BANKRUPTCY.
Dn. FRANCIS RABELAIS may be no great authority upon the law of Bankruptcy; but he has shown us, in his famous chapter on Debtors and Creditors, how universal that relation is, and there- fore how deeply interested we all are in having good laws for its regulation. We trust that our readers will consequently bear with us in a further consideration of Lord Brougham's Bill. It would be a great mistake if it were supposed that we gave to its details that unqualified praise we accorded to its general principles, its scientific form, and the effect it is likely to have on other branches of our jurisprudence. We spoke highly of the consoli- dation parts ; but it was only as such. The laws themselves, thus admirably consolidated, may still be open to animadversion. But it is better to have an imperfect rule clearly ascertained and intelligibly expressed, in a portable form, than to have, or rather to be told that we have, the best possible law, if anybody could tell us how, when, and where to fish it up from the abyss of pre- cedents and statutes. In fact, notwithstanding all that is pre- tended to the contrary, lawyers themselves, with the connivance of judges, are doing that by individual efforts which we think ought to be done by authority and under a real responsibility. They are making the text-books of learned men imperceptibly to supersede the judgments on which they were founded. The only inconvenience is, that they are always open to be questioned; and the temptation is too strong, when adverse to the client, or when a young gentleman is desirous of showing his learning. I few introductory clauses, for instance, turning Sir Edward Sugden's book on "Vendors and Purchasers" into an act of Parliament, would not much increase its real weight upon the mind of judges and counsel, but it would put an end to all dispute as to whether it was all law or not ; and in this manner we might much sooner attain to a code than is imagined. So much for the consolidation of the law. We will now sup.. pose that we have got our new Bankruptcy Court established, "a little lower than the angels," with "rank and precedence next after the Judges of the superior Courts of Westminster Hall." What is to be its relation in future to those courts, or either of them ; and how far is the independent jurisdiction to be a reality or only a name? We stated last week, that we did not think the changes go far enough. What we alluded to particularly was, the apparent determination to keep the Court in leading-strings as a dependency of the Court of Chancery. The name of the Lord Chancellor occurs too often in the bill to be consistent with that entire emancipation of Bankruptcy which we should like to see. We do not, however, forget the origin of the Court. There was no bankruptcy at common law, in anything like the modern sense ; and when the requisite powers were given by statute, they were considered as something lower than the lowest functions of the Masters' Office, and they were delegated to inferior people out of doors. It was more proper to give those powers to the Chan- cellor than to the Common Law Judges, because the entire process was of an equitable nature. That grand inquisitor alone could deal with a trust as an affair of conscience ; could decree specific performance ; and, above all, could compel the defendant, the bank- rupt himself, to answer interrogatories and to disclose the real state of his affairs. This was all very fine in theory ; and a great deal more might be drawn from the commonplaces on the same side. But how did it work in practice ? We remember "the Septuagint of Basinghall Street," the seventy-two Commissioners ; which had become an affair of patronage, an eleemosynary insti- tution, a sort of "ragged school" for destitute young barristers, and, instead of a benefit, was regarded as a nuisance by mercan- tile people. All that has been swept away; the Court has outgrown its tutelage ; and the law administered by it is no longer mere equity in the technical sense, nor is it common law but a law sui generis, which neither an Eldon nor a Cottenham will necessarily understand by virtue of what they administer in their own court. We think, therefore, there is too much "Chan. cellor " in the bill ; and, if it were not a Whig measure, we should have suspected there was an eye to patronage,—especi- ally as the name almost invariably occurs in connexion with the giving of places and the awarding of pensions ; one fla- grant instance of which, that relating to the retirement of the present Registrar-General of the Court, will require a distinct inquiry, and perhaps a special reprehension. The patronage of the Chancellor belongs to the Government of the day ; and, having seen 60,0001. per annum lately voted for the demoralization of the bar, whatever may be the immediate ap- parent benefit to the public, in the County Courts, we are not willing to see the same process extended, or even perpetuated, where it might have been reduced. We think likewise that references are directed to the Chancellor on trifling matters, which might have been left to the good sense of the Judges to settle
among themselves. For instance, if the Chief Judge is disabled by illness, he cannot arrange with one of the other Judges to sit for him, but the Chancellor is to be consulted. The same if a Registrar is ill ; and so, throughout the bill, the hierarchical prin- ciple is maintained, to a degree that would appear to us vexatious if we did not know that Law hath its infallibility flowing through appointed channels, the same as Church. We now take leave of the Chancellor and the part allotted to him in the bill ; not meaning any disrespect to that noble and learned person,—whom we believe to be one of the most able, upright, and conscientious men that ever occupied that exalted seat,—but regretting always that his official connexion with party politics should make us tremble, for the boasted independence of the bar, at the accumulation of so much patronage in his hands. The next point we shall touch upon is the special jurisdiction of the Court—the subject-matter that it is to operate upon—the class of persons that are to be amenable to it; or, in other words,
what substitute is to be provided for the " fiat " of the Chancellor —who may be made bankrupts—and what in future is to. be
regarded as an "act of bankruptcy." Every one of these topics,
