I move that the amendment be agreed to.
PUBLIC BUSINESS. - AGRICULTURAL CREDIT BILL, 1927—FROM THE SEANAD.
The Dáil went into Committee to consider the amendments from the Seanad to the Agricultural Credit Bill.
Amendment 1.—Section 2. After the word "Corporation" in line 28 the word "Limited" inserted.
Question put and agreed to.
Amendment 2.—Section 4, sub-section (1). All from and including the word "and" in line 11 deleted down to the end of the sub-section and the word "Limited," within the inverted commas, substituted therefor.
Mr. HOGAN
I move that the amendment be agreed to.
Question put and agreed to.
Amendment 3.—Section 4. A new sub-section added at the end of the section, as follows:—
(3) A trustee may, unless expressly forbidden by the instrument (if any) creating the trust, invest any trust funds in his hands, whether at the time in a state of investment or not, in any shares of the Corporation which are at the time of the investment fully paid-up as to capital.
Mr. HOGAN
I move that the amendment be agreed to. The capital of the Corporation is to be paid-up, half at one time and the rest on call. Obviously it could not be a trustee security until the capital was fully paid up. It was considered that it would be useful, after the capital had been paid up, to make the investment a trustee investment, and for that purpose the amendment is inserted.
Question put and agreed to.
Amendment 4.—Section 7, sub-section (3). The following words added at the end of the sub-section:—"and (except in the winding-up of the Corporation) shall be so repayable only out of moneys which are profits as ascertained in accordance with directions of the Minister and in the winding-up of the Corporation shall be so repayable after the creditors of the Corporation have been paid in full."
Mr. HOGAN
I move that the amendment be agreed to. As sub-section (3) stands, the Minister could at any time demand repayment of any moneys advanced by him in respect to his guarantee in the matter of share capital, interest or certificates, and the Corporation would have no alternative except to pay that out of, say, deposits or other funds of that sort. That is considered wrong. It was considered that any repayment of moneys should be made out of profits, and that the Minister should not be in any better position than any other creditor. It is to meet that point that the amendment was inserted in the Seanad and agreed to.
Question put and agreed to.
Amendment 5.—Section 11. The section deleted and the following new section substituted therefor:—
11.—The Articles of Association of the Corporation shall provide:—
(i) that the number of directors (including the Chairman) shall be seven, of whom four shall be elected by the shareholders with the usual provisions for co-option to casual vacancies and three shall be nominated by the Minister from time to time as occasion requires.
(ii) that so long as the Minister holds more than two hundred thousand shares of the Corporation the Chairman of the directors shall be nominated from time to time by the Minister from amongst the three directors nominated by him.
Mr. HOGAN
I move that the amendment be agreed to. This amendment sets out that the directors shall be nominated from time to time by the Minister, and in addition the provision for co-option to casual vacancies. There was no provision in the section as it stood for the election of the ordinary directors. This amendment sets out that that matter should be dealt with in the Articles of Association.
Question put and agreed to.
Amendment 6.—Section 12, sub-section (1). Lines 57 and 58 deleted.
Mr. HOGAN
I move that the amendment be agreed to. This is the most important amendment that is being inserted. In connection with this amendment I might deal with another amendment in order to explain it to the Committee. Section 12 gives a list of the persons to whom, and the purposes for which, the Corporation may lend money. It is proposed to add to this list another section, which is set out in amendment 8 from the Seanad, and which reads as follows:—
Section 12, sub-section (1). Before paragraph (e) a new paragraph inserted, as follows:—
(e) to any person (other than a co-operative society) for the purpose of purchasing for agricultural purposes land which was immediately before the purchase comprised in a security held by the Corporation from the vendor of such land.
By amendment 10 from the Seanad it is proposed further to add to the section, and this amendment reads:
Section 12, sub-section (1). Before paragraph (f) a new paragraph inserted, as follows:—
"(f) to any person (other than a co-operative society) for the purpose of paying off a loan which was originally made to him before the passing of this Act wholly or mainly for the purpose of purchasing land for agricultural purposes."
