PAYMENT IN GOLD.

Ashburton Guardian, Volume 54, Issue 190, 25 May 1934, Page 7

PAYMENT IN GOLD.

INTEREST ON MORTGAGES. EXTRAORDINARY LEGAL POINT. An extraordinary legal position lias been disclosed which mortgagees in certain cases, have a right to demand that interest, as well as principal,' shall be paid in gold (says the .Sydney "Sun" of May 11). ~'■',; The Minister of Justice (Mr Martin) has prepared a minute for Cabinet on the subject, and early legislation to abrogate what is known as the gold clause in mortgages is anticipated. In a recent instance a propertyowner on whose land a mortgage of £IO,OOO existed, recently sold the property for £16,000 cash and tendered £lO 000 in Australian notes to pay off the mortgage. The mortgagor, a trustee,'refused the tender, pointing out that the mortgage, contained a clause providing for redemption m S °in the meantime, the purchaser of the property is threatening to sue for specific performance o the contract. The vendor would ha ye no defence to this suit, but to convey the land he would have to pay about £19,000 to clear the mortgage on a gold basis. ■■ o The .validity of the gold c ause was affirmed by a decision of the House of Lords as recently as last December in the case of Societe Intercommunale Beige Mectricite Feist v. The Company (150 Law Times, page 41). The gold clause in this case was similar to that inserted in New South Wales mortgages and the Lords held that the bonds in question had to be paid in gold according to the terms of the contract. /