and many similar ones, might each give rise to a lengthened dissertation. We will save the necessity of this for our present purpose, and endeavour to furnish materials for further inquiry, by some few general remarks on the law of bankruptcy, considered subjectively, in relation to the bankrupt himself. We have looked in vain for a good legal definition of the word; we will therefore venture to frame one, sufficient at least for prac- tical purposes. Bankruptcy is the insolvency of a trader, adjudi- cated according to law, by a court of competent jurisdiction. We are not aware that any part of this definition can be spared ; for although a trader may be a bankrupt, in popular estimation, when insolvent, he is not so de facto as well as de jure until the other conditions are ruililled. We must next inquire, what is a trader in contemplation of law ; what is insolvency, or rather, what is the test of it, and what is the insolvency of a trader ? What is the difference between insolvency and bankruptcy How does a trader, being insolvent, subject himself to the law of bank- ruptcy; whether passively, by being insolvent, or actively, by doing something called an "act of bankruptcy," or by not doing something, or by his own petition, or by an act performed by ins creditors ? The bill does not venture on a new definition of the word "trader." It might have been thought sufficient to have said, as it has done, "all persons who, either for themselves or as agents or factors for others, seek their living by buying and selling, or by buying and letting for hire, or by the workmanship of goods and commodities": but it is not so. An alphabetical list is given of such trades and occupations as from time to time have been adjudged liable to the bankrupt laws. Then comes the special proviso, "no farmer, grazier," &c. ; which at once reminds us of the reason why all persons are not subject to these laws. It is the old feudal distinction between "a gentleman" and "a trader"; operating partly by way of pride, which in England makes it impossible for one of the former class to keep a shop, and partly by way of fear, lest the quick and peremptory action of these laws should break in upon the settlement of landed pro- perty. This part of the subject might well deserve a full discus- sion in a bold and uncompromising spirit. We will merely note our opinion, in passing, that there is no valid reason why there should be a different law of insolvency for debtors of different classes. On the contrary, it might be shown that those people who are pleased to term themselves " the aristocracy "—a word, however, of which we do not know the legal meaning, except in reference to the Peerage—would, in the long run, be greatly benefited by their being brought under the check of these salu- tary laws. A few searching bankruptcies, conducted in a severe and inquisitorial manner, with noble lords or gentlemen as the subjects of them, would strike terror into the spending, borrow- ing, mortgaging class. A timely bankruptcy might have saved some estates which need not be more distinctly alluded to. Then comes the question, What is insolvency ; and what is the legal test of the insolvency of a trader ? To our simple under- standing, the not paying what a man ought to pay, would be a satisfactory explanation. But the ingenuity of lawyers has de- termined that something more metaphysical shall be aimed at : like the distinction in "high treason" between the intent, which is the crime, and the overt act, which is the evidence of the crime ; the Regicides having been found "guilty of the intent," &c., and the cutting off the King's head being, in law, not the crime but the evidence of it. So the not paying is not insolvency, but the evidence of insolvency in certain cases. Insolvency means, therefore, in law, the inability, to pay all creditors in full, or, as the phrase is, twenty shillings in the pound. It was only very recently that the best of all possible evidence of insolvency —to wit, the fact of not paying—was admitted, in any ahape as proof, or 'even as presumption of it. The solution of this is, that bankruptcy was regarded as a crime ; and, as every man was to be presumed to be innocent till found guilty upon evidence, it was thought necessary to wait until he had performed some act, beyond the very essential one of not paying, so as to indicate clearly and beyond the shadow of a doubt that he did not intend to pay, because he would not, or was not likely to pay, because he could not. Such an act, of which "departing the realm with intent to defeat or delay his creditors" may be taken as a sample. A trader goes away to Paris, and leaves his bills to be dishon- oured. Is this an act of bankruptcy"? We doubt whether it would be, without satisfying the court of the "intent." What we want is some simple mode of making—what we cannot re- peat too often—the mere fact of not paying the test of insolvency and the act of bankruptcy.
We are happy to find this principle recognized in the bill ; strongly recommended as it is, in various forms and in different degrees, by witnesses before the Committee.
Our limits are exhausted, otherwise we might say something on the proposal urged by many persons for the revival of arrest under mesne process. Mr. Commissioner Evans has pronounced his opinion emphatically against it, as upon the whole injurious to trade, and especially so to creditors themselves ; partly because it creates a false security, as well as for other reasons. But there are other considerations, as there are other duties and other vir- tues, beyond the payment of debts,—the policy that will not al- low either individuals or classes of men to be armed against each other with powers which cannot be perfectly regulated by law. Such powers, we know, have been shamefully abused, if only in extorting money from innocent persons whose feelings were thus wrought upon, and who were no more bound to pay the debts of their relations or friends than the creditors were to lose them.
Such motives are no longer avowed in official documents ; but they exist in the minds of tradesmen and money-lenders. We , however, concede nothing beyond the power of summons, in- quiry, and adjudication by the court ; feeling well assured that a wise legislature will no more consign to individuals the key of its gaols than it would the lash or the halter of its executioners.
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