TOPICS OF THE DAY.
A NEW VIEW OF BANKRUPTCY.
WE hope that the comprehensive measure introduced by the Attorney-General will prove a step towards a final adjustment of the procedure affecting Debtors and Creditors. No part of our jurisprudence has hitherto been so liable to an imputation of hasty and imperfect legislation. The institutions representing the tribunals dealing with Bankruptcy and Insolvency, have been always temporary in their character. Bankruptcy, in twenty years, has known no less than four changes ; Insolvency, during the same period, has passed from the jurisdiction of the Commis- sioners in Portugal Street to the Provincial Commissioners in Bankruptcy, and afterwards to the County Courts. Hence, the law has acquired as transitory a character as the tribunals. The proposal to erect a Court which shall form the centrical point of guidance and appeal, has the advitnta:ge of destroying the chaotic elements now in existence, and educing a system of harmonious action. WE hope that the comprehensive measure introduced by the Attorney-General will prove a step towards a final adjustment of the procedure affecting Debtors and Creditors. No part of our jurisprudence has hitherto been so liable to an imputation of hasty and imperfect legislation. The institutions representing the tribunals dealing with Bankruptcy and Insolvency, have been always temporary in their character. Bankruptcy, in twenty years, has known no less than four changes ; Insolvency, during the same period, has passed from the jurisdiction of the Commis- sioners in Portugal Street to the Provincial Commissioners in Bankruptcy, and afterwards to the County Courts. Hence, the law has acquired as transitory a character as the tribunals. The proposal to erect a Court which shall form the centrical point of guidance and appeal, has the advitnta:ge of destroying the chaotic elements now in existence, and educing a system of harmonious action.
The illogical distinction between traders and non-traders has long been the means of inflicting unnecessary loss upon creditors, and cruelty upon debtors. The unfortunate trader is allowed a mode of settlement and discharge, which dispenses with imprison- ment; but the unfortunate gentleman, artist or farmer, had to undergo the degradation of incarceration before discharge. We showed, in a previous paper, • that the number of Bankrupts, neeossarily all traders, were only some 1800 against more than 3300 insolvents, who all petitioned from prison. It is, of course, impossible to say how far many insolvents deserved imprisonment; what is now to be remarked is, that imprisonment was the inci- pient and necessary ingredient upon which the petitions were founded. Only a small fraction of the whole 3300 were remanded back to prison, for fraudulent misconduct ; from which it follows that we had invented a system so utterly inadequate to deal with fraud, that the punishment, instead of being directed to its proper objects, was vicariously spread over six times the number of innocent parties. Imprisonment for debt is a foul blot on our commercial juris- prudence, and we are glad to notice that the Attorney-General is ready to introduce another measure, which shall effect its aboli- tion. What we want is imprisonment for fraud; for when that is established to the satisfaction of a jury, it is as a criminal, and not as a debtor, that punishment should ensue to the wrong doer. Our present practice of imprisonment only acts as a snare to an honest creditor who believes that none of his customers will incur its disgrace ; nor, probably, would they, did not they also deal with dishonest creditors, who seek to wrest the power of imprisenment to their advantage, in enforcing contracts so tinctured with fraud on their own parts, as to make their dealings a curse to commerce and to morals. We have said much on this subject before, and may find opportunities of enforcing it again. Meanwhile, we pro- ceed with the review of Sir Richard Bethell's Bill.
The separation of the judicial administrative and commercial functions of the court registers and assignees, is likely to prove most salutary towards the speedier progress of adjustment. The abolition of the useless and scarcely ornamental officers, messen- gers, and brokers, will have the simple effect of saving a consider- able sum, now wholly and unnecessarily wrung from creditors. But on one point we are not so assured. The official assignee, it appears to us, should not only be the auditor but the treasurer of the estates. It is of vital consequence to shut out the most remote chance of a revival of the great frauds which prevailed up to the appointment of official assignees. We have less faith in the activity of the creditor's assignees, for generally speaking their duties will be performed by their attorneys. A stringent provi- sion should require that all moneys received by the assignees, should be paid into the credit of the assignees of the estate, in account with the Bank of England, and in case of default, the as- signees should be surcharged with interest, at such a rate as would leave no margin', between the probable profit upon it in the as- signee's own hands and banking interest. Those who have had any experience in bankruptcy before 1842, will best understand the force due to our recommendation.
