Defects in the Law of Debtor and Creditor.

265 encumbrancers of such and such a property, ings ostensibly to make him bankrupt, but or other distinctive title; and if no suffi- often merely to extort from the Debtor, or his cient cause were shown, if the Court were relations or Creditors (for Creditors are someempowered to make the order on such sum-times needlessly alarmed at the supposed conmons, and it were enacted that the Account- sequences of bankruptcy to their own interant-General's certificate of payment of pur-ests), terms advantageous to themselves, quite chase-money should be a discharge from all encumbrances as to such purchaser, it would afford one of the great facilities rendered by the encumbered Estates' Act in Ireland, without any additional machinery, as the Court of Chancery could, at a light expense, settle the equities between the seller of the property and the various encumbrancers, a proper subject of inquiry between them, but with which the purchaser has nothing to do.

Having now addressed you on the defects which occur to me in the Law, as it exists between Debtor and Creditor as individuals, I would bespeak your attention to that branch of the Law governing the Debtor and his Creditors as a body.

regardless of the equitable arrangement which ought to be made when a Debtor cannot pay all in full. And I regret to say, that instances are by no means wanting among members of our Profession of encouragement of hardhearted or avaricious Creditors, and who, being known to have unlimited influence over clients being Creditors, have insisted on large sums being paid to them, nominally as costs which they had incurred, or which they might have derived from the prosecution of a bankruptcy, but really as bribes for prevailing on their clients to come into terms of arrangement. This conduct is disgraceful to a liberal Profession, and I trust that it will be denounced by every member of this Society wherever attempted.

But it will not do to rely upon the feeling of honest indignation; we must seek to lessen or modify this nuisance if we cannot remove it altogether.

To the gentlemen I am now addressing, it cannot be necessary for me to say, that good policy and duty alike dictate, that as soon as a Debtor finds himself unable to pay every Creditor twenty shillings in the pound, he should at once suspend his payments, and call his To which end we must direct our attention Creditors together, and tell them the true po- to the master grievance of the law of Debtor sition of his affairs, and ask them for their and Creditors as a body, which is, as it seems advice, as well for their benefit as his own, for to me, the Bankrupt Act of 1849. I do not at the commencement of insolvency, at all mean to say that many of the changes introevents, the interests of the Creditors and of the duced by it are not very useful; on the conDebtor are identical. Nay, more, I venture to trary, I think the giving of original jurisdiction say, through the confidence which a somewhat to each District Court a very salutary improveextended experience in the vicissitudes of com- ment, but there has been no Act of Parliament mercial life warrants, that if a trader, who has since I entered the Profession, now more than not managed his financial affairs judiciously, 35 years ago, which has occasioned so much finds that he has either over-purchased or doubt or difficulty in its construction, and over-shipped himself, or in some other manner which, I believe, mainly arises from these cirover-traded, so as to be unable to meet his en- cumstances. In 1848 and 1849 a committee gagements without assistance, he would find of the great wholesale houses in England, a that assistance would be afforded more easily, numerous and wealthy body, and, perhaps, and on far less rigorous terms, than by having containing the largest number of sellers on recourse to the money-lender, or to those pests credit, sat in London, to obtain from the Goof society, Tradesmen's Loan Societies, or to vernment of the day such a bankruptcy code the more seductive, but, in the long run, al- as would remedy the grievances of which they, most necessarily ruinous game of dealing in as a body, had most to complain. This influ fictitious paper. These expedients for raising ential body won over the energy of Lord money at high rates of interest, and the opera- Brougham, and under his auspices, in the Sestion of compound interest, not according to sion of 1849, a long Bankruptcy Bill, broken the computation in our arithmetic books, at up into divisions and subdivisions, was preone and the same rate annually, but at gene- sented to the House of Commons. The clauses rally augmenting rates of interest, repeated in the Bill were, it is believed, from many three or four times in the year, make a vast hands, some not skilled in Parliamentary inroad upon the means of a Debtor if solvent, draftsmanship, nor even versed in the lanand sadly diminish the sum for division guage of the Acts of Parliament. However amongst his Creditors, if insolvent. So that every Debtor in insolvent or doubtful circumstances should be encouraged to make an early revelation of his affairs to his Creditors, and the Creditors should meet their Debtor's approaches by sympathy and forbearance, and even assistance, where practicable.

