Special Message to the Congress on Reform of Judicial Procedure.

To the Senate and House of Representatives:

On previous occasions I have called the attention of the Congress to the necessity of strengthening and making certain changes in our judicial and law-enforcement machinery. Since then substantial progress has been made both through improved methods of administration and additional legislation. However, there is room for further improvement. With this in mind, in my annual message on the state of the Union, I stated that I would address the Congress at a later date on important matters of reform in organization and procedure of criminal law enforcement and the practices of the Federal courts. The subjects are of highly technical character. They have been exhaustively examined by the Department of Justice, the Commission on Law Enforcement, and recommendations have been made over many years by various bar associations of the country.

CONGESTION IN THE COURTS

Improvement has been shown during the past three years through steps taken under direction of the Attorney General in more efficient organization of enforcement agencies through congressional action in concentration of the responsibilities in the Department of Justice and through the prison reform laws passed by the Congress. Yet despite every effort there is still undue congestion in the courts in a number of districts.

The following statistics indicate this congestion as well as the progress made:

In private litigation in the Federal courts in the last 5 years there has been no large increase in the number of cases commenced, but the courts have not been able to reduce the number of such cases pending and awaiting trial.

The number of Government civil cases begun in 1928 was 20,695, increasing each year until in 1931 the total was 25,332. Cases terminated during this period show that the judicial department has kept pace with the increase but has been unable to reduce the congestion.

The number of bankruptcy cases begun has increased from 53,000 in 1928 to 65,000 in 1931, with a steady increase in the number of cases undisposed of at the end of each year.

Criminal cases commenced have increased from 1928 to 1931, but the number pending shows a decrease from 30,400 at the end of 1928 to 27,900 at the end of 1931. In 1931 alone 4,000 more criminal cases were disposed of than commenced, showing a definite gain in this field. There has also been a steady improvement in the quality of the work of the prosecuting agencies. Despite an increase in the volume of criminal cases begun, there has been a steady reduction in the number left pending each year. The results attained show a greater percentage of convictions and a lower ratio of dismissals and acquittals. In 1928, 78.3 per cent of criminal cases terminated were by verdict and plea of guilty, while in 1931 this ratio had increased to 84.2 per cent. In 1928, 21.7 per cent of criminal cases were terminated by dismissal or acquittal, while in 1931 this figure had fallen to 15.8 per cent.

Final results of the more effective work of the Federal agencies for enforcement of criminal laws are evidenced by increase of prisoners. The number of Federal convicts in prison institutions and on parole increased from 19,110 at the end of 1928 to 27,871 on June 30, 1931. During the same period the number on probation increased from 3,500 to 12,000. The total number of Federal convicts under some form of restraint was 39,900 on June 30, 1931, as compared with 22,600 on June 30, 1928. The recent reorganization of the parole and probation systems not only has produced a humane result, but has relieved an otherwise impossible prison congestion. These gains in effectiveness have been the result mainly of improvement in personnel, of administrative effort and reorganization, and not of reforms in judicial procedure.

I commend to the attention of the Congress the recommendations of the Judicial Conference on the subject of increased personnel. Relief should be granted in those districts where private litigants are suffering from delay, where civil and criminal dockets are seriously congested, and additional judges are needed.

REFORM IN CRIMINAL PROCEDURE

The extent of crime is and must be a subject of increasing concern to the Government and to every well-disposed citizen. This increase is by no means confined to the violation of new criminal laws.

Some part of all crime is due to confidence of criminals in the delays of the law and to their ability to avoid conviction and to delay penalties by misuse of the procedure and provisions of the law intended to assure fair trial. This is more manifest in procedure in the courts of some States than in the Federal courts. Yet important reforms in the Federal establishment and in the Federal procedure are needed and must be undertaken. Aside from its direct result, the indirect result of high standards in the Federal courts is of nation-wide influence.

CRIMINAL APPEALS

The present procedure in criminal appeals to the United States circuit courts of appeal and the procedure in the United States district courts, in preparation for appeals after verdicts of guilty, lend themselves to delay and unnecessary expense. With the granting of bail and the stay of execution of the sentence, the convicted person loses all incentive to expedite his appeal. No small part of the general criticism of the delay in criminal cases rises from the delays in the preparation and hearing of appeals after verdicts of guilty, and a reform in these Particulars would be a long step in advance.

