THE

JOURNAL OF JURISPRUDENCE.

BANKRUPTCY REFORM.

MR MOFFATT, the chairman in 1864 and 1865 of the Select Committee of the House of Commons on Bankruptcy Law, has shown so much earnestness in his desire to amend the English Bankrupt Law, that whatever falls from him will justly receive from the public much consideration. We therefore feel that no apology is required for reverting to one of the proposals contained in a paper by him, read in October to the meeting of the Social Science Association, and reproduced in the Law Magazine. It will be recollected that, in 1864, Mr Moffatt wished the Committee to report to the House that while the evidence has proved the English Bankrupt Law to be a costly failure, it has shown that the Scotch system is a practical success.' The Committee did not then report in these terms; but suggested the propriety of a further investigation, the result of which, however, was, that they last year recommended the adoption of a considerable portion of the Scotch system, which Mr Moffatt tells us will include 'the appointment of trustee or curator to be chosen by the creditors, to be paid by them according to agreement; . . . to have power to reject or admit claims of creditors, subject to appeal to the Judge; to be subject to the revision of one or more of the creditors, who should be appointed by the others. . . . Accounts to be rendered in full to the Accountant-General in Bankruptcy, who shall certify to their accuracy before the trustee is entitled to payment for his services.—Trustee to report as to the conduct of bankrupt.—Trustee to be subject to the supervision of a Judge, and liable to dismissal in case of misconduct.' Were this all that is proposed; although we might have pointed out that it is impossible for one accountant in

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bankruptcy, or for fifty to audit the accounts of all the bankruptcies in England, and that in Scotland it is a committee of creditors, not the accountant, who audits the trustees' accounts; yet we should, on the whole, have congratulated our English friends on the probability that they will soon have a good Bankrupt Law. But much more than this is proposed; and in this further proposal we cannot but feel that we ourselves have a most material interest. Even commercially related as Scotland and England are, it may be quite possible, or in the meantime necessary, however inconvenient, to maintain minor differences between the laws of the two countries. But such sweeping changes in the law as will be effected by the abolition of imprisonment for debt, and by enacting the continuing liability of the bankrupt for his debts, can hardly be introduced on one side of the Tweed without affecting those who live on the other. The Committee of the House of Commons have already recommended that imprisonment for debt should be abolished; and Mr Moffatt and Lord Westbury unite in a desire to make the future profits of a bankrupt liable for his present debts, and to make his discharge entirely dependent on the goodwill of his creditors.

Mr Moffatt refers to Lord Lyndhurst's Report in 1844 to the House of Lords, and admits that, in that report, the question of liability to pay debts out of after acquired property' 'is argued in extenso; and further, says that that report suggests that the existence of such liability, though rarely productive to creditors, would tend to paralyze the future exertions of debtors.' He also tells us, that the Commission which investigated the subject in 1840, reported strongly against the proposal to retain the liability for unsatisfied debts upon after acquired property.' Still he dwells upon all the arguments which were disregarded, as he admits, in these reports, and tells us, that although adduced twenty years since, they have lost none of their force by age.' He further says, 'A law which may afford to creditors the means of prompt possession and equable distribution of assets of insolvent estates, with further right of recovery upon the after acquired property of insolvents, is undoubtedly the desideratum from the creditor's point of view. On the other hand, the debtor should be freed from all personal coercion by the abolition of arrest and of imprisonment for debt, or the interference of previous creditors in his after pursuits, until such time as he may have acquired property to discharge the old liabilities.' In support of the position which he takes up, Mr Moffatt quotes from a

letter written to himself by Lord Westbury, who says, 'Let this be the law. On a man becoming bankrupt, grant him, on his surrender, protection from imprisonment for debt (so long as that absurdity continues), but let his future estate remain liable to his debts until he gets a voluntary discharge from his creditors.'

The suggestions of Mr Moffatt and of Lord Westbury are made, as the former says, from a creditor's point of view; but we think that the point cannot have been very elevated, and that if Mr Moffatt will look a little more deeply into the matter, he will see that the suggestions made will operate less for the benefit of the body of creditors generally, than for that of the great capitalist. These suggestions, if carried out, will, in our opinion, do more to injure the commercial prosperity of this country than any of the other jejune experiments in bankruptcy legislation which have lately been made in England. We are at a loss to conceive how it can be expected that any man can start a new concern with success, if he have the debts of the old concern still hanging about his neck. Does Mr Moffatt think that the mercantile world will give credit? Can he suggest any workable plan by which the creditors of the new concern can be kept safe, the credit of the bankrupt (for bankrupt he still is) maintained, and yet the creditors of the old concern receive the surplus profit of the new? The scheme is extravagant. A very different picture presents itself to our minds. Abolish the discharge, and you convert the energetic, hopeful man, striving to retrieve his position, into a man without energy or hope, and therefore incapable of effort,-the man who might yet give employment to thousands, into one who is an object of disgust to himself, and who almost inevitably will become a burden on society— one, in fact, who for all the good he will henceforth do, might as well be sold trans Tiberim at once. Not one in a hundred will ever afterwards prove himself a useful member of society. Misfortune will be punished as a crime. The man who has once failed will be practically shut out for the future from trade; and consequently, all business will become centred in a few hands, to the profit of the large capitalist alone, and to the great injury of our commerce, and loss of our working classes.

But Mr Moffatt is a purist. He says, 'There can be no question that the whole principle of law should be to maintain the inviolability of contracts; but this is practically reversed in every instance in which a creditor is compelled to give other than a voluntary

acquittal to the debtor for the unsatisfied portion of the debt.' Surely it must have occurred to Mr Moffatt in his capacity of a legislator, if not otherwise, that abstract propositions, which might be printed in letters of gold in the laws of Utopia, must be somewhat modified to meet the exigencies of everyday life. Nothing, for instance, ought to be more inviolable than the right of property; and yet we question whether Mr Moffatt himself maintains that it is tyrannical in the public interest to invest railway companies with compulsory powers of purchase.

We cannot go the length of those who say, 'If a man embarked in trade accepts a bill to pay six months hence, there is as clearly as possible a tacit understanding that he only promises to pay, if, when the period arrives, he have the wherewithal to pay. Every merchant takes the bill of another on this footing, and if innocent bankruptcy intervene, there is not, morally speaking, any breach of contract.' Still a practical legislator must have regard to the risks, uncertainties, and necessities of trade, which, indeed, lie at the foundation of the Bankrupt Laws, and in consequence of which the enforcement of mercantile claims is withdrawn from the operation of the ordinary machinery of the law. Lord Westbury says, 'Is it not a mistake to attempt, in a system of rules for the collection and distribution of the assets of a bankrupt, to create a code for enforcing commercial morality? . . . . This attempt to combine the punishment of the dishonest or reckless debtor with the collection and distribution of his remaining property is, in my judgment, a very great mistake. . . . . I would abolish it altogether. If a man has committed a fraud, let him be punished by the . . . . criminal law,

.. but do not attempt to administer criminal law or a quasi criminal law in bankruptcy.' But does not Lord Westbury see that the withdrawal of the discharge from a bankrupt is one of the most penal measures which can be passed; and does he not propose to administer this very measure in bankruptcy, inasmuch as the adjudication of bankruptcy will declare to the bankrupt that he shall not be discharged until he has paid the uttermost farthing?

We agree with Lord Westbury in this, that bankruptcy law should be entirely of a civil character; but we cannot agree with him in thinking that the Court of Bankruptcy 'has but one function -the collection and distribution of the debtor's assets. We admit that, indeed, to be its first function, and one quite separable from all the rest. But we hold to it, that in this country, where we have