this may be, the Bill being introduced, and so sanctioned and backed by the influence of the standing Committee to which I have referred, the Government of the day felt under an obligation to do something; and when the Session was far advanced, a select committee was appointed to receive evidence on the whole subBut to effect so great a good, a considerable ject of the Bankrupt Law. To them, of course, change will be necessary in the Law; the the Bill was referred, the then AttorneyDebtor must have time to consult with his General, now the Lord Chief Justice of the Creditors, without being visited with proceed- Common Pleas, being appointed its chairman.

266

Defects in the Law of Debtor and Creditor.

A vast body of evidence was received, occupy- by substantive clauses, or by omission from, ing till a very late period in that Session, or addition to, the Bill, as originally drawn, which would have required much time to ar- shall be referred. range and deal with properly, but the Government being determined that a Bankruptcy Bill should be passed, having been defeated on a division on the question of its postponement, the ill-digested and incoherent mass forming the Bankruptcy Consolidation Act, 1849, was the result, the difficulties and perplexities of which, instead of being alleviated by time, only become more apparent each succeeding term.

I trust that this meeting will not separate without agreeing upon a memorial to the Lord Chancellor (whose kindness and consideration to our branch of the Profession cannot be too highly extolled, for it stands in bold relief to other eminent men who have risen by our means, but who, having attained the height they sought, have most ungenerously, if not ungratefully, kicked away the ladder)-I say that I trust a memorial will be presented to the Lord Chancellor, praying his Lordship to have the Bankruptcy Act of 1849 submitted to the three gentlemen (whom his Lordship has appointed to revise and consolidate the Statutes on important branches of the law), as being one requiring revision more urgently than any other, and with instructions to remodel and build anew a Statute of Bankruptcy, having regard to the evidence taken under the late Commission, as well as to that before the Committee in 1849, and where the draftsman shall not wilfully change or ignore what was useful and intelligible in the Act of 1826, and in which new matters shall be expressed in plain and intelligible, and not in incoherent and contradictory, terms, like many portions of the Act of 1849, and particularly the clauses as to arrangements by Deed.

It is on account of the operation of these clauses, the defenceless state in which the arranging Debtor and his Creditors are left, that important changes are here necessary. Debtors must be induced to make known early their actual position to their Creditors, and the Debtor and his Creditors must have time to meet and concert measures for their mutual benefit, unmolested by the machinations of litigious and sordid persons, due care being taken in the meantime that the property of the Debtor is adequately protected, and I venture to think that by a modification of clauses already existing in the Bankrupt Act, this great boon to Debtors and Creditors might be afforded.

But, undeniably, under any scheme, the rights of Creditors must be duly considered; and it is conceived that under the arrangement clauses under the control of the Court, and the clauses as to arrangement by deed, it was by no means considered what a large portion of the debts of Commerce are owing on Bills of Exchange, and which are constantly changing hands before they are at maturity, so that, under both modes of arrangement, impossibilities are required from the arranging Debtor. Thus, by the 213th section, under the arrangement clauses under the control of the Court, notice of the private sitting is to be given in writing to every Creditor not less than 14 days before the same is held, such notice to be sent by post, addressed to every Creditor at his last known place of business or residence. Let any gentleman ask himself how this is to be done as to any merchant in extensive trade, two-thirds of his debts probably being represented by Bills of Exchange, and the other one-third being due to home and foreign houses; very many of the bill-holders must necessarily be unknown for service, and the foreign Creditors could not be served except after a great consumption of time.

