The Sun.
London, England, 1845-05-15 00:00:00

THE SU N, LO NOON,

6. Persons who have accepted and executed letters
of licence, deeds of composition, &c., registered in the
Court according to provisions to be presently men-

tinned.

. _
The Bill then proceeds with provisions regulating
private arrangements between a debtor and his cre-
ditors, whether by composition-deeds, trust-deeds, or
otherwise ; and no portion of any code respecting in-
solvents will probably be of so great pecuniary bene-
fit to the trading classes as this part of the proposed
law. Under all the faults and frauds of the present

system, it is notorious that the advantages of
private arrangements are so great, that :it
is a constant occurrence for a dishonest
trader to rob his creditors, and to create
a fund for himself, by offering a small when he is
able to pay a much larger dividend, the creditors
allowing themselves, often knowingly, to be wronged,
because persuaded that the estate is not likely to pay
over even the trifle offerei, if subjected to the process
of a fiat in bankruptcy. The advantages to be de-
rived from private arrangements are principally these
—a larger and earlier dividend is in almost every case
obtained, as there is neither the delay which is inse
parable from legal proceedings, nor the sacrifice at-
tending forced sales, nor a diminution in the means
of payment by the loss of an established business.
Debts owing to the trader are paid in due course,
while under a bankruptcy:debts' 'especially in the case
of foreign correspondents, are frequently contested,
and sometimes wholly lost. Sales made by foreign
correspondents show better prices and lower charges
when made for the trader himself, than when made
for his estate, worked under a bankruptcy; and,
finally, in cases of dispute, fa merchant will obtain
much better results for himself than can be obtained
for a bankrupt estate, where the only remedy is
frequently by hostile proceedings in a foreign court

of justice. -
On the other hand, the advantages attending private
arrangements consist in the necessity of obtaining the
concurrence of all the creditors in the absence of any
check upon the proof of debts ; in the want of ade-
quate controul over the proceedings of the trustee in
getting in and distributing the assets ; in the danger
of the trustee himself becoming insolvent with the
assets in his hands ; in the want of controul over the
expenses of working the trust ; in the scandalous im-
munity obtained by a dishonest trader on the one
hand, and in occasional oppression on the part of a
grasping creditor on the other ; in the insecurity of
tithes and property sold under trust deeds ; in the in-
ability of the trustee to sue in his own name ; and,
finally, in the circumstance that any malversation or
culpable negligence on the part of the trustee can
only be corrected by the slow and costly interposition
of the Court of Chancery ; while, on the other hand,
any creditor, by filing a bill, may transfer the whole
administration of the trust to that Court.
The operation of the 7th and Bth Victoria, c. 70,
is very circumscribed. Its provisions apply only to
parties who are not traders • and even with respect
to them the Act gives no relief with respect to debts
payable in future, or to contingent liabilities; and
it contains no clauses for the purpose of annulling
these proceedings, which are generally resorted to for
the purpose of preventing an equal distribution.
To avoid the disadvantages, and secure the advan-
tages of private arrangements, is the object of the
next fifty-seven clauses of the Bill, of which the
following is a brief summary.
It is proposed that a majority of the creditors of
any person, whether trader or non-trader, who has
not the immediate means of fulfilling his pecuniary
engagements, shall have power to bind the whole
body of creditors in any agreement for a composition
deed, trust deed, letter of licence, &c. ; such majority
to consist of not less than three-fifths in number, and
four-fifths in amount of creditors to the extent of 201.

and upwards.
Every such agreement to be under seal (in order
to secure the advantages which the law how gives to
instruments having this formal incident), and to con-
tain a state of affairs, dated and signed by the debtor,
disclosing a full account of his pecuniary situation,
such as the number and amount of his debts, whether
admitted or disputed; the statement of all his assets
of whatever description, and various other particu-
lars relating to his insolvency.
Every creditor to be duly served with a notice of
the proposed agreement, using thQ term as signifying
every description of arrangement between a debtor
and his creditors, whether by letter of licence, trust
deed, deed of composition, or other similar com-
promise.
The judicial confirmation of the agreement to be
open to 132 opposed by creditors who can show that
the required majority has been improperly consti-
tuted, or that some fraud, unknown at the time of
signing the agreement, has since coma to light, or
where notice to any creditor has been fraudulently
withheld.

