The Press. WEDNESDAY, NOVEMBER 29, 1882.

Press, Volume XXXVIII, Issue 5360, 29 November 1882, Page 2

The Press. WEDNESDAY, NOVEMBER 29, 1882.

Unless _the promoters of reform in bauk.ruptcy are prepared to gainsay the conclusions to which we have been' leading them, it will require exceedingly little change in the Draft Bill of the Minister of Justice to give them effect. Among the acts of bankruptcy proposed to be recognised by this measure, the third is " that execution has issued against the " debtor in any legal process; provided," the clause goes on to say, " that if the " execution be satisfied within three days " after issue thereof, the act of bank"ruptcy shall ipso facto be annulled." It will be seen at once that if this proviso be struck out of the clause all that we have been contending for is practically conceded.

The clause as it stands is a reproduction almost in terms of the analogous provision George JesseTs Act of 1869. This fact does not, of course, exempt it from criticism, Wβ aie wicked enough, indeed, to believe that the existence of this proviso has not a little to do with the failure of the Act. We well remember the high expectations that were formed of it. The older' members of our own Chamber of Commerce wijl, we doubt not,"remember their gratification when the Act arrived out here. Our own Debtors and Creditors Act of 1867 was more than upon its trial, and the English Act arrived, as it was considered, just in the nick of time to lend irresistible assistance to their recommendations for extensive changes. As far as thorough professional knowledge of the principles and procedure of bankruptcy, perfect skill in the manipulation of details, and artistic precision of language, could combine to ensure success, all these requisites were to be found in Sir George Jessel's measure. It did, probably, almost all that could be done to simplify procedurej cut down expense' and put a stop to peculation. The measure, and the speech introducing it,"made" Mr. Jessel, and enabled Mr. Gladstone to appoint him the first Jew Attorney-General and the first Jew Master of the Bolls ever seen in the Old Country. . Yet, when this measure came to work it succeeded no better than those that had gone before it. The dividends in bankruptcy proved to be as infinitesimal as ever, and the Act itself would long since have been repealed had public opinion at home been sufficiently matured to agree upon what else was to be substituted in its place.

I What, then, was the fault of the Act? Wβ know not how to answer this question except by repeating what we have suggested already—that there was one thing which in common with all previous Acts it did ■ not do. It did far more than any previous Act to secure the economical. distribution of the debtor's assets—-if there were any. i What it did not provide for was that there should be any assets to distribute. A debtor's property, as we all know, does not become assets for his creditors until, he haa been adjudicated a bankrupt, and the last Act like all previous Acts left it practically impossible to obtain an' adjudication until the debtor's property had evaporated. It retained almest identically the same conditions as necessary to an act of bankruptcy as had been insisted on by the Legislature from the days of George the Fourth; and these, as we have already pointed out, are such as not merely to establish the fact of the debtor's insolvency but that it has proceeded to the final stage of absolute collapse. Hence there have been no assets to divide.

The clause which we mentioned at the beginning of our article is seen, when looked at, to be so illogical that one wonders how it ever came to assume the shape in which we find it. For the object # toforapfcy w W provide {haifae fact Of execution toeing issued against !bim be a. proper basis at all on wrtieh. to establish, an act of bankruptcy, the act, one would think, ought to be complete so soon as £h& - ejcecntioii. is issued. ■' Aj.p . to f tirxie, aXL events, -tire debtor's property mil tti in li aiailaDlc lor ml <3istrilnxfc£oji_ Scxt when it is made to l>e the law that if tbe elector somebow con* trives to pay the plaintiff the amormt of bis ; debt, and coats, the act of bankruptcy is to be annulled, the very object of the Bant* rttptcy Law is set aside, and ttat jffoperty ie allowed to go eidoshre^r to one creditor which Ought to have been divided amongst all. The proviso indeed is obnoxious to the imputation ■wiiich ■Wβ have been cssrefnl to preclude against ia our own proposals. For by means of it a single creditor is permitted to pervert the proceeding which the law intends for the general benefit, into a direct means of extorting the payment of his own claim.

The presence of the proviso in the Act can in fact only be explained as due to the unconscious influence of old habits of thoughtEver since we hare had acts of bankruptcy the point seems always to have been j that a debtor who waa obliged to allow a suit against him to proceed to executionand even then could not pay the demand sued for, must be insolvent. In this view no doubt all will be agreed. But the question we humbly submit is—why wait until this extremity is reached t It is easy enough, surely, to obtain satisfactory proof as to a man's commercial position when he is on the very throes of an execution. There is no need to wait till the litigating creditor has secured his prize. The true question is not that which is solved by the proviso. It is not whether the debtor can contrive by hook or by crook to pay one creditor, but whether he can pay all. ! The summons on the creditors' petition in bankruptcy asks that the debtor may show cause why he should not be adjudged bank, rupt. The reason why, if at all, he is to be so adjudged is that he cannot pay all his creditors in full. That he can pay them in full is certainly not shown even prima facie by his having satisfied the particular creditor who has sued him. It might have been very good evidence in his favour if he had paid that creditor in the ordinary course as soon as the debt fell due. There would then have been no imputation on his solvency. But, surely, it is the worst of evidence to call to his commercial character that he has stood out through the whole course of a litigation up to final process, in order to escape paying a demand which the result proves he ought never to have resisted.

Wβ are not sorry that the question is now reduced to so simple an issue. We hope the Minister of Justice may see his way to expunge the proviso from his Act. Should he not do s» it will not be difficult we trust, to find a member of the Lower House supported by the confidence of the mercantile community and competent to raise the question in an effective form. Whether it will best be done by moving an instruction to the committee on the second reading, or by waiting till the House gets into committee, and then moving the necessary amendment on the forty-second clause is a question we may leave for future consideration.