And where an extensive merchant wishes to obtain relief under the arrangement clauses by deed, he is met by the 235th section, making the arrangement a nullity as to all Creditors who have not notice of the arrangement, and exacting from the arranging Debtor, in a preliminary proceeding, a minuteness of information which he is not required to furnish under Bankruptcy itself.

The clauses as to arrangements under the control of the Court appeared to be borrowed from a modern Scotch Act (6 & 7 Wm. 4, c. 56), giving their Sheriffs' Courts jurisdiction as to the process of cessio bonorum. This process is of ancient use in the Scotch law, and, if not most aptly described, will be made most intelligible to an English lawyer if designated as a Statutory Letter of License to a Debtor, on his surrendering all his property for division amongst his Creditors.

It is such a Statutory Letter of License that I think is the great desideratum in the English law of Debtor and Creditor. But the present arrangement clauses in the Bankrupt Act are not capable of practical working in any estate connected with foreign commerce.

The clauses in the Act, as to arrangement by deed, originated with eminent Solicitors in in conjunction with one or more of his CrediI would suggest, therefore, that a Debtor, the City, but these underwent alterations in tors, should be permitted to petition the Banktheir progress through the two Houses, as is ruptcy Court for an order for the issuing of a shown by Mr. Lavie's letter to the last Com- cessio bonorum, in which the Debtor should missioners on Bankruptcy, from which arose express his readiness to surrender or make their ambiguity and obscurity; nor shall we available his estate and effects for the benefit ever be free from difficulties of this nature of his Creditors, in such manner as they should until Parliamentary draftsmen are employed determine at one or more meetings to be conand paid for by the State, to whom the prepa-vened; and the Creditor or Creditors joining ration of all public Bills shall be entrusted, in such petition should consent to be trustees and to whom, also, all amendments, whether of such estate until the wishes of the Creditors

Defects in the Law of Debtor and Creditor.-Result of the Examination.

should be ascertained; and that upon an order being made for such cessio bonorum, the Debtor's estate should vest in such Creditor as provisional or interim assignee. And if a Creditor should not join with the Debtor in such petition, that on the order being made for the cessio bonorum one of the official assignees of the Bankruptcy Court should be appointed provisional or interim assignee, and on the order being made, the Debtor's estate should vest in him accordingly. That a private meeting of the Creditors of such Debtor should be held not earlier than one calendar month after the order for the cessio bonorum, nor later than two calendar months, and the time and place should be advertised in the "London Gazette" 21 days before the day of meeting, at which the Debtor should present the best account he can of the state of his affairs, with a proposal for the acceptance of his Creditors. And the majority of two-thirds in number and value of the Creditors present at such meeting shall determine as to the acceptance or rejection of the arranging Debtor's proposal, or, if not satisfactory, should determine as to the mode of winding up his estate, whether by acceptance of the estate and effects vested in such interim trustee, in satisfaction of the debts, or by compromise or other mode of arrangement, or by Bankruptcy; of course pending the meetings, the person of the Bankrupt should be protected as under the present clause for arrangement, under the control of the Court.

With some brief observations on two other parts of the Bankrupt Statute, I will close my paper.

The total repeal of the Usury Laws has just been effected; their re-enactment is, therefore, at present an impossibility, even if it were desirable. It is, therefore, proper to consider the right of the Creditor to dictate any rate of interest, however extravagant, as the settled law of the land. But any one who has noticed the proceedings in the Bankruptcy and Insolvent Courts, since the Usury Laws have been progressively relaxed, must have observed the profligate rates of interest which Debtors have engaged to pay, and which, in many cases, have actually paid for loans, some absolutely reserved, in other cases conditionally, in case of default, in payment of the principal at the appointed day.

