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BANKRUPTCY account; and a banker will not be allowed to retain any benefit from a payment made in circumstances amounting to privity on his part with the breach of trust (Gray v. Johnston, L. II. 3 H. of L. 1), as where, for instance, the banker has pressed for the payment of an ascertained overdraft on private account and received a cheque on the trust account for that purpose. The mere fact that money standing to the credit of a trust account was transferred to an overdrawn private account on which no balance had been struck, and for the liquidation of which no application had been made, and, being so transferred, wiped out the overdraft, was held in Gray v. Johnston not to show any privity on the part of the banker with the breach of trust, and he retained the money so transferred against the beneficiaries. Authorities.—The Institute of Bankers. Questions on Banking Practice. 5th edit. 1898. Blades, East, and Blades, and Effingham Wilson. —Legal Decisions affecting Bankers, 1900. Same publishers.—J. Douglas Walker. A Treatise on Banking Law, 2nd edit. 1885. Stevens and Sons.—Chalmers. Bills of Exchange, 5thedit. 1896. Stevens and Sons.—Daniel. Negotiable Instruments, 4th edit. 1891. Baker, Yoorhis, and Co., New York. (j. R. P.*) Bankruptcy.—The history of English bankruptcy legislation prior to the year 1869, and the chief features of the Consolidating and Amending Act passed Review of jn tqgq year, are briefly set forth in the article legislation. on “ Bankruptcy ” in the ninth edition of this work. The main object of the Act of 1869 was to remedy abuses which had grown up under previous bankruptcy Acts, the effect of which, to adopt the language of Sir Robert Collier, the then Attorney-General, had been to enable a bankrupt to “ defraud those to whom he was indebted, and to set them at defiance.” Lord Cairns, in introducing the measure in the House of Lords, also expressed the opinion that the large increase which had taken place in the annual insolvency of the country during the preceding years could not “ be attributed to depression in trade, but must be traced to the enormous facilities which are given to debtors who wish to be released from their debts on easy terms.” It is a curious illustration of the difficulties which have attended bankruptcy legislation in England, that the measure which was passed in 1869 to remedy these defects was described twelve years later by Mr Chamberlain, the President of the Board of Trade, in introducing an Amending Bill, as “ the most unsatisfactory and the most unfortunate of the many attempts which had been made to deal with the subject,” and as “ the object of the almost unanimous condemnation of all classes.” This result cannot be regarded as due to any new departure or change of principle in the Act of 1869, which, on the contrary, while it introduced some amendments in the methods of procedure which were apparently well calculated to effect a reform of many of the abuses complained of, followed in the main the lines of the immediately preceding legislation. The failure of the measure was rather the failure of a longcontinued line of policy; and the fact that after half a century’s experience of legislation, directed by the ablest minds in the legal profession, matters had grown worse instead of better, was calculated to cast serious doubts on the soundness of the principles on which the various bankruptcy Acts from 1825 to 1869 had been based. During this period no less than six measures of first-class importance had received the assent of the Legislature, viz. the Acts of 1825, 1831, 1842, 1849, 1861, and 1869, each of which was a practical acknowledgment of the failure of its predecessor; and the last of these, as already stated, was admitted to be the most unsatisfactory in its results. In order to understand the causes of these successive failures, it is necessary to bear in mind the complex character of the con-


siderations which enter into the question. Bankruptcy law was primarily a branch of the criminal law, its object being to punish fraudulent bankrupts, and to compel the surrender of their property for the benefit of creditors, hut without releasing the debtor from his obligations. Subsequent legislation introduced the principle of granting relief to the bankrupt with or without the consent of the creditors, where he conformed to the provisions of the bankruptcy law. But the whole of the procedure was conducted by or under the supervision of the court exercising jurisdiction in bankruptcy. On the other hand, the right of creditors to exercise some control over the realization of the debtor’s property through an assignee chosen by themselves was recognized at an early date, but this right was also exercised subject to the supervision of the court, which investigated the claims of creditors and determined who were entitled to take part in the proceedings. Provision was also made for the interim protection of the debtor’s property by official assignees attached to the court, who took possession until the creditors could be consulted, and under the supervision of the court audited the accounts of the creditor’s assignee. So long as this system continued substantial justice was generally secured ; the claims of creditors were strictly investigated, and only those who clearly proved their right before a competent court were entitled to take part in the proceedings. The bankrupt was released from his obligations, but only after strict inquiries into his conduct, and underr the exercise of judicial discretion. The accounts of assignees w ere also strictly investigated, and the costs of solicitors and other agents were taxed by officers of the court. But the system was found to be cumbrous, to lead to delay, and too often to the absorption of a large part of the estate in costs, over the incurring of which there was a very ineffective control. Hence arose a demand for larger powers on the part of creditors, and the introduction into the bankruptcy procedure of the system of ‘ ‘ arrangements ” between the debtor and his creditors, either for the payment of a composition, or for the liquidation of the estate free from the control of the court. At first these arrangements were carefully guarded. Under the Act 11825 of 1825, a proposal for payment of a composition might ° be adopted only after the debtor had passed his examination in court, and with the consent of nine-tenths in number and value of his creditors assembled at a meeting. Upon such adoption the bankruptcy proceedings were superseded. Dissenting creditors, however, were not bound by the resolution, but could still take action against the debtor’s subsequently acquired property. These powers were not found to be sufficiently elastic, and the Act failed to give public satisfaction. Attempts were made by . the Acts of 1831 and 1842 to remedy the defects com- fjgsi plained of, by a reconstitution of the Bankruptcy Court jg42 and its official system. But these measures also failed, because they were based on the assumption that judicial bodies could exercise effective control over administrative action, a control for which they are naturally unsuited, and which they could only carry out by cumbrous and expensive methods of procedure. Under the Act of 1849 a totally new principle was in- Act troduced by the provision that a deed of arrangement 0f j849 executed by six-sevenths of the creditors for £10 and upwards should be binding upon all the creditors without any proceedings in or supervision by the court. But the determina tion of the question who were or were not creditors was practically left to the debtor himself, without any opportunity for testing by independent investigation the claims of those who signed the deed to control the administration of the estate. It is not difficult to see, in the light of subsequent experience, how well calculated this provision was to encourage fraudulent arrangements, and to introduce laxity in the administration of debtors’ estates. A modification of the too stringent conditions of the Act of 1825, which would have enabled a bankrupt to pay a composition on his debts, with the consent of a large proportion of his bond-Jide creditors, and subject to the approval of the court, after hearing the objections of dissenting creditors, would doubtless have proved a beneficial reform, but the Act of 1849 proceeded on a very different principle. Instead of reforming, it practically abolished judicial control. By avoiding Scylla it fell into Charybdis. To give any majority of creditors the power to release a debtor from all his obligations without full disclosure of his affairs, and without any exercise of judicial discretion or any investigation into the causes of the failure, or the conduct of the debtoj, would in any circumstances have been to introduce a new and mischievous principle into legislation. But to give such a power to creditors whose claims were subject to no independent investigation was to invite inevitable confusion and failure. Yet this was the dominating principle of English bankruptcy legislation for nearly Act thirty-five years. Under the Act of 1861 the evil was Qf 1861 aggravated, by reducing the majority required to make a deed of arrangement binding on all the creditors, to a majority in number and three-fourths in value of those whose claims amounted to £10 and upwards. It was these provisions which, according to the highest judicial authorities, enabled bankrupts