The creation of the new tribunals will amply meet the require- ments of the metropolitan counties. But, in the provinces, con- siderable annoyance will result from the transference of the busi- ness to the county courts. Generally speaking the judges of these courts are common lawyers, whose education and experience, have so narrowed their minds as to render them incapable of taking the broad and compendious views required in commercial adjustments. The comparatively small amount of insolvent prac- tice committed to the County Courts, is anything but satisfactorily administered at present ; and we know not what the judges could do with the wider interests involved under deeds of trust and bankruptcy. No inconsiderable amount of equity is required in the division and marshalling of assets, ditties which the County Courts have never hitherto performed. The present Bankruptcy Commissioners are all men more or less distinguished at the equity bar. It would be impossible by blending the professional accomplishments of any number of County Court Judges, to make up for the loss of Mr. Commissioner Holroyd's services in the me- tropolis, or those of Mr. Commissioner Ellison in the North of Eng- land, or Mr. Commissioner Hill in the West. Mr. Hill, indeed, has had to contend with the difficulty which a man encounters • Spectator, January 21, 1880. who is in advance of his day ; for no man has grasped the kernel of the subject more completely than he, or seen more clearly the fallacies of that which Sir Richard Bethell is about to make the old law. But there is one mode of avoiding the difficulty ; when the county commissioners' seats become vacant, their registrars, who have acquired not only by education as members of the bar, but by their experience as Deputy Commissioners, a knowledge of the whole routine of those parts of the system which are to be re- tained, might have the district divided into circuits, to which they might go at proper times as Assistant County Court Judges. This arrangement has the advantage of economy, the salaries being only at present 8001., whilst the County Court Judges would not be overwhelmed with new work.
It is startling to find that there were no less than 8000 deeds of trust executed in 1858. These deeds would cover an enormous amount of fraud, which passed without investigation and punish- ment. The Attorney-General was wrong, we think, when he termed bankruptcy "a reproach." Why is it so ? Simply be- cause we permit privacy by arrangements out of court. No doubt creditors are anxious not unnecessarily to expose the amount and number of their bad debts. Equally so is the debtor, who does not wish to be called upon to account for his deficit. These two feelings send many a trust deed to a final settlement. But we need not call our debtors bankrupts ; they may be simply peti- tioning debtors at first. Yet it is of great importance that all arrangements between debtors and whole bodies of creditors, should be carried out by order of a court, after investigation of the cause of the deficit by competent inspectors, appointed by. the creditors. One of the most frequent causes of insolvency is bad or incorrect bookkeeping; and so long as this is permitted, there is no hope of seeing the commercial evil of bad debts extinguished. If a man's books do not show on the face of them how his insolvency has occurred, it is the interest of the public that he be called upon to Recount for it. Such an account shows what the debtor's conduct has been whilst receiving credit, and points out his appropriate punishment. But, so long as private arrange- ments are permitted, the source of the evil is untouched. The unfortunate man is entitled to an immediate discharge, but he only. Whether the "future acquired property" of debtors should be liable raises a question of the gravest importance. In a previous paper, we ventured to suggest that only "unavoidable loss and misfortune" should receive a first-class certificate discharging both person and property ; that expensive and incapable debtors should only receive a second-class discharge, protecting the per- son but not the future surplus of the debtor, whilst to the reck- less debtor only a terminable discharge should be given. Ob- viously, a man capable of earning a competence should not be allowed to throw the whole of his improvidence upon his creditors. All that he can ask is protection to his person, nor is it safe to create a tribe of commercial bashi-bazouks by granting immunity to reckless adventurers.
We trust that this bill will receive, as it deserves, the calmest consideration. It in necessary that the tribunals in bankruptcy should be finally founded, for so long as the judges obey tempo- rary and transitory requirements, we shall never be able to get, in a collective form, the evidence necessary to point out the path to a sound and salutary reform of the laws relating to debtors and creditors.
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