..... ---
If such opposition is effectual the agreement to be
annulled, and the creditors remitted to their original

rights.
The practice of giving preference to some of the
creditors is effectually counteracted by such an Act,
constituting an act of bankruptcy on the part of the
debtor, and also subjecting the creditor to have his
debt postponed till the debts of certain clas3e3 of cre-
ditors are satisfied, and by taking away the coloura-
ble distinction between payments proceeding wholly
from the debtor, and those made under a real or a

simulated compulsion.
The evils arising at present from the insufficient
powers of trustees on the one hand, and from the vir-
tual unaccountability on the other, are done away with
by vesting in the trustees all the property, whether
real or personal, of the insolvent, including the debt-
ors' right of action, and all such property as may de-
volve on the insolvent before the final dividend, and
by giving the trustee power to sell rights of action
and to mortgage property where such a course is de-
sirable; on the other hand, the abuses at present ex-
isting from trustees keepinc, assets in their own
hands, will be remedied by obliging every trustee to
pay all assets into the banks agreed upon by the cre-
ditors, within one day of receiving such money, under
penalty of paying interest at the rate of 20 percent.
for any moneys retained in his hands, besides being
liable to fine and imprisonment upon complaint to the
court by two creditors. The services of all trustees
to be remunerated according to a graduated scale
upon the amount of assets realised.
A majority of creditors in number and amount to
be at liberty to carry on the business of the insolvent
if they think it expedient; but where such continu-
ance is not unanimously agreed on, and there happens
to be a loss such loss is to be borne rateably among
those creditors only who have sanctioned the con-
tinuance of the business.
Next follow a variety of provisions respecting the
proof of debts in full, the liabilities of sureties, the
remedies for attempts at fraudulent preferences, the
power of the trustee to sue and to be sued, and to
make valid conveyances; the right to cancel the
agreement if the instalments promised are not made,
or if other circumstances occur so as to induce a very
large majority of the creditors to desire a revocation
of the agreement ; and, finally, the classification of
the insolvency according to the representation of the
trustees, as having occurred through misfortune, im-
providence, or fraud, fur purposes to be presently
mentioned.
Such is a brief sketch of the provisions by which it

is proposed to disencumber of their defects, and to
render more efficient, both in safety and in expedition,
those descriptions of compromise which in this, as
well as in other countries, form the very great ma-
jority of the cases in which an insolvent's property is
divided rateably among his creditors.
We next come to the mole of obtaining a judicial
declaration of insolvency, and the consequences of
such declaration. And here it will be proper to
point out what will be the law of arrest for debt if
the provisions of this Bill shall come into operation.
hitherto the law of arrest for debt has been a con-
stant theme of disagreement among the friends of
improvement in legislation. The abolition of arrest
upon mesne process was passed amidst many doubts
and misgivings; and arrest after judgment is still a
vexed question, having its advocates who insist upon
the security of the creditor, and opponents who urge
the hardship to the debtor. Yet the solution of the
difficulties attending this question appears simple
enough, now that it is once thought of.
The imprisonment of a debtor is justified on two
grounis only : the prevention of injury to the cre-
ditor; and the punishment of misconduct in the
debtor. With reference to the former object, the
imprisonment of the debtor is often important for the
purpose of preventing his concealing or absconding
with property which ought to be distributed amongst
the creditors, or withdrawing himself from the juris-
diction of his proper judges. The graduated punish-
ment of misconduct in the shape of recklessness
and of fraud, will tend to the prevention of such mis-
conduct in debtors, and will thus operate for the fu-
ture benefit of both classes.
had this principle been kept in view, the extra-
ordinary absurdities of our present law of arrest could
never have existed. As our laws at present stand in
the Insolvent
imprisonment Debtors Court, every debtor must
u
prisonment before his petition can be
received at all, so that punishment, instead of only
following ascertained misconduct, has here to be
submitted Ito before any trial whatever. On the other
debt h
esummoned
punishedbefore thefor
non-attend Bankruptcy
ante, yet
hand,cou a d
Court,
,though
is subject to no provisions to insure his
presence, so that if he embezzled the property of his
creditors, or for other reasons knows that punishment
awaits him, he may, unless he has made his intentions
known, make off with his stolen property without
any hindrance from the Court of Bankruptcy, al-
though his circumstances are in a course of proof
before this very Court. As the system of the In-
solvent Debtors Court is begun by punishing miscon-
duct, and then proceeds to examine whether it exists,
" castigatque auditque dolos," the late Acts have trans-
ferred debtors, who would have come under the juris-
diction of this Court, to the jurisdiction of he Com-

