I have the honour to be, my Lord, your Lordship's most obedient and faithful servant, "The Right hon. the Lord Brougham." This was sufficient proof that he (Lord Brougham) had not acted as a volunteer, officiously intermeddling with the family affairs of the parties, when he made the disclosure with respect to these proceedings on the part of the Marchioness, and that she begged it to be made as an act of jus-cy, as, for instance, when a man shut up tice to herself. Subject at an end. among those who had claims on them, from further liabilities. These laws had origi"JAMES L. RIDGWAY.nated in an act of Henry 8th, but had not been extended into anything like a system till the reign of Elizabeth. It was obvious, that, as the object of the law was to take away the property of the insolvent, it became necessary to have a test of insolvency; therefore the act of Parliament adopted certain criterions whereby to test insolvenshop, and denied himself to his creditors, or when he absconded from his creditors, this was deemed to be fair ground for a commission of bankruptcy. This law was applicable only to persons carrying on trade. A man applying to have the bankruptcy law carried into effect, had to prove himself a creditor, as well as that his debtor was a trader, who had committed an act of bankruptcy, otherwise the law would not impose its liabilities on him. When a person applied for a commission he had to go before the commissioners and establish these three propositions. The commissioners then allowed further proceedings, and a commission was issued to ascertain who were the creditors, and divide the estate among them. The next step was for an officer of the court to take possession of the estate, as far as it could be laid hold of. He mentioned these steps with the view of showing that every step taken under a commission of bankruptcy required the administration to be on the spot, or as near it as possible. If the court were 100 miles off, it was obvious that very great expence must be incurred. When the estate was to be seized by means of a messenger, if the court were in the neighbourhood, it was no expense for the messenger to go and possess himself of it; but if it were situated at any great distance, it was quite obvious that great expence must be incurred by the BANKRUPTCY ACT.] Lord Cottenham rose, he said, in pursuance of notice, to call their Lordships' attention to the effects of the change made in the law relating to bankruptcy by the act of last session, He believed he should be able to satisfy their Lordships that the alteration then introduced was not only unnecessary, but that it had been in its operation very prejudicial. The remedy was easy; it would have been more easy, undoubtedly, to have provided a proper remedy before the act of last session was passed; but whether easy or not, if he succeeded in demonstrating the great evils which that system had produced, it was his hope that their Lordships would feel themselves obliged at any cost to apply a remedy. It was not his intention to blame those who took part in passing this bill; his sole object was to remedy what he believed to be a great public mischief, and if his noble and learned Friend on the Woolsack, when this discussion was closed, were satisfied that the mischief was in fact attributable to the act of last session, he hoped to have his assistance in framing a measure for its removal. The first point to which he should wish to direct their Lordships' attention, was, the particular locality of the several courts established throughout the country for the administra-employment of a messenger for that purtion of the law. He should not ask their Lordships to follow him through any legal argument; but he would state a few facts to show the nature of bankruptcy transactions, and to lead to the conclusion that courts situated at a great distance from the residence of the parties whose affairs were to be administered, could not possibly do justice to them. The object of the laws of bankruptcy was, when a trader became insolvent, to secure the property for the benefit of those who had claims on it; next, to administer it faithfully; and lastly, to discharge the trader, after he had given up his assets, and they had been divided pose. The next step was the choice of assignees, who had the duty cast upon them of collecting the estate, and dividing it among the creditors. The assignees were elected by the creditors, and all these things must be attended with great expence if the place of the bankruptcy was situated at a great distance from the court. If it was in the neighbourhood, it would be easy to manage this business; but if the persons had to travel to a distance, they would either not go at all, or go at great expence and inconvenience. Another step was the proof of the debts, which must be done by the creditors going before the commissi 343 Bankruptcy Act. {LORDS} oners in person, or making affidavit. That Bankruptcy Act. 344 bankrupt lived. The Northampton peti- induce an honest creditor to abandon his claim altogether. In the statement from Northampton, signed by the solicitors of the town, it was shown that the expense of opening a fiat had been so much increas that the costs often amounted to 201. and even to 401. In the statement of 149 London solicitors acting as the agents of 1,200 country solicitors, embodying therefore to a large extent the information of that branch of the profession best acquainted with the law of bankruptcy, the expenses of opening a fiat were stated to amount to from 30l. to 60%. owing to the great distance which parties had to travel themselves, and take their witnesses, and the result, of course, was a great waste of the estate at the very commencement. All these expenses were naturally owing to the system established last year. It appeared that the rate of remuneration allowed was 6d. a mile, and 17. 