Prudent traders say, that 10l. per cent. upon the capital turned over in the course of a year is all that can properly be calculated upon, one year with another, after due allowance for expenses of trade and bad debts. If this be a just calculation, the trader who exceeds that rate of interest commits a positive injustice to those Creditors who trust him with goods or money at ordinary rates of interest; and although I do not wish to add to the penal character of the Statute of Bankruptcy, yet I think that as the lender cannot now be visited for any extortion or oppression in his dealings

267

Creditors in loans, at interest above a fixed rate, at all events so long as losses by gambling or by stock-jobbing are so seriously visited by the Bankrupt Act.

The clauses in the Bankrupt Act, which are found most useful in obtaining payment of debts from reluctant traders, are those relating to Bankruptcy Notice and Summons, that is, section 78 and following clauses. But these sections contain many anomalies, which it is to be hoped will be corrected on any revision of the Bankrupt Statute.

trader, not the place of carrying on business, For instance, the place of residence of the is the criterion as to the jurisdiction of the District Court of Bankruptcy, The words of the 78th section are, "if the Creditor of the trader shall file an affidavit in the Court in the district in which such trader shall reside, &c. ;" so that if a Debtor carry on business in Birmingham, but reside, that is, sleep, according to the construction of residence, in the cases on the Poor Laws and Parliamentary Registration, within the jurisdiction of the Bristol Court, a Creditor must resort to the Bristol Court to proceed against him by Trader Debtor Summons.

Then suppose a firm of three partners with three houses, one in London, one in Manchester, and one in Liverpool, and a partner resident in each, which of the three Courts would have jurisdiction against the other two, for their residence and usual or last known place of abode or business are not within the other's jurisdiction? It may be said, that for the relief of the Creditor those clauses should be liberally construed, so as to give any of the three Courts jurisdiction. It may be so said; but on the other hand it is usual to consider those parts of the Bankrupt Statute creating acts of bankruptcy as penal, and, therefore, to be strictly construed. Supposing however, that each Court has jurisdiction as to all the partners in the case I have mentioned, what would be the effect as to a partner resident in Scotland? If he were served there, could an English District Court of Bankruptcy adjudge him bankrupt? Surely reason and convenience dictate that the District Court which contains the place of business of any one of the three houses should have jurisdiction over all the partners of the firm, and that personal service of the summons on any partner within the three kingdoms should be good service. It cannot be wrong to make the place of business of a trader of more importance than his place of dwelling, especially as the very name of "bankrupt” is derived from the desertion of the trader's place of business.

RESULT OF HILARY TERM
EXAMINATION.

SOME errors appear in the newspapers re

with a necessitous borrower, the latter should garding the number of new admissions on the be subject to a deprivation or some suspension Roll of Attorneys.

of certificate, if he wastes the substance of his

There were in all 111 notices from the Can

Result of the Examination.-Notes of the Week.

didates for examination, but only 83 com- ting_on Saturday the 23rd day of February pleted their testimonials of service and at- next, and will on the said 23rd day of February tended on the day of examination,-Tuesday, and matters then standing for judgment. next proceed in giving judgment in all causes

Of the above number 70 were passed and promoters of the Meeting of Bankers and Mer

chants at Guildhall, the Council of the Incorporated Law Society have asked the Judges to receive a deputation on the subject of the proposed closing of legal business at 2 o'clock on Saturdays; and that Lord Campbell appointed Friday, the 1st February. We are not able at present to state the result.

Superior Courts: Lord Justices.-V. C. Stuart.-Queen's Bench.

269

Mr. Matthew R. Sausse, Puisne Judge at| Mr. William Dournan, Solicitor, has been Bombay, has had the honour of knighthood appointed Clerk of the Peace for Sudbury, in conferred upon him. the room of Mr. William Dournan deceased.

RECENT DECISIONS IN THE SUPERIOR COURTS.

Lord Chancellor.

Lee V. Goren. Jan. 19, 25, 1856.

PRIORITY OF

UNREGISTERED DECREE TO SUBSEQUENT VESTING ORDER OF INSOLVENT'S ESTATE.