missionurs of Bankruptcy. But the measures by
which these Acts prevent the insolvent from being
punished, unfortunately open a wide door fur the
escape of the fraudulent.
By the provisions of the Bill in question these evils
are remedied. Debtors summoned before a court of

insolvency are of two descriptions Th3se who
are known or suspected to be guilty of malversation ;
and 2, those who, though insolvent, lie under no such
imputation. The former class the Bill gives power to
arrest at once, an oath being made before the commis-
sioners of certain acts on the part of the debtor, so

that by a summary process, the court, immediately on
being made cognizant of the fact, interferes to prevent
the debtor from dissipating, or alienating in fraudu-
lent preferences, or absconding altogether with the
property of his creditors ; and the debtor thus accused
on oath of misconduct, is secured for the jurisdiction
of the court. This summary process the Bill only
allows for creditors for more than twenty pounds, it

.
not being considered desirable to expose a man to the
risk of the loss of liberty on summary and exparte
process for a smaller amount. With resp,ct to the
second class, such insolvents are to be summoned
upon affidavit of debt, bat are not to be arrested. Of
course arrest is to follow where the sum:nons is dis-
obeved.

Thus both descriptions of insolvents are brought
within the jurisdiction of the court, and it is there
placed in the discretion of the commissioner according
to the circumstances proved, to detain the debtor
under arrest until security is given for his appear-
ance before the court. Finally, by subsequent pro-

visions, imprisonment is awarded as the punishment
of certain acts of misconduct.
Such are the provisions which appear to solve all
the difficulties of the law of arrest. The debtor
accused on oath of malpractices, whom it is desirable
to secure without delay, before he completes his

fraud an i absconds, is arrested upon summary pro-
cess ; and such dishonest debtor, instead of being
able to escape, as at present, will still be secured for
the cognizance of the court by bail, or by merited
imprisonment, if his conduct has been such, or his
credit is so low, that no one will be security for his
not absconding. By the proposed course, those
against whom a strong prima facie case of guilt is
made out, and those only, will be liable to arrest ; the
unfortunate will no longer be subjected to imprison-
ment for debt, and punishment before trial will cease

to disgrace the statute-book.
The Bill then proceeds to a variety of details re-
specting the securing, the discovering, and the
realizing the debtor's property, and other details of
administering the estate ; the plan of obliging the
debtor to file a statement of his affairs, as in the In-
solvent Debtors Court, and lately ordered by the
Commissioners in Bankruptcy, is among the provi-

sions of the Bill.
We now come to a very important part of the pro-
posed enactment.
With respect to the liability of subsequently ac-
quired property two distinct modes of treatment,
diametrically opposed to each other, are in operation
at the present moment. .In the Insolvent Debtors
Court, where a man after being discharged from im-
prisonment attains to opulence, a portion of his wealth
is, under certain humane and equitable regulations,
applied in satisfaction, or in part satisfaction, of his
former debts. This is in accordance with the law of
France, and of nearly all the continental states with
respect both to commercial and non-commercial insol-
i vents. On the other hand, in the Court of Bank-

ruptcy, though the legislation has frequently varied as
to where the power of granting the certificate
shall be intrusted, yet in all the alterations one extra-
ordinary rule has been constantly adhered to, namely,
that the bankrupt shall either be left whollyunpro-