With regard to the first amendment, the Corporation may not lend money to a person for the purchase of land de novo, but under amendment 8 it may lend money to purchase land which is held by the Corporation as a security. The Corporation may make a loan, say, to a creamery, and may hold land as a security for the loan, but they may want to liquidate the security, and it is considered that for the purpose of its ordinary operations, even though it may not make a loan to a person to buy land de novo, it is felt that, nevertheless, the Corporation should be in a position to make a loan to a third party to buy land which the Corporation itself holds as a security, and which the Corporation wishes to sell up. With regard to amendment 10, it is considered that the Corporation should have the right to liquidate a loan already made for the purchase of land, and for that purpose this amendment is introduced.
The view taken in the Seanad on this Bill was that these arrangements should exist, not so much to create new farmers, because that is the work of the Land Commission and of other bodies, but to provide credit facilities for existing farmers, and it was on that principle that these changes were made. It was also pointed out that the report of the Banking Commission was expressly against the lending of money for the purpose of buying farms de novo, and, in the circumstances, while I have no strong views on the matter one way or the other, I am accepting the amendment. I do not think it makes any difference.
The Minister said that the second provision would enable the Corporation to turn a land asset into a liquid asset in order to enable it to lend money to a third party to buy land. If the Corporation get that land back again as a security from the third party who has made the purchase, where is the liquidation?
Mr. HOGAN
Obviously this is to meet a case where the Corporation held land as a security and wants to sell it up, and where it would be unable to sell unless it could make a loan to a third party to purchase the land. This amendment covers that. It reads: "to any person (other than a co-operative society) for the purpose of purchasing, for agricultural purposes, land which was immediately before"—that is to prevent, so far as you can prevent, any wangling between the Corporation and other parties—"the purchase comprised in a security held by the Corporation from the vendor of such land." Obviously, that allows the Corporation to make a loan to a third party to buy land which the Corporation wishes sold and which they hold as security. As I understand from the Deputy, his point is that he is afraid it will also admit of certain cases which are not contemplated. Is that the Deputy's point?
My point is that you are enabling the Corporation to advance money for the purpose of paying off a loan which they have already made. It does not get them any further. It is merely that they are giving money out of one pocket and getting it back into another.
Mr. HOGAN
There are many reasons for selling it, besides the actual value of the security. The bankers want it, anyway.
It does not seem to get you any further.
Mr. HOGAN
Is it not a common every-day occurrence for a banking institution to lend money to a third party in order to buy a security which they hold?
If it was a case of advancing part of the money on sufficient security it would be somewhat different.
Mr. HOGAN
Surely you must leave that to the directors. The directors must see when it is advisable to lend money and how good is the security. I agree that unless you have competent directors it is merely taking the money out of one pocket and putting it into another, but the directors must see to that.
Question put and agreed to.
Amendment 7.—Section 12, sub-section (1). Before the word "designed" in line 8 the word "primarily" inserted.
Mr. HOGAN
I move that the amendment be agreed to. It was considered that this was a very wide section as it stood. The section reads:
"(d) to any person engaged in or proposing to engage in an enterprise designed for the service of farmers."
Personally I am against limitations. I think a certain amount of discretion should be left to the directors, but that limitation to insert the word "primarily" there seems to be right.
Question put and agreed to.
Amendment No. 8.—Section 12, sub-section (1). Before paragraph (e) a new paragraph inserted as follows:—
"(e) to any person (other than a co-operative society) for the purpose of purchasing for agricultural purposes land which was immediately before the purchase comprised in a security held by the Corporation from the vendor of such land."
Mr. HOGAN
I move that the amendment be agreed to. I have already explained this amendment.
Question put and agreed to.
Amendment No. 9.—Section 12, sub-section (1). The words "under this section" deleted in lines 15-16.
Mr. HOGAN
I move that the amendment be agreed to. The words "under this section" have been inserted twice. It is purely a verbal amendment.
Question put and agreed to.
Amendment No. 10.—Section 12, sub-section (1). Before paragraph (f) a new paragraph inserted, as follows:—
"(f) to any person (other than a co-operative society) for the purpose of paying off a loan which was originally made to him before the passing of this Act wholly or mainly for the purpose of purchasing land for agricultural purposes."