6s. 8d. a day besides. Suppose the estate to be taken possession of was 100 miles off, the messenger would have to be paid his travelling expenses there and back. Was he, then, to remain there? There was no difficulty in his doing so when the estate was in the same town as the court; but if the messenger was sent to one place 100 miles off, and to another in an opposite direction fifty miles off, he could not of course remain to take charge of both. The consequence was, he must employ an agent, and this they would find, by referring to page 182, he was expressly authorised to do; and it was moreover directed, that after an agent had been appointed, the messenger himself was not to go again without an especial order. The official assignee never went at all. What chance was there, under such circumstances, that the estate would ever be properly realised? The books had, of course, been carried away, and put into the hands of the official assignee. The parties were probably at Yarmouth, the books in London. The messenger was not to go down again without a special order. The estate, and in London, he believed, this alteration had been productive of great benefit. The creditors in London had not the time to look after the estate of a bankrupt, and he believed, that in consequence of the change in the system a great massed by the removal of the court to a distance, of property had been saved. But it was obvious that the official assignee ought to be near the property which he was expected to look after. By the act of last session, the system of official assignees was extended to the country. But suppose the property to be realised lay fifty or a hundred miles away from the official assignee, great expence must in that case be incurred, and the estate would derive little benefit from it, the creditors losing the security which it was intended they should derive from the active interference of a well-informed person. So much of the report of 1841 as was adopted produced the act of last session. By an order in Council, the London district was greatly extended; in one direction 122 miles, so as to include Yarmouth. He would now state some of the towns that had been deprived of their own courts and been obliged to go to a considerable distance for all bankruptcy proceedings. Nottingham, with 80,000 inhabitants, had to go fifty miles; Boston, with 14,000 inhabitants, had to go one hundred miles; Louth, with 60,000 inhabitants, ninety miles; Yarmouth, with 25,000 inhabitants, one hundred and twenty-two miles; and Norwich, with a population of 72,000, one hundred and twenty-two miles. From the return of 1841 it appeared that of the fiats sued out, 1,714 executed in places not now enjoying the benefit of a local court. In 866 of those fiats, the distance the parties would have to go was 40 miles, and in 176 it was as much as 80 miles. The majority of the debts in those fiats was under 10l. A petition from Leicester stated the details of five fiats, in which of 213 debts, 117 were under 51. and 75 under 10%, and no less than 178 creditors proved in person. In many of those cases the dividend would not pay the expenses of the creditors' jour-agent was probably a common person, with ney, and the natural consequence would be, that the system would act as a great discouragement to the creditor troubling himself at all in the matter. Not only had the creditor to make a long journey and to be at great expence of money, time and trouble on his own account, but he would often be put to additional expense in taking his witnesses with him, and thus the mere show of opposition might be sufficient to little or no information. What under such circumstances was to become of the interests of the creditors? The next step was the choice of the assignees. He had already stated, that a large proportion of the creditors had not a sufficient interest to induce them to undertake the trouble and expense. If they resided in the same town in which the court was placed, and if they exercised the right of electing the assignees, no doubt they would look after, and 20l. were generally excluded. That their own interests, even when the amount this must be so, was proved from the was inconsiderable, because they might do mere calculation of the expenses necesso without any material sacrifice of time sarily incurred, either in taking a journey and trouble. Another point to which it to the court of the commissioner, or in was necessary he should refer was this. arming themselves with an affidavit to It was very desirable that throughout the make that proof. The petitions stated, proceedings the bankrupt should himself that the expense of employing an attorney be present to explain every point that and drawing up an affidavit was from 30s. might appear to be obscure. The official to 3., and this expense was to be incurred assignee had the books, it was true, but in for the chance of getting at some future many cases the books proved nothing. A period, perhaps, a dividend of 50s. This question might arise whether a debt that calculation showed, that it was no rash appeared on the books should be sued for statement to say, that such creditors were or not. Without some explanation from actually excluded from all the benefit of the bankrupt, it might often be impossible to this measure. What he had stated hitherknow whether it would be expedient to in- to was the obvious result of the arrangecur the expense of doing so. Then, if a ments which had been made under this creditor came to prove a debt, who was to system, or was derived from the petitions know whether he ought to be allowed to of solicitors, or from returns on the Table prove? The bankrupt might know, but of the House. He was furnished, howhow could the official assignee? At al- ever, with particular instances which fell most every moment, matters arose on in with what he said, and confirmed what which those who had to administer the he had attempted to establish. If their estate, must have information from the Lordships appointed a committee, these bankrupt. The next, and the most im- parties were ready to verify the stateportant of all the points to which he should ments they supplied to him; if they were direct their Lordships' attention, was the not, of course those statements would fall effect of this bill on the small creditors. to the ground. He should avoid stating He had already stated, that a large pro- the names of the parties, but the first ocportion of the creditors were for sums curred at Bodmin, forty-four miles from under 107. and 201. The petitions which Exeter, where a chief commissioner was had been presented to the House showed appointed. The bankrupt stated, that fifthat the creditors for these sums lost all teen months before the commission, his the benefit of the new enactment. The property was worth 8,7797,, while 700. expense and trouble necessarily incidental was all that was realized under the bankto proving a claim of this description ruptcy. It appeared, that but two crediwere such, that they preferred abandon- tors under 101, proved, and the greater ing their rights to attending upon these number abandoned their claims. There Courts of Bankruptcy. It was so stated