MORTGAGORS AND TENANTS

Otago Daily Times, Issue 22137, 15 December 1933, Page 6

MORTGAGORS AND TENANTS

RELIEF LEGISLATION 7 ; MORTGAGES ON STOCK. _____ (From Oub Pasuaubntaet EtPOIXM.) WELLINGTON, December 14. Power for the court to deal with etock mortgages in cases of disagreement by compelling the mortgagor and the mortgagee to enter into a pooling scheme is the principal new feature in the Mortgagors and Tenants’ Relief Bill, a measure consolidating the relief. legislation passed since 1931, which was introduced into the House of Representatives to-day and read a second time pro forma and referred to the Statutes Revision Committee.

Briefly, the clause provides that upon the service on the etock mortgage of a copy of the mortgagor’s application for relief in respect of land, mortgage or stock the mortgagee- shall rule off his account with the mortgagor (referred to as No. 1 account) and shall forthwith open a new account (known as No. 2 account) thereafter all moneys received by the stock mortgagee on account of the mortgagor shall be credited to No. 2 account and held in trust for disposal as provided in the Bill subject to any agreement that may be made between the parties. The following are to be first charge on No. 2 account in priority to other payments (a) current advances made by a etock mortgagee with interest at current rates for farming or living expenses and for the purchase of stock, etc; (b) current interest on No. 1 account at a rate agreed upon by the parties or fixed by the court. The balance in the No. 2 account after the payment of these first charges is to, be applied after the payment of rates and taxes owing in ouch manner as the court thinks fit towards the > payment of the principal and interest owing to the land mortgagors and stock mortgagee, and of any other debts whether secured or unsecured.

A memorandum on the Bill says that it is considered beyond dispute that a stock mortgagee is entitled before any other disbursements are made to recoup himself out of the proceeds for the current year for any advances made by him during the year, and for a able rate of interest on them. It is considered that the stock mortgagee is entitled before anything is paid to the land mortgagee to current interest at H reasonable rate on the No, 1 account or on the value of stock, whichever is the smaller. The argument has been advanced that if the stock mortgagee sold up under his mortgage the mortgagor would have to stock up afresh for which ho would be obliged to pay the ruling rate of interest. Further, it is stated that while the land mortgagee has practically indestructible security the stock mortgagee’s security is hot so safe, arid he runs the risk of losses due to drought, disease, and other mishaps. For these reasons it is regarded as only just and equitable that the stock mortgagee should have prior right to current interest on the value of his security. Another new clause limits the. rights of creditors to proceed with any execution of other process by way of bankruptcy proceedings which would have the effect of vitiating any pooling scheme or other arrangement made for relief. The limitations apply while the application for relief is pending or an .order for relief or pooling scheme is in force. Ohcr new clausen did not affect the basic principle of the Act, but are necessary to correct various anomalies which have been discovered since the last amendment of the original Act. The mortgagor who has received relief Via given power to apply to the court for further relief, but no euch application is to be made after the expiratiorr of the period for which relief hae previously been granted except by leave of the court.