tected at the mercy of his creditors, or shall- be
wholly absorbed from all liability whatever, however
culpable or fraudulent his condact may have been,
and however his subsequent wealth may enable him
to fulfil his engagements. While death was the
penalty for frauds committed after the issuing a com-
mission of bankruptcy, the most complete immunity
has till lately existed for all frauds committed before
the bankruptcy. The old Roman law and the pre-
sent English law have on this point pursued the oppo-
site extremes of lenity and severity; by the former
a debtor might be obliged to dedicate the whole
labour of his life to his creditor, of whom he was,
in some cases virtually, in others really, the slave;
while the English law allows the certificated bank-
rupt to inherit or acquire a fortune, without affording
the slightest assistance to the creditors whom he may
have reduced from affluence to destitution.
The highly important consequences of a moral, as
well as of a commercial nature, depending on a right
legislation on this question, appear to render it de-
sirable that a deliberate consideration of the provi-
sions contained in that part of the Bill which relates
to this plan, should be undertaken by those whose
functions will call upon them to legislate on this
subject. This is rendered of greater importance by
the misapprehension which pervades many minds on
this point.
It is clearly shown that the system, peculiar to this
country (the origin of which is distinctly traced),
whereby a trader is discharged absolutely from his
pecuniary engagements, notwithstanding that he
may, at a later period, be perfectly competent to
satisfy his creditors, on the ground of an intervening
inability to meet those engagements, is both impolitic
and unjust, and that all the real benefits re-
sulting from the course now adopted, may be
secured without persevering in that reckless dis-
regard of the interests of creditors, to which the
long prevalence of the principles upon which
the previous system is founded, have familiarised
the public mind. Acting upon those principles,
the Legislature lsst year, by the 7th and Bth Vict.,
c. 96, deprived creditors of their only of ective remedy
for the recovery of debts under 201. The direct con-
sequence of that statute was the practical extinction
of all debts under 201. due from dishonest debtors,
involving the ruin of a numerous class of tradesmen
whose cspital was inrested in small debts. But the
blow must recoil against the class for whose benefit it
was introduced, as it strikes at the root of that credit
which in so many cases is absolutely necessary.
Without credit, the most skilful artisan, who is tem-
porarily out of work, may be entirely broken down,
and reduced, with his family, to the state of paupers.
Without credit, a young man, who has acquired a
character for industry and integrity, may lose the
most favourable opportunity of establishing himself in
the world. Without credit, a person attacked by a
sudden illness must often forego the benefit of
medical assistance. Without credit, a person who
has accidentally lost, or has been robbed, of his ready
money, may find himself and his family suddenly
placed in the most distressing extremity of suffering
and destitution. Without credit, a mechanic, the
employment of whose skill is necessary for the pur-
pose of carrying on some new or increasing branch of
industry in a remote part of the country, will ge-
nerally be unable to obey the call, and he and his in-
tended employer and the public will be more or less
deeply injured. Without credit, a farmer may be
obliged to sell his corn when the market is glutted,
thereby not only deeply injuring himself, but also in-
juring the consumer, who will ultimately have to pay
a larger price than he would have paid if the corn
improperly forced into consumption had been se•
served for a period when the stocks had become ge-
ne;ally exhausted. Credit is, no doubt, frequently
abused; but it seems to be at variance with the spirit
of sound legislation to enact laws tending to prohibit
persons of full age and of sound mind from making
such contracts as they may deem most conducive to
their own interests, yet this is the spirit and tendency
of all laws introduced for the purpose of, what is
called, discouraging excessive credit.
By the Bill in question such facilities are given to
creditors for obtaining payment of their debts, that
every person who has occasion to contract debts with
honest intentions, and for proper objects, will find no
difficulty in obtaining credit for large or for small
amounts, in proportion to his wants and his circum-
stances, whilst the career of those dishonest debtors
who are now in the habit of living upon the credulity
of othessi, will be stopped by the proposed enactments.
By the Bill in question it is proposed that in every
case of insolvency the assignee, trustee, or inspector,
shall deliver to the court his answers to certain sets
of questions framed for the purpose of ascertaining
the true character of the insolvency. By these ques-
tions, in number thirty-five, every description of
imprudence, carelessness, misconduct, and fraud, by
which the insolvency had been brought about, or by
which the loss to the creditors has been increased, is
sought to be unravelled, from excessive expenditure
and unjustifiable speculation, down to the crime of
absconding with the property of the creditors.
According to the result of these inquiries, the insol-
vent will be placed in one of four series of classes :-
1. Atterminated debtors, and insolvents by misad-
venture, the former term familiar to the legal anti-
quary, being revived for the purpose of designating
those debtors who, with the cbnsent of a majority of
their creditors, obtain time for the payment of their
debts in full.
2. Improvident insolvents.
3. Culpable insolvents and culpable bankrupts.
4. Fraudulent insolvents and fraudulent bankrupts.
The result of this classification, and, indeed, of the
whole of the proposed provisions, will be, that those
whose insolvency has been occasioned by the vicissi-
tudes of fortune, inevitable in a commercial country,
will be more favourably dealt with than at present,
and will be separated even in name from the classes
who now involve all bankrupts under one common
stigma ; while, on the other hand, dishonesty in mer-
cantile transactions will no longer, as at present,
enjoy an immunity from the penal consequences by
which the law deters from dishonesty of every other
description.
lin nsolvents
estp yre,absolved
sbn,3t obiyvemisadventure,
positionfr omo f
certificated
liability w ilf olrb
me bankrupts,
placedant he
kriurofso,that
is nearlytm aformer
debts, with this exception, that once inthreeymeabres;
if one-third of such insrlvent's creditors in number