in was another case at Leicester, 112 miles the petitions; and all his experience tended from a chief court. The balance sheet of to confirm those allegations. What was the bankrupt showed he had eighteen crethe effect of this? To take their pro- ditors, but not one of them proved. The perty out of the hands of the small cre- petitioning creditor consequently got the ditors, and to put it into the hands of the whole of the estate. This only proved, rich creditors. The latter, of course, that the people of Leicester had a fund of thought it worth while to prove their good sense, which prevented them from debts, and they were willing to incur pursuing a phantom they were never likely expense, for they were sure to derive a to catch; namely, a bankrupt estate admibenefit from it. But they have another nistered 112 miles from the residence of the advantage. Of course, the sums belong- bankrupt. There was another case suping to poorer creditors, when not claimed, plied him from a place in Shropshire, go to swell the fund, to be divided amongst which was seventy-four miles from a the rich. So that the effect was to take principal court, where only four creditors their property from those least able to proved, and these were for sums above bear the loss, and to hand it over to 100l.; all the others abandoning their those who had the strongest interest in claims. It was unnecessary to trouble their the commission, and were best able to Lordships with more of these cases; he bear the expenses of its proceedings. He had stated enough to show that the present had stated, that these creditors of 107. system tended to the great waste of the es tate, and the great hardship of small credi- the mass of the details with which it was tors. But let its general effect be also necessarily burthened. But it would be considered. When an estate was admi- his duty to refer to those details, because nistered 100 miles from a place where a upon them the measure which his noble man lived, he was pretty sure not to be and learned Friend condemned was foundmuch troubled with creditors who could ed, and because by them that measure was prove. Where the commission was taken to be justified. He considered the motion out for a fraudulent purpose, and to se- of his noble and learned Friend extraorcure the trader against future liability, it dinary and unprecedented. The bill to was no bar to the creditor that he lived at which it referred had only come into operaa distance from the chief court of the com- tion in November last. It comprehended missioners; but it was a denial of justice to a variety of details which could not be the bona fide creditor. Not only did this satisfactorily settled, save by the result of power of attracting all the cases to the chief a long experience. It included the cocourt in each district operate favourably to operation of a great number of persons by the person who was anxious to commit whose skill and energy it was to be carried fraud, but it had a powerful effect in into execution-and so to take it out of tempting to the commission of fraud. The the hands of the Government before time man disposed not to act fairly, might do was given them to modify its provisions, so with impunity under the new system. to cure its defects, to institute inquiry as Formerly, the creditors had it always in to its practical working, seemed to him a their power, when they suspected fraud, to course imprudent and unjustifiable. It have the commission issued to the place of was the more imprudent and unjustifiable residence of the bankrupt. That security from this circumstance that all the obwas now gone for the creditor; but it re-jections which had been raised by his noble mained in full force where it was the ob-and learned Friend, or by the petitioners, ject of the fraudulent bankrupt to get the whose case he had advocated, arose from debts proved at a great distance from the the formation of the districts, and from places where the creditors resided. This was the case on which he did not ask their Lordships to come to a final resolution; but had he not stated enough to show that the alteration of the law was necessarily productive of great injury, and was proved to have been so by the experience of the solicitors who had petitioned, and by the returns on the Table. He asked their Lordships to appoint a committee, by which the facts he had stated might be investigated. He could not suppose, that the circumstance of the bill being brought in by his noble and learned Friend would induce him to adhere to it at all events, and even after it was proved by the evidence he had brought forward, that it did not answer its purpose. He hoped, their Lordships would not allow the Session to close, and leave in operation a system which was a denial of justice to all creditors of insolvents for a small sum. The noble and learned Lord concluded by moving for a select committee to inquire into the operation and effect of the Bankruptcy Act of last Session. The Lord Chancellor rose with great reluctance to oppose the motion of his noble and learned Friend, and to occupy for a time the attention of their Lordships on a subject which, however important in its results, was most uninteresting, from the location of the particular persons who were to carry out the system. He was aware, and their Lordships must be aware also, that the formation of the different districts, and the appointment of the various officers to the different places, could only be properly and finally settled by the result of a long experience; and indeed, so well aware had their Lordships been of this, that, in the bill itself, they had not attempted to point out what the districts should be, or how the different officers should be allotted to the respective places. They saw that it would have been most imprudent to pursue such a course, for if they had, it would have been impossible to alter, at a subsequent period, the original division, without again coming to Parliament. They, therefore, referred to her Majesty in council, the original appointment of the places, and they gave to her Majesty in council the power of subsequently altering the districts, if it should be thought prudent so to do. Under these circumstances, the motion of his noble and learned Friend was, to say the least, premature. His noble and learned Friend, before he had made such a motion, ought to have allowed sufficient, even ample time for the full development of the system in all its parts. What was that system? What was the principle of the bill to |