Mr. HOGAN
I move that the amendment be agreed to. I have already explained this amendment.
May I take it that this amendment means that any person who has substantial security, and who may have borrowed, or mortgaged his land to the bank, may get a loan for the purpose of paying off the mortgage?
Mr. HOGAN
No, you cannot take that.
May I ask the Minister what is the use of introducing an Agricultural Credit Bill in order to enable the farmers to maintain themselves and their families, if you are not prepared to grant them facilities whereby they will be able to get loans for long terms for the purpose of paying off mortgages already incurred?
Mr. HOGAN
The Deputy is under a misapprehension. I have not got the responsibility for the making of the loan. It will be a matter for the directors. They will observe the ordinary banking canons when they come to make a loan. They will make a loan where they think it is desirable, and where they think it is undesirable they will refuse to make a loan. They will be limited by the terms of the Act, but they will exercise the powers given under the Act in every case where they think it is desirable.
May I take it from the Minister that the Board shall have the power, if they so wish, to grant loans to pay off mortgages?
Mr. HOGAN
Certainly.
Question put and agreed to.
Amendment No. 11.—Section 12, sub-section (3). The words "actually or usually" deleted in lines 66-67.
Mr. HOGAN
I move that the amendment be agreed to. The paragraph to which the amendment refers reads:
Any co-operative society which at the time of the making of the loan or advance carries on the business of selling by retail any goods which are neither actually nor usually ....
These are the words deleted. These words were inserted in order to enable a creamery, say, to deal in foreign butter if it wished and to cover the case of an egg society and so on. They were never quite satisfactory, and it is considered best to delete the words. There is a further amendment, No. 15, which deals with the same matter and which reads as follows:—
"(5) Where the goods sold by a co-operative society are mainly goods produced by that society or its members, any similar goods occasionally sold by such society may, for the purposes of this section, be deemed to have been so produced although in fact produced by and purchased by the society from other persons."
Question put and agreed to.
Section 12, sub-section (3). After the word "society" in line 67 the words "or its members" inserted.
Section 12, sub-section (4). The words "actually nor usually" deleted in line 7.
Section 12, sub-section (4). After the word "or" in line 8 the words "its members or by that" inserted. Section 12. Before sub-section (5) a new sub-section inserted as follows:—
(5) Where the goods sold by a co-operative society are mainly goods produced by that society or its members, any similar goods occasionally sold by such society may for the purposes of this section be deemed to have been so produced although in fact produced by, and purchased by the society from, other persons.
Mr. HOGAN
I move that the amendments be agreed to. They are purely verbal.
Question put and agreed to.
Section 12, sub-section (5). The following words added at the end of the sub-section:—
"but this sub-section shall not apply to or prevent the investment of moneys in the purchase of bills, notes or other negotiable instruments made by the Minister for Finance or by the British Treasury.
Mr. HOGAN
I move that the amendment be agreed to. It was not clear that the Corporation had the right to invest money which it might have in hands temporarily. It was necessary that it should have powers to invest money temporarily as essential or ancillary to its operations. It was, therefore, necessary to insert this amendment.
Why did you put in the end of that amendment?
Mr. HOGAN
Simply because the directors might see a chance of doing a good stroke for the unfortunate Irish farmer and collar a little English money.
I am glad that the Minister realises that the Irish farmer is unfortunate.
Question put and agreed to.
Section 12. A new sub-section added at the end of the section, as follows:—
(6) References in this section to the lending or advancing of money shall not be construed as including the investment of moneys in the purchase of stocks, shares, bonds or debentures quoted on the Stock Exchange in Dublin or on the Stock Exchange in London or the subscription for stocks, shares, bonds or debentures intended to be so quoted.
Mr. HOGAN
I move that the amendment be agreed to. This amendment is for the same purpose. It wants to be made clear that investing in debentures is not lending money within the meaning of that section, otherwise they could not invest in debentures, because they could only lend to persons set out in the section.
Question put and agreed to.
Section 17. The word "books of" deleted in line 22.
