MORTGAGORS’ RELIEF ACT.

Evening Star, Issue 21037, 26 February 1932, Page 8

MORTGAGORS’ RELIEF ACT.

“ Experience having shown that the provisions of the Mortgagors’ Relief Act are inadequate to cope with the present conditions, it is proposed to review and extend the existing legislation on this subject.” The quotation is from the Governor-General’s Speech, which set forth the programme for the present emergency session of Parliament. No forecast of the proposed legislation, however, has indicated that it will deal with one .matter which has been exercising no small number of minds. Land mortgagees of farms, who may include very small financiers, many of them women, grouped together in the operations of both public and private lending institutions, are under a disadvantage now in obtaining even partial payment of their interest from impoverished farmers owing to the claims of the holders of stock and chattels securities, who are in a position to assert priority. When the last amendment of the law was foreshadowed, in the Supplementary Budget of October last, the Finance Minister stated: “ The court will also be empowered to authorise a fair distribution between the mortgagor, mortgagee, and the holder of the chattels securities of the proceeds of the farm to .enable the best to be done for all parties, and to ensure that production will be carried on.” This would seem to be a fair and reasonable provision to be made, since, if the land is useless without the stock and implements, the latter are also useless without the land. When the Bill came down, however, land mortgagees were astonished to find that it did not contain any such provision to authorise the court to make the holder of a chattels security share with the land mortgagee the season’s proceeds from a farm. The position legally obtaining at present is that the holder of a chattels security (who may be a stock and station agent or any other person, firm, or company) is quite entitled to retain all the farm proceeds, and until the existing Act is amended there is no authority to make him pay any portion thereof to the mortgagee whose security has been utilised to produce the income. A mortgagor who has given security over his stock and plant does not control his own finance, and any financial obligation into which he qliters may prove to be valueless by the holder of his stock security refusing to fulfil the obligation. Consequently, any arrangement between a mortgagor who has given a chattels security and his mortgagee is non-effective unless the holder of the chattels security voluntarily agrees to become a party to the arrangement. As the Mortgagors’ Relief Act stands at present the court has apparently no direct power to order the holder of a chattels security to account to either a mortgagor or a mortgagee for any proceeds from a mortgaged farm. Divisions are made now in a number of cases, in accordance with the principle which was promised—but only promised —to be incorporated in the Act, generally on the basis of what is known as the Canterbury Chamber of Commerce scheme, which puts both kinds of mortgagee on the some footing in proportion to their respective claims. There certainly appears to be a case that in any fresh amendment of the law the application of this scheme, or at least of the principle which it embodies, should be made compulsory. Unless something of the kind is done the supply of mortgage money to farmers may be discouraged at a later time, irrespective of the circumstances in which it is required, to their injury and that of the whole community.