MORTGAGEES' POSITION

Evening Post, Volume CIV, Issue 19, 22 July 1927, Page 3

MORTGAGEES' POSITION

CASE BEFORE FULL COURT

Aa application for an order defining the rights of mortgagors in unusual circumstances came before the Pull Court to-day. There were on the bench his Honour the Chief Justice (Sir Charles Skerrett), and their Honours Mr. Justice MacGregor and' Mr. Justice Ostler. The statement of facts showed that the plaintiff, Arthur Mortleniau, sheepfarmer, of Makauri, and Eobert James Fleming and Richard Fleming, sheepfarmers, of Matawai, were registered under the Land Transfer Act, 1915 as proprietors in fee simple as tenants in common in equal shares in land in Poverty Bay. They executed in favour of the defendant, the Public -Trustee, a memorandum of mortgage to secure an advance of £6000. By memorandum of transfer the mortgagors transferred the lands to Robert Leonard Gray, electrical engineer, of Christchurch, and Donald Camplin Gray sheep-farmer, of Waiohika, the -purchasers, as tenants in common in equal shares, subject to the previous mortgage. No express covenant for indemnity was set out in the transfer, nor was any implied covenant negatived, ihe purchasers executed a memorandum of extension of term, and the principal sum secured was increased from £0000 to £7500. The variation consented to by the mortgagors, and by Arthur Mortleman as second mortgagee. The Public Trustee paid the advance of £1500 to the credit of the plaintiff's account. The purchasers •made default in payment of the interest secured by the mortgage and the variation, and abandoned the land to the plaintiff. The position of the mortgagors was such that it was believed that only the plaintiff would be able to pay the principal sum of £6000. It was believed that the lands comprised iv tho mortgage could not at the present time be sold except for a sum substantially less than. £6000. The main question raised was, wero the mortgagors upon payment by them to the Public Trustee of the principal sum of £6000 entitled to rank as first mortgagees to the extent of leaving the Public Trustee to rank as second mortgagee to tho extent of £1500? Mr. T. F. Martin appeared for the plaintiff, and Mr. M. Myers, K.C., with him Mr. E. Kennedy, for the defendant. Judgment was reserved.