Mr. HOGAN
I move that the amendment be agreed to. This is purely verbal.
Question put and agreed to.
Section 19, sub-section (2). Before the word "articles" in line 39 the words "memorandum and" inserted.
Mr. HOGAN
I move that the amendment be agreed to. This is also a verbal amendment.
Question put and agreed to.
Section 23, sub-section (1). After the word "a" in line 51 the word "recognised" inserted.
Section 23, sub-section (1). After the word "or" in line 13 the word "recognised" inserted.
Section 23, sub-section (1). The following words added at the end of the sub-section:—
"the expression ‘recognised bank' means a bank which is for the time being appointed by the Minister to be a recognised bank for the purposes of this Part of this Act."
Mr. HOGAN
I move that the amendments be agreed to. These amendments are verbal. Previously, it was the Minister for Justice who appointed the recognised banks, but as it is felt that they should be appointed by the Minister for Finance that change has been made.
Question put and agreed to.
New Section. Before Section 24 a new section inserted as follows:—
"24.—The Minister may if he so thinks fit on the application of any bank appoint such bank to be a recognised bank for the purposes of this Part of this Act, and whenever the Minister so appoints a bank to be a recognised bank he shall forthwith give to the Minister for Justice notice of such appointment.
Section 24, sub-section (6). After the word "except" in line 62 the word "that" inserted.
Section 24, sub-section (8). Paragraph (f) deleted.
Mr. HOGAN
I move that the amendments be agreed to. The amendment which we have just passed implies that it is the Minister for Finance who is to make the list of appointed banks, but the first of these three amendments which I am now proposing gives him power to do so. Consequently it is necessary to take out paragraph (f) of sub-section (8). The second of these amendments gives power to the Minister for Finance to consult the Minister for Justice in view of the fact that it is the county registrar who will keep the registers, and, consequently, the Minister for Justice must be communicated with.
Question put and agreed to.
New Section. Before Section 28 a new section inserted as follows:—
"28.—(1) It shall be an obligation on every person (hereinafter called the debtor) who seeks from another person (hereinafter called the creditor) the grant or continuance of credit to disclose in writing to the creditor (if required in writing by the creditor so to do) whether there is or is not a chattel mortgage subsisting in respect of any of the debtor's farming stock and the particulars of every (if any) such chattel mortgage.
(2) No creditor shall disclose any information furnished to him by the debtor in pursuance of this section save in so far as such disclosure may be necessary or proper for the purposes of a prosecution under this section or for the institution or conduct of legal proceedings for the recovery of moneys due by the debtor to the creditor.
(3) Every person who shall make in writing a statement in pursuance of this section which is to his knowledge false or misleading in any material respect and every person who shall in contravention of this section disclose any information furnished to him in pursuance of this section shall be guilty of an offence under this section and shall be liable on summary conviction thereof to a penalty not exceeding twenty pounds."
Mr. HOGAN
I move that the amendment be agreed to. I regard this amendment as being an improvement on the Bill. It means that if a person applies for credit, or to continue credit, to another it shall be the right of the other to ask him in writing if he has got a chattel mortgage on his stock, and the reply must be in writing. It is made clear in sub-section (3) that the person need not reply, but if he does he must tell the truth under a penalty not exceeding £20. The request must come in writing, and there is also a penalty for wrongful disclosure. This does not seriously interfere with the secrecy of the chattel mortgage. A request can only be made by the person who is being asked for credit, and it enables a trader to find out whether there is a chattel mortgage, but it does not enable him to go to the Register to find out. It was a little bit harsh that a creditor should have to issue a process to get a decree and lodge it with the sheriff in order to find out whether there was a chattel mortgage.
Question put and agreed to.
New section. Before Section 28 a new section inserted as follows:—
"28.—(1) Whenever a farmer (hereinafter referred to as the intending mortgagor) agrees to make and the Corporation or a recognised bank (hereinafter referred to as the intending mortgagee) agrees to take a chattel mortgage (hereinafter referred to as the proposed chattel mortgage) the intending mortgagor shall furnish to the intending mortgagee a statement in writing stating whether he is or is not then indebted to the Corporation or any recognised bank (hereinafter referred to as the existing creditor) and, if he is so indebted, the name of the existing creditor.
