditors. Beyond this, we believe that the
practice of imprisonment for debt is neither warranted in
principle nor beneficial in practice, and that, on the con-
trary, while the exercise of the present almost unlimited
power and imprisonment is productive of pecuniary loss,
injury, and distress to creditors as well as to debtors, it also
occasions great moral evils in its tendency to subdue that
proper degree of pride and honest feeling which is incon-
sistent with the degradation of imprisonment in a gaol, and
to level the distinction between guilt and misfortune."
With the principles which were enunciated in that portion
of the report he entirely concurred, and, acting upon the
suggestion there made, and in order to clear the way for
legislation, their lordships would find that the Government
measure set out with various clauses which were intended
to restrain, not to abolish, imprisonment on final process.
For such a proposal he was happy to think that he had the
sanction, not only of the commissioners upon these two oc-
casions, but also of many members of their lordships' house.
In 1844 Lord Cottenham introduced a bill for abolishing
imprisonment for debt, and upon that occasion his noble and
learned friend Lord Lyndhurst adverted very strongly
indeed to what he considered the absurdity of the existing
division between the two Courts for administering the
law of debtor and creditor, and to the injustice also of that
provision by which the after-acquired property of an insol-
vent debtor was made liable to his creditors. In addition
to the authority of Lord Lyndhurst and of Lord Cottenham
he had that of the late Lord Denman, and of two noble and
learned friends whom he now saw present, one of whom
(Lord Brougham) last session introduced a bill for
the very purpose of abolishing imprisonment for
debt. Thus fortified, he would call their lordships'
attention to the clauses with which this measure set out,
and by which imprisonment upon final process was
restrained. In future it was only to be permitted-
1, in cases where there was an apprehension of the debtor's
absconding, which their lordships were probably aware was
provided for at present under the Ist and 2d of Victoria,
and also under the absconding Debtors'Arrest Act of 1852 ;
2, where the debt had been fraudulently incurred or there
had been a vexatious defence ; 3, or where the debt was due
in respect of damages which had been recovered in any
action of tort. In all other cases no imprisonment for debt
would be permitted. Having thus cleared the way, it
would be seen that the Insolvent Court, being de-
prived of the greater part of its functions, no longer con-
tinued to be essential. He was bound, however, to say,
that as long as imprisonment for debt had existed, and that
Court had been entrusted with- the duty of discharging
debtors who were entitled to their discharge, it was quite
impossible that the law could have been better administered
than it had been by the commissioners. The Government
measure proposed to establish one Court only, which was to
be called the Court of Insolvency; but in abolishing the
Insolvent Court they proposed not to dispense immediately
with the Insolvent Commissioners. It was thought that
those gentlemen might be called into active service, and
might be employed under the new system ; and, in this way,
not only would the advantage of their services and experi-
ence be secured, but the extent of the working staff which
would be requisite would be ascertained. One Court only
being thus established for the purpose of administering one
uniform law of debtor and creditor, there then arose a ques-
tion of considerable interest and importance—namely,
whether it was possible any longer to keep up the distinc-
tion between the trader and the non-trader. Their lordships
were probably not aware that a great demand had been
made for the abolition of this distinction, and upon careful
consideration the Government felt disposed to yield to that
demand to a very considerable extent, though they thought
it impossible to do so entirely. For instance, with regard to
acts of insolvency, some were peculiar to persons in busi-
ness, and could hardly be applied to the case of non-traders,
The Government proposed therefore, that upon these three
grounds alone should the non-trader either have the benefit
of the Act or be exposed to its provisions :—first, where he
himself applied for the benefit of the Act, when hig pro..
perty might be distributed among his creditors ; secondly,
where he left the country for the purpose of defeating or
delaying his creditors, or where being abroad, he remained
there with the same object; thirdly, where a judgment
having Leen obtained against him by a creditor, upon a
summons issued, he failed to satisfy that judgment, or to
enter into some arrangement for that purpose. In these
three cases only would the law be applicable to non-traders.
In the last of these cases the summons of a judgment credi-
tor had been introduced by analogy to a trader-debtor sum-
mons. Under the existing law a creditor might go before
a commissioner of bankruptcy, make an affidavit of his
debts, procure a summons against his debtor, and the latter,
if he disputed the debt, must arrange for having the case
tried; or, if he admitted it, and made no arrangement for
discharging it, this constituted an act of bankruptcy. The
Government thought it would be rather a strong measure
to introduce what would be equivalent to a trader-debtor
summons against a non-trader, and believed they should
sufficiently comply with the fair and just demands of credi-
tors by exposing non-traders to tho consequences of not
satisfying debts to the extent he had described, where these
debts had become judgment debts and the debtor was not
prepared to make any arrangement. In bringing non-
traders within the operation of this Act, there had been
considerable apprehension, which the Government had been
obliged to meet, lest where a debtoz was the owner of an
estate in tail or remainder a vindictive creditor should be dis-
posed to sacrifice the interests both of the debtor and the
other creditors by anticipating the periol at which it would
become available, and during the existence of the prior
estate. - It was, therefore, thought desirable by the
95th clause to prevent a creditor from selling an estate
in tail or remainder without the consent of the debtor i
during the existence of the prior estate, but leaving the
debt a charge upon the estate when it fell into posses-
sion, although the debtor might then have obtained an
order for his discharge. There was another provision
which would probably excite some discussion, and to
which he begged attention. There was, as he had al-
ready explained, a distinction between bankruptcy andin-
solvency in respect to after-acquired property. Bankruptcy
set
a man free, and allowed him the enjoyment of all the
acquired by him after he had obtained his certifi-
pcarote"wle
warrant of
thelnsolvenfocryeAhcits, adnisienhsoarlvgztunedxee-r
whichcuted a
execution'
might attorney
bee
against any property subse-
quently acquired by issuhim. o This distinction had been con-
sidered an unjust one.
He
Lhad mentioned that his noble
n
friendsubject in 1844
and the commissioners in
_ _Yndhurst expressed himself
stronglytahedrearn
il on learned
this
report in 1840 also aodfvearltedintsoolit in this way :
oliticianwt debtors is, in our
man in his business,Tltle Insolvent
" The future liability
m Interruptingost unjust andam
LawOpini after on,a
property, imprisoning him until his placeoralen all his
occupied, and then turning him out destitute business is
insolvent and unworthy of trust, , a
nevertheless expects•
proclaimed
at some future time to acquire property which ho is t givellim
up for distrib
• ' ution among his creditors. The practicalo
result is that he makes no exertion beyond supplying lux
daily wants, and too frequently becomes a Permanently
degraded character ;
his family are brought up ill ; hence
society loses, and the creditors do not gain."
In order to obtain execution against after-acquired property
an application must be made to the court, and it was the
practice of the court never to touch property acquired by a
man's own industry after his discharge; and with respect
to property which
*might have come to him by bequest, or
in a fortuitous manner, it was the custom only to take one-
third for the purpose of applying it to his creditors; and
their lordships must be aware that it was easy to defeat the
law, even to this extent, by means of secret trusts for, the
benefit of the insolvent, or—what was disadvantageous to
the insolvent—by not giving him property which, but for
this unjust law, he would probably have received. He
put it, thcrefore, to their lordships, whether, having
low for the first time brought non-traders under the
InAdt39l7 Powers of this act, by which arrangement they