Respect for the law and the effect of convictions as a deterrent to crime are diminished if convicted persons are observed by their fellow citizens to be at large for long periods pending appeal. All steps subsequent to verdicts of guilty are involved in these processes. A statutory code of procedure on this subject would not be sufficiently flexible. I suggest that the Supreme Court of the United States be authorized to prescribe uniform rules of practice and procedure in criminal cases for all proceedings after verdicts in the district courts, and for the circuit courts of appeal, including the courts of the District of Columbia. The success of the Supreme Court in the prompt disposition of criminal cases brought before it gives confidence that it will deal effectively with this subject. The objection heretofore advanced to authorizing the Supreme Court to establish uniform rules of procedure in civil cases, that such rules would destroy the conformity between practice in State and Federal courts, has no validity against the proposal for uniform procedure in criminal cases, in which no conformity exists.

WAIVER OF INDICTMENTS

Legislation should be enacted to permit an accused person to waive the requirement of indictment by grand jury. Where the accused admits his guilt, preliminary hearings and grand-jury proceedings are not necessary for his protection, they cause unnecessary expense and delay. In such cases the law should permit immediate plea and sentence upon the filing of an information. That would allow the accused to begin immediate service of his sentence without languishing in jail to await action of a grand jury, and would reduce the expense of maintenance of prisoners, lessen the work of prosecutors, and tend to speed up disposition of criminal cases.

INVALIDITY OF INDICTMENTS THROUGH THE DISQUALIFICATION OF GRAND JURORS

There have been many instances, some recently in the Supreme Court of the District of Columbia, where indictments, returned after long and expensive hearings, have been invalidated by the discovery of the presence on the grand jury of a single ineligible juror. By law applicable to the United States district courts, including the Supreme Court of the District of Columbia, it should be provided that if not less than 12 eligible grand jurors vote for an indictment it shall not be invalidated because of the presence of ineligible jurors. Legislation should be enacted limiting the time for making motions to quash indictments because of disqualifications of grand jurors.

All the foregoing proposals relating to criminal procedure should be made applicable to the Supreme Court of the District. In addition, the statutes in force in the District respecting the qualifications of grand and petit jurymen and their selection should be thoroughly examined and overhauled. Grounds of ineligibility now exist which do not affect the availability or impartiality of jurymen.

The system now in operation in the District for preparing lists of persons qualified for jury service requires improvement.

JUVENILE DELINQUENTS

Each year many juveniles charged with violation of law fall into the custody of the Federal authorities. In the interest of child welfare there should be legislation enabling the Attorney General to forego prosecution of children in the Federal courts and to return them to State authorities to be dealt with by juvenile courts and other State agencies equipped to deal with juvenile delinquents.

JURISDICTION BASED ON DIVERSITY OF CITIZENSHIP

The Constitution provides that the judicial power of the Federal courts shall extend to cases between citizens of different States and the Judiciary Acts have provided for the exercise of this jurisdiction. In its application, the courts have determined that a corporation shall be deemed a citizen of the State under whose law it is organized. Cases involving corporations, with jurisdiction based on diversity of citizenship, form a substantial part of the business of the Federal courts. Legislation heretofore has been proposed to abolish entirely the jurisdiction of the Federal courts based on diversity of citizenship. I do not approve of such a measure.

The reasons which induced the constitutional grant to the Federal courts of jurisdiction over cases between citizens of different States still exist. To abolish that jurisdiction entirely would work to the detriment of those States which look to outside capital for the development' of their business and commerce. As applied to special types of cases, however, affecting corporations, the present law allows the Federal courts to exercise jurisdiction because of diversity of citizenship, in cases not within the real purpose and spirit of the constitutional provision referred to.

I recommend the consideration by the Congress of a measure to modify this jurisdiction to a limited extent by providing that where a corporation, organized under the laws of one State, carries on business in another State it shall be treated as a citizen of the State wherein it carries on business as respects suits brought within that State between it and the residents thereof and arising out of the business carried on in such State. Such a change in the law would keep out of the Federal courts cases which do not really belong there and reduce the burdens of the Federal courts without impairing in any degree the diversity of citizenship jurisdiction which the framers of the Constitution had in mind.

PROHIBITION LAW IN THE DISTRICT OF COLUMBIA

I have hitherto recommended legislation effectively to supplement the prohibition law for the District of Columbia. The Attorney General has made recommendations as to the character of such legislation before the committees of the Congress. I again urge favorable action.