The defendant in a suit, in which a decree was made, was declared an insolvent, and a vesting order on his assignees was made subsequent thereto, but before it was registered: Held, reversing the decision of Vice-Chancellor Stuart, that under such order although not registered under the 1 2 Vict. c. 110, the assignees were entitled to priority over the plaintiff's in the suit. THIS was an appeal from the decision of Vice-Chancellor Stuart. It appeared that the plaintiffs had obtained a decree against a Mr. Holmes, but that before its registration on August 10, 1853, under the 1 & 2 Vict. c. 110, he became an insolvent, and that a vesting order was made of all his real and personal estates in assignees, but this order had not been registered. The Vice-Chancellor held that the plaintiffs were entitled in priority to the assignees, whereupon this appeal was presented.

Wigram and Toller for the respondents; Malins, Elmsley, G. Lake Russell and Humphreys for the appellants.

Cur. ad. vult.

The Lord Chancellor said, that before the passing of the 1 & 2 Vict. c. 110 no right existed making the decrees of this Court available against real estate, and until the registration, which was necessary under the Act, was effected it obtained no additional power thereunder. The insolvent's estate, therefore, passed under the vesting order made before such registration, to the assignees, and the decision of the Vice-Chancellor must be reversed.

Vice-Chancellor Stuart.

Sutherland v. De Virenne. Jan. 25, 1856. EQUITY JURISDICTION IMPROVEMENT ACT. REPRESENTATIVE OF DECEASED PER

SON IN SUIT BY DEFENDANT.

In a suit by a manager and shareholder, and the representatives of deceased co-managers and shareholders of an association for trading purposes in India, against the defendant, who was a shareholder, and the representatives of deceased shareholders, except the representative of a Mr. H., who died in India, and had appointed the defendant his executor, who refused, however, to administer here: An order was made under the 15 & 16 Vict. c. 86, s. 44, for the defendant to represent Mr. H.

therein.

It appeared that this suit was instituted by

www

a manager and shareholder, and the repre-
sentatives of deceased co-managers and share-
holders of an association for trading purposes
in India, against the defendant, who was a
shareholder, and the representatives of de-
of a Mr. Hudson, who died in India, having
ceased shareholders, except the representatives
appointed the defendant his executor, who,
he had proved the will in India, and prayed
however, refused to administer here, although
for an account of the partnership assets and
for a contribution by the shareholders to dis-
charge the liabilities.
made under the 15 & 16 Vict. c. 86, s. 44,' for
This motion was now
an order on the defendant to represent Mr.
Hudson in the suit.

C. M. Roupell in support; Rogers, contrà. The Vice-Chancellor said, the order must be granted as asked.

Queen's Bench.

Regina v. Churchwar. Jan. 23, 1856. ORDER OF REMOVAL.-WHERE CHILDREN

REMOVED WITHOUT MOTHER.

Three pauper children were residing with their mother, who was in extreme poverty and unable to provide them with proper food and clothing, and was besides living with another man by whom she had several children. The paupers' uncle relieved them several times, and ultimately, with the mother's consent, obtained an order for their admission to the workhouse. An order for their removal to their place of settlement without their mother was confirmed, and held, that the 9 & 10 Vict. c.

1 Which enacts, that "if in any suit or other proceeding before the Court it shall appear to the Court that any deceased person who was interested in the matters in question has no legal personal representative, it shall be lawful for the Court either to proceed in the absence of any person representing the estate of such deceased person, or to appoint some person to represent such estate for all the purposes of the suit or other proceeding, on such notice to such person or persons, if any, as the Court shall think fit, either specially or generally by public advertisements; and the order so made by the said Court, and any orders consequent thereon, shall bind the estate of such deceased person in the same manner in every respect as if there had been a duly constituted legal personal representative of such deceased person, and such legal personal representative had been a party to the suit or proceeding, and had duly appeared and submitted his rights and interests to the protection of the Court."