THE Wellington Independent "NOTHING EXTENUATE; NOR SET DOWN AUGHT IN MALICE." THURSDAY MORNING, 22nd JUNE.

Wellington Independent, Volume XX, Issue 2222, 22 June 1865, Page 2

THE Wellington Independent "NOTHING EXTENUATE; NOR SET DOWN AUGHT IN MALICE." THURSDAY MORNING, 22nd JUNE.

THE WELLINGTON CHAMBER OF COMMERCE ON BANKRUPTCY LAW. To judge from the report of the rather desultory conversation on the subject of bankruptcy law, which took place at the late meeting of the Chamber of Commerce, th© members seem to know little more than that the present Act is bad, and that something else lis needed in its place. Of what nature the reform should be, or in wliat direction it should be made, they are by no means clear, and the eleven queries of the Attorney General appear each to have constituted a problem.. W

difficult of solution to them, as the pons asinorum is to dullard schoolboys. One member judiciously avoided the meeting altogether, but sent a note that he had quite made up his mind to endorse the recommendations of the Lyttelton Chamber, whilo the rest who actually grappled with the matter, expressed themselves in a manner equally vague and diversified. There was an honest desire evinced to satisly the wishes of the Attorney-General, and there was a general agreement that the chief object to bo kept in view was to get as much as possible out of a bankrupt's estate for the creditors, but how this was to be done nobody exactly knew. The Chairman thought the Scotch code should be adopted : Mr Dransfield expressed the general sentiment in saying that the management of bankiupt estates should be left as much as possible in the hands of creditors ; Mr Hunter thought that recourse must sometimes be had to the Courts ; while Mr Pearce was clearly of opinion that the less the law had to do with a purely mercantile transaction, the better. I Mr Pearce likes the Scotch code, and quotes an article from the Economist in its favor. But, indeed, he goes very much further than either the Scotch or any other code, and» adopting the views of a writer in the Economist, argues that the bulk of bankruptcy business is mercantile and financial ; that it is an error to impose on an essentially judicial body essentially administrative duties ; and in short, that he does not see the necessity of having a Court at all. We do not follow Mr Pearce in this. He wants too much of a good thing, and carries an argument, perfectly sound in a limited sense* much further than it will fairly go. Because mercantile men can themselves realise the assets of an estate, ascertain its liabilities, and pay a dividend to the creditors in a quicker and cheaper manner, than can be done by a legal body, it does not follow that there shoidd be no bankruptcy court. By all means let administrative matters be left as much as possible to the creditors, but don't therefore do away with judicial functions altogether. The Scotch code, which the members of the Chamber admire as much as they understand it little, is an excellent one, simply because it do»s what we have suggested. This we shall proceed to show, by a brief explanation of its principles and practice. In Scotland, bankruptcy proceedings take place either in the ordinary Sheriff Court, or before the Lord Ordinary of the Court of Session — in about ninety-five per cent of estates sequestrated, they come under the cognizance of the former tribunal. In the most populous counties, such as Lanarkshire, the chief city of which is Glasgow, the Sheriff, who is always a trained lawyer of experience and ability, presides over the Bankruptcy Court about once a week. The provisions of the Scotch Bankruptcy Act, and the powers and duties of the Sheriff, trustee, and law agent in the sequestration, ■willbebestunderstoodby showing how a bank rupt's estate is dealt with in a suppositions case. Mr Peter Brown, we will say, is a trader in Glasgow whose affairs have become involved, and he therefore resolves before matters get worse to let his estate be sequestrated for the benefit of his creditors. The law provides that in such a case, the bankrupt, with the concurrence of one or more of his creditors, can petition the Sheriff to grant sequestration. On the other hand, should the insolvent trader be unwilling to go into the Court, his creditors can of themselves get him declared bankrupt by the Sheriff. But we have assumed that our suppositious Mr Brown is an honest man, who does not wish to carry on business after becoming hopelessly involved, so the petition emanates from himself and is signed by some of his creditors. The Sheriff immediately grants as a matter of course, and fixes a meeting of the creditors to appoint a trustee and ascertain the position of matters. At this meeting the bankrupt usually j>rescnts a statement of his affairs, whereupon the creditors by vote elect a trustee. This is usually an accountant of some standing, who takes such matters up as a parfc of his business. It is very seldom one of the creditors themselves, becauso the duties of the position are too exceptional and troublesome while the remuneration is too trifling for any merchant to care about having anything to do with either An accountant in good practice will perhaps have a hundred estates tinder his management every year, the aggregate per centage on which amounts to something considerable. The election of the trugtee is made by the creditors, but requires to be confirmed by the Sheriff, who may reject any unsuitable person. The trustee moreover has to find sufficient security for his intromissions with the estate, and has at the close of the proceedings, to give a full statement of what he has done before he receives his own discharge. The trustee having thus been chosen is rested with the full control and management of the estate. He collects debts, sues those who delay to pay, realises property, ascertains the amount of liabilities, and in short, perfoi'ms all the duties of a trader who might wish to wind up his business. Usually, certain factors or commissioners, are elected from the body of creditors to supervise his proceedings, but these have but little to do, as the other checks on the trustee to which we have alluded, are found in practice to secure an honest and energetic performance of his duties. The next step in the sequestration is the examination of the bankrupt before the sheriff sitting as a judge in bankruptcy. This is attended by the bankrupt, the trustee, thesolicitorontheestate,and ' any creditors who may think proper. The bankrupt is examined on oath, and requires to make a full disclosure of the causes which have led to his insolvency, of the exact state of his affairs, and of any prospects he may have of acquiring property by be-

