STOCK MORTGAGES AND CROP LIENS.

Otago Witness, Issue 1858, 1 July 1887, Page 7

STOCK MORTGAGES AND CROP LIENS.

An important change in the law relating to bills of sale has been made at the close of the present session by the passing of the Special Chattel Securities and Contracts Bill. By a decision of the Bankruptcy Court in Dunedin, confirmed in the Appeal Court, in the case of M'Cailum v. Reid, it had been decided that a mortgage of stock — and by inference a crop lien — was a security withinthe meaning of the 4th section of " The Chattels Security Act 1883" and the 80th

section of "The Bankruptcy Act 188B"; the practical effect of which was that the consideration received contemporaneously had to be clearly distinguished from any prior payments, and if bankruptcy ensued within six months only contemporaneous advances were protected. We pointed out at the time the hardship this might cause to farmers dealing -with stock agents. The Bill in question now makes mortgages of stock, crop lidns, and wtfol attd oil securities special securities arid exempts them from the above provisions, and applies to all securities now in existence of this nature, except such as may be questioned by proceedings now pending. The provisions of " The Chattel Security Act " 1880" will still apply, which voids any mortgage of stock made within 60 days of bankruptcy unless the consideration be an advance made at the time of making the security, but future advances are protected to one-half the amount of the original advance although made within the 60 days. On the whole we think the amendment} though not without its dangers, will work satisfactorily, and enable stock agents to carry farmers through a time of difficulty with much less risk to themselves. We believe mortgages of stock and crop and wool liens have been much less abused than ordinary bills of sale for purposes of fraudulent preference, and thefarmers and stockholders as a rule are much les3 disposed to take advantage of their creditors than are many traders. We think there is fair reason to hope, therefore, that the change in the law will be beneficial. We write under the belief that the Bill was passed as originally printed, as we are not advised of any amendments.