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fixed rates of interest is not infrequent, we provide a registry of the particulars of loans, and impose conditions to prevent sham loans. So that if our bill becomes law, the dealings with firms having limited partners will be contracts entered into with the knowledge that such limited partners are not to be responsible beyond their subscribed capital, contracts precisely analogous to the contracts with insurance companies. We all well know that every policy of insurance, whether against loss from fire, or from loss at sea, or for sums payable at death, contains a clause declaring that the stock of the company shall alone be responsible for all claims in the policy, and that no proprietor of the insurance company shall be liable beyond his share in such stock. If every contract of a trading concern was reduced into writing, then an Act of Parliament would not be necessary. Each house would make its own law, and that without the most fastidious moralist raising any imputation of dishonesty or unfairness.”
Mr. Ryland then proceeded to trace our present principle of the unlimited liability of dormant partners from the case of Waugh v. Carver, in 1793, (which case, as observed by Mr. Commissioner Fane, “ was not law but mistaken political economy,") down to the present time, and cited against it the opinions of a numerous array of jurists, judges, political economists, and statesmen, in addition to the Report of a Select Committee of the House of Commons in 1851, and the resolution of the House itself in 1854, and concluded that part of the paper with the following summary of the arguments in favour of the principle of limited liability.
“ The received principle of commercial legislation is to leave people to act for themselves, and not to restrict competition.
“ Private interest is a better guarantee for caution than public superintendence.
“ The interest of a community is best consulted by leaving to its members, as far as possible, the unrestrained and unfettered exercise of their own talents and interest.
Capital without industry is dead, and so is industry without capital. It is the union of the two out of which all wealth arises. It is therefore most impolitic to discourage that union by saying to each accumulator, you shall not risk any portion of your accumulations for the aid of struggling industry or struggling ingenuity, on the terms of sharing the profits, if profits there be, without risking every farthing you have in the world.
“ The principle of limited liability offers encouragement to talent and energy, which, in the absence of such a system, may find less means for their exercise and development. The introduction of the principle would tend not only to the pecuniary benefit of capitalists, but they would combine with it the advancement in life of some relative or friend in whom they have confidence. It would retain at home capital which is now sent abroad, and although this might lessen the value of money, it would increase the value of labour, and thus the public good be promoted.”
As to the registration of firms, Mr. Ryland gave instances where creditors had been set at defiance for the want of some means of discovering the actual members of a firm, and cited the second Report of the Mercantile Commission in favour of the proposed scheme of registration. In a very interesting discussion which followed, the desirability of the registration of firms was taken as too obvious to need argument. It was also generally admitted that the principle on which dormant partners were held liable, viz., that they took a part of the fund on which the creditors relied for payment, was one-sided ; because if there were no profits then every servant and creditor who was paid took a part of the fund, and ought, if the principle were carried out, to be made liable also. Some objections of detail were taken to the bill, particularly as to the clause that the limited partner should refund in case of bankruptcy within twelve months. It was contended that it would be better not to impose any limit of time, which is easily evaded, but to make the liability to refund dependent on the
solvency or insolvency of the business on the retirement of the limited partner.
Closely connected with the subject of allowing persons to take a share of profits in lieu of an exorbitant interest on preferential securities, was a paper read by Mr. C. T. Saunders, (of Birmingham,) on “ The Frauds of which Bills of Sale are the instruments, and the remedy for their prevention.” After an historical review of the statutes and cases relating to transfers of chattels personal, the writer argued that the true and safe doctrine was that implied in Tyne's case, (3 Co. 80,) and expressly laid down by Lord Hardwicke in Ryall v. Rolle, (1 Atkyns, 165,) that all such transfers should be held fraudulent unless accompanied by actual change of possession. The contrary doctrine, that if the continuance of the debtor's possession was consistent with the forms of the deed it was not fraudulent, has been settled ever since Martindale and Booth, 3 B. and Ad. 505, (A.D. 1834,) and the increasing mischiefs arising from bills of sale led, in 1854, to the Act for their registration (17 & 18 Vict.)