BANKRUPTCY

The Federal Government is charged under the Constitution with the responsibility of providing the country with an adequate system for the administration of bankrupt estates. The importance of such a system to the business life of the community is apparent. The number of cases in bankruptcy has steadily increased from 23,000 in the fiscal year 1921 to 53,000 in 1928 and to 65,000 in 1931. The liabilities involved have increased from $171,000,000 in 1921 to 5830,000,000 in 1928 and to $1,008,000,000 in 1931, and the losses to creditors have increased from $144,000,000 in 1921 to $740,000,000 in 1928 and to $911,000,000 in 1931. The increases are therefore obviously not due to the economic situation, but to deeper causes.

A sound bankruptcy system should operate--

First, to relieve honest but unfortunate debtors of an overwhelming burden of debt;

Second, to effect a prompt and economical liquidation and distribution of insolvent estates; and

Third, to discourage fraud and needless waste of assets by withholding relief from debtors in proper cases.

For some time the prevailing opinion has been that our present bankruptcy act has failed in its purpose and needs thorough revision. During the past year the Department of Justice, with my approval, has conducted an investigation into the administration of bankrupt estates in the Federal courts. Nation-wide in its scope, the inquiry has involved intensive study of the practical operation of the bankruptcy act under varying local conditions throughout the United States. Court records and special reports of referees have been analyzed. Organizations of business men and lawyers have assisted in gathering information not available through official channels. Judges, prosecuting officers, referees, merchants, bankers, and others have made available their experience. Data gathered by the Department of Commerce relating to causes of failure and the effect of bad debts upon business has been studied. The history of bankruptcy legislation and administration in this country, and in Great Britain, Canada, and other countries, has been reviewed.

The inquiry has now been completed. Its result is embodied in a report which is transmitted herewith for the consideration of the Congress. Thorough and exhaustive in detail, it presents the information necessary to enable the Congress to determine the faults in the present law and to devise their cure.

The present bankruptcy act is defective in that it holds out every inducement for waste of assets long after business failure has become inevitable. It permits exploitation of its own process and wasteful administration by those who are neither truly representative of the creditor nor the bankrupt.

Except in rare cases it results in the grant of a full discharge of all debts without sufficient inquiry as to the conduct of the bankrupt or of the causes of failure. It discharges from their debts large numbers of persons who might have paid without hardship had the law discriminated between those overwhelmed by misfortune and those needing only temporary relief and the opportunity to deal fairly with their creditors.

The bankruptcy act should be amended to provide remedial processes in voluntary proceedings under which debtors, unable to pay their debts in due course, may have the protection of the court without being adjudged bankrupt, for the purpose of composing or extending the maturity of their debts, of amortizing the payment of their debts out of future earnings, of procuring the liquidation of their property under voluntary assignment to a trustee; or, in the case of corporations, for the purpose of reorganization.

The act should be amended to require the examination of every bankrupt by a responsible official and a full disclosure of the cause of his failure and of his conduct in connection therewith for the consideration of the court in determining whether he should have his discharge.

The discretion of the courts in granting or refusing discharges should be broadened, and they should be authorized to postpone discharges for a time and require bankrupts, during the period of suspension, to make some satisfaction out of after-acquired property as a condition to the granting of a full discharge.

The choice of the liquidating personnel should be limited to competent individuals or organizations after careful consideration by the courts of their qualifications and ability to maintain an efficient and permanent staff for the conduct of the business. Compensation for such services should be upon a scale which will attract trained business organizations. Competent officials should be continuously charged with the observance of the administration of the law and with the duty to suggest to the courts and to Congress methods for its improvement. The present statute is susceptible of improvement to eliminate delay in its cumbersome processes, much of which results from a confusion of judicial and business functions.

The inquiry has not stopped with the collection of information and an expression of general conclusions. Its results have been embodied by the Attorney General in a bill for revision of the present bankruptcy act in order to present the proposals in concrete form.

I earnestly commend them to your consideration.

CONCLUSIONS

Reform in judicial procedure is, for many reasons, a slow process. It is not to be brought about by any single measure. It can best be accomplished by dealing with the subject step by step, the sum of which, in the course of time, will result in definite improvement. Taken together, the proposals above outlined offer an opportunity for substantial improvement in the administration of justice. They tend to decrease the burden on the Public Treasury and upon litigants. None of them requires consequential increase in expenditures. They would reduce crime.

In concluding, may I not say that important as these recommendations are we must all keep before us the thought that effective administration of the law in a Republic requires not only adequate and proper machinery, honest and capable officials, but above all a citizenry imbued with a spirit of respect for law.

HERBERT HOOVER

The White House.