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II. THE LAW OF BANKRUPTCY.

history of the law of Bankruptcy, and the causes which led to its institution and its alteration from time to time might be interesting, but would be of little importance. The general principles are pretty well established, though not perhaps very carefully defined. If any one thinks that they unduly restrict the powers of the creditors, I reply that the only right which any creditor has of seizing the person or property of his debtor is the right which the law confers on him; and as the public good ought to be the main object of the Legislature, no creditor ought to be allowed to possess this power unless it is for the public good that he should possess it. The debt may remain as a moral obligation, but the creditor may have no just claim to the assistance of the State in recovering it. This is the principle of the Statute of Limitations. It does not extinguish the debt after the lapse of a certain time, but it refuses to let the creditor set the law in motion to recover it when this period has elapsed.

The principle is I think acknowledged, that when a man shows by his conduct or his admission that he is unable or unwilling to pay his debts as they become due, the State is justified in laying hold of his property, and in realising it and dividing it on equitable principles among the creditors, instead of leaving each creditor to try to be the first to lay hold of enough of the assets to pay his own debt in full, to the detriment of the others. A scramble, on the principle of "first come first served," is very undesirable, and is also in most instances very wasteful to the estate. The principle of taking possession of the estate and stopping all actions at the suit of individual creditors is a sound one; and, as a rule, an attempt on the part of a particular creditor to obtain an advantage over the others should be regarded, not as a

reason for treating him with special favour on account of his "superior vigilance," but for according him no preference of any kind over the rest.

It sometimes happens that the debtor or his friends, when he is thus driven into a Bankruptcy Court, make an offer to the creditors to pay a composition in full discharge of his debts, the debtor being allowed to carry on the business and retain his assets, instead of having them sold or otherwise realised by the State. If all the creditors accept this offer, they ought under all ordinary circumstances to be permitted to do so; but the present law enables a sufficient majority of them to accept the proposal and render it binding on the dissentient minority. To this course, likewise, I think no objection can be made on principle. But some investigation is often required in order to find out whether the offer is a reasonable one. This investigation should, I apprehend, be made by an officer of the Court to whom this duty was entrusted, and the result of his inquiries should be transmitted to the creditors before any vote on the composition is taken. The debtor should, of course, furnish a sworn list of his creditors, with the amounts due to each, as well as a full statement of his assets-any serious error in either of which might lead to the composition being set aside. The more usual case, however, is a realisation of the estate.

As regards this realisation, the first question which arises is, whether this duty should be entrusted to an officer of the Court or to a person who has been nominated by the creditors (in England by the official receiver, or by a trustee nominated by the creditors at a meeting held for the purpose)? The law on this subject ought, I think, to be elastic. Large estates, as a rule, can be best realised by a trustee under the control of the Court and bound to account to it. Small estates. as a rule, can be best realised by an official. Delay in realising usually costs something. Expense is also incurred in calling meetings of creditors.

Creditors are perhaps put to trouble and inconvenience in attending the meetings and proving their debts, when there is no prospect of a dividend, and debts may at such meetings be admitted too hastily and without proper investigation. In Ireland, though the statute allows the creditors to appoint a trustee, this power is hardly ever acted on. But there the law permits the appointment of a creditors' assignee, in whom the bankrupt's estate is vested jointly with the official assignee, though the money produced by the realisation of the estate is received by the official assignee only. This system, however, has also proved unsatisfactory in dealing with small estates. The realisation of the estate is usually deferred until the official assignee has a creditors' assignee to assist him. This occasions delay and expense; and when the day for appointing a creditors' assignee comes, either no assignee is nominated (in which case the appointment is sometimes adjourned, thus causing further delay and expense), or his debt is so small that he has practically no interest in the matter, and leaves it entirely in the hands of his solicitor. Small estates would, I think, be best realised by an officer of the Court, assisted by an official solicitor where the services of a solicitor are required for there are many cases in which, so far as realisation is concerned, no solicitor is needed. Large estates should, as already suggested, be realised by a trustee under the control of the Court, but the rules for controlling him should not be too strict, and should chiefly aim at preventing delay in realisation and distribution. His account should be audited by some well-qualified person, whether an officer of the Court or of the Board of Trade. Where the official receiver, or official assignee (in Ireland), realises the estate, I think the audit of his accounts should be entrusted to an official of the Board of Trade.

For a speedy and complete realisation of the estate, all persons who had dealings with the bankrupt should be

bound to supply to the person to whom the realisation is entrusted, all proper information as to the estate and the charges on it (the Court dealing with any trouble or expense that he might be put to). Thus a mortgagee should be bound to state (if so required) the particulars of the mortgage and the sum which he claimed as due on foot of it: and any person who had a contract with the bankrupt which had not been completed at the date of the bankruptcy, should be required at once to give notice to the person in whom the estate was vested, so as to enable the latter to decide whether he would proceed with the contract or disclaim it. A solicitor who has a lien for costs on any title deeds, &c., should for a similar reason be required to furnish his bill of costs to the trustee or assignee, and the latter should in all proper cases be permitted to have the costs (or any other bill of costs) taxed without undertaking to pay in full the amount allowed on taxation, which would be usually inconsistent with the Bankruptcy Statutes. With an absconding bankrupt, or one who has filed no statement of affairs, the trustee or assignee has often great difficulty in discovering what the assets are as well as in realising them. He should have every facility for ascertaining this. A solicitor's lien on a deed affords no reason why the trustee should not have a copy of the deed and judge for himself as to its value. The administrator of an insolvent estate should not be required to buy a pig in a bag. A secured creditor has a right to sit on his security, as the phrase is, but this ought not to prevent the trustee from ascertaining all about the security, nor should he be restrained from selling the bankrupt's interest under the security however limited or qualified that interest might be. The bankrupt's interest may be worth something though he has not a good marketable title. And I do not think a secured creditor should be allowed to realise the security without notice to the trustee or official receiver.

So much for the realisation of the estate. Everything possible should be done to render it speedy, complete, and as inexpensive as the circumstances admit of, as well as to have the accounts vouched and the proceeds made available promptly. Next comes the distribution of the assets. The statutes here give a preference to some debts over others, but it is not always easy to ascertain what debts are entitled to this preference. In Ireland for instance, though not in England, Crown debts are deemed preferential, so that telephone rent will in future be a preferential debt in that country. No such distinction as this ought to exist, and as the essential principle of bankruptcy is equality, the list of preferential debts should be made as short as possible. There are, however, a number of other difficult questions which arise on proving debts in bankruptcy, such as the landlord's claim for rent leviable by distress and the preferential creditors' claim against the amount so levied, the claims of secured creditors, and of bill-discounters whose bills represent debts due to bankrupt, claims in respect of future debts, annuities, reversions, breaches of contract, guarantees, etc., including the postponed claim of the bankrupt's wife. The person who is best qualified to realise the estate may know little or nothing of such matters. He will very probably leave them in the hands. of his solicitor who may run up a pretty large bill of costs with very little result. The admission of debts, in my opinion, ought not to be left to the trustee or even to the official receiver. Sittings for proof of debts should be held before an officer of the Court possessing a competent knowledge of bankruptcy law, whose duty should be not merely to decide on objections to proofs, but to see that no debt was admitted that was not proved to his satisfaction-giving the claimant an opportunity of amendment if the claim as originally furnished was defective. This is the ordinary practice in Ireland where the decision