The present state of the law the writer, as to conditional bills of sale, stated to be as follows:
“ 1st. As between the assignee under a bill of sale and the other creditors of the debtor: the bill of sale may be made for an entirely antecedent debt, and for the express purpose of stopping a hostile execution. The mortgagor may retain possession of the effects, and a creditor who seeks to levy an execution upon the goods is compelled to withdraw.
“ 2nd. As between the assignee under a bill of sale and the assignees in bankruptcy of the debtor: a bill of sale may be given on the eve of bankruptcy, may comprise the whole of the bankrupt's effects, may secure an old-standing debt accompanied with a present advance, and if possession be taken the day before the bankruptcy takes place, the assignment will be valid in the absence of proved fraud, and the other creditors will lose their dividends. Of course in each case the deed must be registered unless possession be taken within
twenty-one days after the execution, when registration becomes unnecessary.
The various dishonest uses made of such a state of the law were then described, and the writer contended that the Act of 1854 had rather fostered and increased those mischiefs than otherwise. Bills of sale were more frequent than ever.*
The only remedy, he argued, was to be found in a return to the old doctrine laid down by Lord Hardwicke, from whose judgment in Ryall v. Rolle he cited the following passages :
“ It has been said in this cause that great mischief might arise to trade and credit from making securities of this kind void, because it might prevent persons from using their credit in trade, and that they will not be able to make a security without exposing their circumstances to the world, which may hurt their credit. On the other side it has been argued, that a delusive credit is of still more dangerous consequence. I will not say but that some inconvenience may arise on each part, but I will say that very great inconveniences may arise by giving an opportunity to people to make such securities, and yet appear to the world as if they had the ownership of all these goods of which they are in possession, when perhaps they have not one shilling of the property in them; and further I will venture to say that it was the design of the Act of Parliament (13 Eliz.) to prevent this, for the Act was made in the simplicity of former times, long before those large and airy notions of credit prevailed which have since been introduced.”
Owing to the lateness of the hour at which this paper was received, it had not the advantage of being discussed by the meeting, but the general impression was that the writer had not overstated the frauds on creditors of which bills of sale were the instruments.
Mr. Henry Reynolds (of Birmingham) read a short paper upon “ Probate Duty on Leaseholds in Mortgage.”
* The number registered being 7000 in 1856, 7,500 in 1857, 8000 in 1858, 8,500 in 1859, 9000 in 1860, and 9,818 (!) in 1861.
The question discussed was, If a person die possessed of leaseholds (say at the value of £2000) which he has mortgaged for £1,500, must his executor pay probate duty on the whole £2000, or on the net value of his testator's actual interest ? The usual practice has been to pay duty on the whole gross value, without deducting the mortgage, and this practice is founded on the 55 Geo. III., c. 184, s. 38, which enacts “that the estate and effects of the deceased shall be valued” (for the purposes of probate) “ without deducting anything on account of the debts due and owing from the deceased.”* Mr. Reynolds, whilst admitting that a mortgage, if created by the testator himself, was undoubtedly a “ debt owing by him," contended that the “estate” of such a testator in the mortgaged property was only the value of equity of redemption subject to the mortgage, and that any executor might conscientiously make the required affidavit on that ground. He stated that he had pursued that practice for fifteen years, and no objection was taken by the Stamp Office until 1858, when Mr. Timms threatened Exchequer process against one of his clients who had so acted, but upon his submitting his reasons, the objection was waived, and the account was passed, as it had been in several subsequent cases. He also pointed out that this practice was far more beneficial to clients than paying the duty first, and getting a return afterwards on account of debts, for the latter remedy could not be pursued without paying off the mortgage within three years, which was often inconvenient and sometimes impossible. In small cases especially, the cost of getting a return of duty was greater than the sum returned. The discussion which took place ended in a resolution requesting the committee of the association to obtain, if possible, an official decision of the question.
Another paper, not so purely professional in its subject, but containing many valuable suggestions and remarks as to the laws relating to the relief and settlement of the poor, was read by Mr. C. A. Smith, of Greenwich.
As is the custom of Englishmen, the members of the