(2) If in such statement the intending mortgagor states that he is so indebted the intending mortgagee shall send by post to the existing creditor a notice in writing stating the intention of the intending mortgagee to take a chattel mortgage from the intending mortgagor, and if either the intending mortgagee fails so to send such notice or the proposed chattel mortgage is made within seven days after the day on which such notice is so sent the proposed chattel mortgage shall be deemed to be fraudulent and void as against the existing creditor.
(3) If a chattel mortgage is made without such statement being furnished by the intending mortgagor to the intending mortgagee and the mortgagor was at the date of such chattel mortgage indebted to the Corporation or a recognised bank such chattel mortgage shall if the intending mortgagor was so indebted to the Corporation and the Corporation is not the mortgagee be deemed to be fraudulent and void as against the Corporation and shall if the intending mortgagor was so indebted to any recognised bank be deemed to be fraudulent and void as against every recognised bank (other than the mortgagee) to which the intending mortgagor was so indebted.
(4) Every person who shall make a statement in writing in pursuance of this section which is to his knowledge false or misleading in any material respect shall be guilty of a misdemeanour and be liable on conviction thereof to a fine not exceeding two hundred pounds, or, at the discretion of the court, to penal servitude for three years or imprisonment for any term not exceeding two years."
Mr. HOGAN
I move that the amendment be agreed to. This is a long amendment, but its length is largely due to the difficulty of drafting, owing to the fact that we are dealing with banks and the Corporation. If they were all banks it might be drafted in one section. It means that if a person applies to the Corporation for a loan and the Corporation propose to take a chattel mortgage on the applicant's chattels, before executing the mortgage they must find out whether the applicant has a loan or does business with another recognised bank. If the applicant admits that he is doing business with or has a loan from another bank, the Corporation must acquaint the other bank of its intention to take a chattel mortgage seven days previously. Similarly other banks must acquaint the Corporation. In other words, it must be mutual.
Will there be any registration of mortgages other than chattel mortgages?
Mr. HOGAN
All mortgages are registered, otherwise they are useless. A chattel mortgage is registered in the registry of chattel mortgages.
There is a distinction between it and the registration of an ordinary mortgage. There is privacy with regard to chattel mortgages?
Mr. HOGAN
That is so.
Question put and agreed to.
Schedule. Paragraph 4. The words "good and sound first mortgages on land" deleted in line 25 and the words "securities (in this Schedule referred to as authorised securities) against which certificates of charge may be issued by the Corporation under or by virtue of paragraphs 1 or 2 of this Schedule" substituted therefor.
Mr. HOGAN
I move that the amendment be agreed to. This is a verbal amendment. It was debated in the Dáil as to whether it was necessary that certificates should be issued not only on the security of good and sound first mortgages on land but against any other securities approved of by the Minister for Finance. It was agreed that unless there were power for the Corporation to issue certificates against securities other than mortgages on land the Corporation would be starved. Consequently we inserted in the Bill sub-section (2). For "good and sound securities" on land the words "authorised securities" are substituted.
Authorised by whom?
Mr. HOGAN
The Minister for Finance.
Question put and agreed to.
Schedule. Paragraph 6. The words "first mortgages" deleted in line 35 and the words "authorised securities" substituted therefor.
Schedule. Paragraph 6. The word "mortgages" deleted in lines 38, 40, 43, 46 and 47 wherever the same occurs and the words "authorised securities" substituted therefor.
Schedule. Paragraph 7. The word "mortgages" deleted in line 65 and the words "authorised securities" substituted therefor.
Schedule. Paragraph 10. The word "mortgages" deleted in lines 12 and 13 and the words "authorised securities" substituted therefor.
Mr. HOGAN
I move that these amendments be agreed to. They are consequential.
Question put and agreed to.
The Dáil went out of Committee. Agreement with the Seanad amendment reported.
Mr. HOGAN
I move that the Dáil agree with the Committee in its report.
Question put and agreed to.
Ordered—That a message be sent to the Seanad accordingly.