THE LAW OF BANKRUPTCY.

Mount Ida Chronicle, Volume IV, Issue 250, 19 December 1873, Page 3

THE LAW OF BANKRUPTCY.

, The following article is of value hesides being of local interest. We rejiro - duce from the ' Otago Guardian.' When Mr. T. B. Gillies stated that he was prepared to " abolish debt," he did so with a. purpose; and there can be no doubt the day is coming that will see his idea, in that respect, carried into practice. The abolition of imprisonment for debt is the first step to thnfend. His Bill was rejected last session ; but next year, in all probability, will see imprisonment for debt abolished by statute in New Zealand. At present, the law treats debt as crime, punishable with imprisonment. .But as it 18^ impossible to carry on any kind of business without credit, so it is impossible to get rid of debt. Imprisonment for debt is a relic of a barbarous age, which did not scruple to treat the debtor as a person who had no civil rights unless he could satisfy his creditor; but it is opposed to the humane spirit of this age, and should therefore be abolished. Mr. Gillies, however, goes very much, furj u » in his sweeping proposal to "abolish debt, than simply to repeal the punitive enactments against debtors. His scheme of law reform would involve the abolition of civil process as well, which would have effect of reducing the credit system to the simple { foundation of personal character and solvency, j As we understand the proposition, it is as follows That A, in trusting B with his property, of whatever kind, does it at his own risk, and with, the hope of making a profit out of B. Should B meet his engagements, A pockets the profit,: and ,th«» public C, hear nothing of the matter ; but should B make default,, A goes to C, and demands that G, vvho is no party to the the transaction, should pay the eost of coercing B. to keep faith with This, Mr. ; Gillies holds. to be unjust to the public, who have 110 interest, direct or indirect, in the bargaining of A and B, but who are heavily taxed to maintain Courts of law to adjust their disputes. And we, for our own part;, fail to see -any ov bad, to the objection :■ —an .objection, be it remembered, all the more, remarkable, coming from a barrister who is second to none in the colony in his knowledge of commercial law. Why should the colony be taxed to maintain Courts of law to settle the private disputes of individuals? should colonists be dragged from their private pursuits to sit.on juries, and give days and weeks of valuable time to the adjustment of'private' account's! with which neither they nor the public are concerned ? There is really no reason why such things should be, beyond tiie wholly insufficient one that thft Government assumes functions, in respect of property, which do not properly belong to it. Tf, however, civil process wore abolished, transactions between, individuals would be conducted with much: more care and prudence than they now are. 11l ere would be an end of reckless trading. In iiscriminate credit would not be the rule of business as now, ivlying upon the c.'iip'.-r of accidents, and the help of the Courts, to bring matters square in the end; On the contrary, pood business habits, high moral character, and admitted integrity would in every case be recognised ;—there would not be an end of the credit system, but there would be a commencement of a discriminating system of credit, and.th© result, would be—-fewer 'trarle losses, a higher commercial tone, and more solid progress than is possible undpr a system which handicaps integrity, and taxes the public to make things pleasant for rogues. We are led to make these observations, from reading a report of proceedings in bankruptcy in the ' Mount Ida chronicle,' of the 21st ultimo. The bankrupt was one Kobert Keenan, of Naseby ; and the facts disclosed m the case, tvhile being discreditable, are by no means exceptional. They - have' received greater publicity in this case, and that is all, for otherwise Keerian's bankruptcy differs in no essential point from hundreds of bankruptcies all over the colony. It is the old story of a man starting without capital, and laying out his account to become rich through the intervention of the Bankruptcy- Court. The law made Keenan what he is, as it has made scores, of men dishonest who, but for it, might have remained useful and' respected members of the society in which tliey- moved. There is no proof that up till starting , in as a hotelkeeper and " farmer on credit, lie was other than* reliable ; indeed, the presumption is ialtogether in' his favor. But then he began to tire of the slow process of acquiring wealth which steady application to business involved, and having many examples in his mind's eye, doubtless, Of men who " became capitalists Ky taking the' benefit of the Act, he laid his plans accordingly. Legal assistance is always procurable m such cases ; the District Court is handy, especially if the bulk of the creditors lire at a distance ; and the chances are altog'ether in favor of the bankrupt obtaining his discharge without opposition. But 111. this case the creditors determined to oppose, and Mr. K. H. Leary, Trustee in Bankruptcy, was sent up to Nasebv to conduct the inquiry. It is a fortunate tiling that they did so, for they are likely to recover something out of the estate, which they would not baye got otherwise ; and there is a.chance of the bankrupt being punished by the suspension of his certificate. Judge Grey was also severe in his remarks He Baid "he looked upon the case as a very bad one. If . any creditor attempted to realise, be was told to hunt the slipper amonf the members of the family. Whether the sale to Miss Mungovan was a valid one or not; the case comes under the reputed ownership clause. - Keenan said he was worth £6OO . or £7OO to one creditor, when he was not worth a red penny according to hii own showI may suspend the certficate for three years, and I can also suspend it for twelve months. I will suspend it, there is no quesI may take info consideration such dilligence as he may show in satisfying the trustee. Formerly this suspension depended upon the creditors, who certified satisfaction or otherwise It was then found that a few selfish creditors were in the habit of withholding their names—hoping to make a bargain. Consequently it was now left to the Court. The trustee must furnish a report. That report will be entitled to the highest credit."

As a caution to debtors who may be tempted to act as Eeenan his done, this case may do good ; but there is the other anil more important question,—whether bankruptcy and insolvency laws do not create this class of statutory offenders ; and also, whether the public at large should be taxed to maintain a Court for the sake of enabling Xeenan's creditors ro show how greatly they have been duped. We have a very strong opinion (1) that the Bankruptcy Act is the preut inducing cause of reckless and dishonest trading ; and (2) that it is most, unfair to tax the colony to enable a few persons to complete business transactions, winch they permitted to pas? beyond their control. We wonder .the public submits to such an imposition.,.. We-are convinced that nothing but ignorancn on the part of the public preserves the ou.ubrous, and costly, and at the same time most unneccessavy machinery, of our Courts of law and bankruptcy.