quest or otherwise. Any creditor may also examine him as to any particular transaction. The examination is followed by another meeting of creditors, when the bankrupt can make an offer of composition, or to pay so much per pound sterling as a full satisfaction of his liabilities. If security be given and the creditors, by a certain majority in number and value, agree to accept this offer, a bond is entered into by the bankrupt and his sureties, which is submitted to the Sheriff with a petition for discharge. This latter is then granted, not by the creditors, hut by the Sheriff, and the proceedings are at an end. The bankrupt has once more become solvent, is reinvested iv his property, and may begin the world anew, the only condition being that the composition requires to be paid, and for this of course a sufficient guarantee has been taken. Should no offer of composition be made, then the proceeds of the estate, after deduction of court expenses, law agent's fee 3, extra expenses of realisation and trustee's commission, are in due course distributed amongst the creditors. The bank- ' nipt need not wait so long as this for his discharge, as, at a certain period from the date of sequestration, he can get it whenever a certain majority, in number and value, of his creditors, whose claims have been ranked on the estate, choose to concur in his request. But in this case as well as the other already I mentioned, it is the Sheriff, not the creditors, 1 who grants his discharge. Creditors can however, by refusing to sign the petition, prevent 1 a dishonest bankrupt, receiving a discharge for several yours. One ■■'■it iiin.v is of importance, fllK;-!i is, u;\, .•..''. i'lio.-jo creditors whose claims hare boe:i i-uiked on the estate have any power to vote or act at the meetings. Those who do not send their claims in by a given time, are excluded from participating in whatever may be realised out of the estate. Such are the chief features of the Scotch code, which is admittedly one of the best in the world. It works well, because the practical management of bankrupt estates is left in the hands of the creditors, lender cm efficient system of judicial checks. It would be by no means successful without the latter provision, indeed many abuses would undoubtedly creep iv, and much injustico be done. Mr Peavce approves of the trustee system, but without a Sheriff or Judge, and without satisfactory security being given to the creditors, that intromissions with the funds of the estate will be accounted for, who is to control the trustee ? Mr Pearce " objects to a judicial body performing administrative functions," and has some vague idea of appointing " a central board of merchants ;" but if his plans were put into practice we should have a commercial body, probably as little qualified as the Wellington Chamber, exercising judicial functions. If there is to be control at all, it must be judicial control, and that of course involves the existence of a legal tribunal in bankruptcy. Mr Pearco does not waut a "BariTcniptcy Court, and seems to think that there is none in Scotland. "Wo on the contrary altogether differ with the wish, and deny the assertion. A Bankruptcy Court is i required to this extent, that either a Resident Magistrate or Judge should preside in Bankruptcy proceedings, control the acts of creditors and trustees, protect or punish the debtor, and secure that everything is done according to law. Such a legal official be he Sheriff, Lord Ordinary, Resident Magistrate, or Supreme Court Judge, is absolutely necessary if there is to be a Bankruptcy Code at all, and the latter is certainly much wanted. Mr Pearce's chief blunder has arisen because he only knows a very little about the Scotch Code, and that little is apparently the result of reading an article in an English paper. When the Economist and Mr Pearco say, " that it is wrong to choose a body adapted for deciding legal controversies to be the executive body for transacting mercantile business," we perfectly agree with them. The advantage of the Scotch system is that in it " administrative" and "judicial" functions are kept apart, the former being performed by the creditors and their trustee ; the latter by the Sheriff. Neither Mr Pearce nor his fellow members are aware of this, or indeed of many othor things equally important, and it is there foro to be hoped that before Fen-linft their reply to the Attorn. ■/- Gen era i tin- ■• will mako themselves better acquainted ■■x\\\ Bankruptcy Law in general, and that of Sou: land in particular. It is at present painfully evident that they know little or nothing of either.