CIVIL SITTINGS.

Otago Witness, Issue 1949, 2 July 1891, Page 11

CIVIL SITTINGS.

Tuesday, June 30. (Before his Honor Me Justice Williams). DOAKH Y. DOAKE. Claim £300, damages fot alleged wrongful exercise of power of sale. Sir Robert Stout; appeared on behalf of the plaintiff, John Doake, of Waip*hi, farmer ; and Mr Solomon on behalf of the defendants, David Doake, of Kelso, labourer, and James Doake, of Graenvale station, near Kelso, station manager. The statement of claim set forth that the plaintiff and defendants are brothers; but in July 1882 the plaintiff was the registered proprietor, under the Land Transfer Act, of an estata in fee simple, free from encumbrances, in a piece of land situated in the Glenkenich district, containing 200 s acres, being section 14, block X, on the map of the district; that on the

28th July 1882 the plaintiff mortgaged his estate aid interest in the land to the defendants for £300, to be repaid on the 25th July 1885, at 7 per cent, interest, with a provision that if default should be made in payment of the principal or interest for the space of 21 days after the date appointed for the payment, and if the plaintiff should become bankrupt or insolvent, it should be lawful for the defendants to exercise the power to sell, and all other powers conferred Upon a mortgagee by the Land Transfer Aot; that by lease, dated the sth August 1882, the plaintiff, with the consent of the defendants, demised the land to one Adam Edgar for 10 years at the yearly rent of £45, with a provision that the lessee might at any time during the term purchase the land, free from encumbrances, for £700, on giving to the plaintiff three months' notice ot his desire to purchase; that the plaintiff did not repay the sum of £300 to the defendants on the 25ch July, 1885, and the defendants, without entering into any agreement with the plaintiff for the renewal of the loan for a definite term, agreed to allow the sum of £300 to remain on the security of the mortgage until they should require the same, and the plaintiff paid interest thereon up to and including the 25th January, 1889 ; that in the month of June, 1889, the defendants, professedly in exercise of the power of sale conferred by the mortgage, sold the land, and the estate and interest of the plaintiff therein, to one William Bremner, jun., for £300, and by transfer, dated the 22nd June, 1889, transferred the land to him for an estate in fee simple, discharged from the mortgage,, but subject to the lease to Adam Edgar. That the sale was fraudulent, collusive, and improper, and the following were the facts on whioh the plaintiff based such allegation:—(a) Before making the said sale the defendants did not make any demand on the plaintiff for the amount due to them under the said mortgage, nor give any notice whatever to the plaintiff of their intention to exercise the eaid power of sale ; (b) the said sale was made privately, and without any competition whatever ; (c) the said piece of land was sold at an \ undervalue, being worth at least from £500 to £600 at the time of such sale ; (d) the defendants received no part of the purchase money from the said William Bremner, but took from him a mortgage over the said piece of land for the whole of the purchase moneys, bearing interest at the rate of 7 per cent, per annum ; (c) the defendants purported to sell the said piece of laud for a default in payment of the principal moneys and interest intended to be secured by the said mortgage, whereas' there was no interest in arrear at the date of the said sale. !

In the statement of defence it was denied that plaintiff paid interest to defendants up to and inclusive of the 25th January 1889, and tbat there was due to the defendants for interest at the time of the sale the sum of £12 14s od. They denied that the sale by them to William Bremner, jun., was fraudulent, but said that it was a bona fide sale by them as mortgagees, in the 1 exercise of their power of sale. They denied that before making the sale they did not make demand on plaintiff for the amount due to them, or give him any notice of their intention to exercise the power of sale, but said that for several years before June 1889, the plaintiff had been absent from the Tapanui district and had gone to Auckland, but that they had given notice to hi* agent, Mr Quin. They admitted that the sale was made privately, but said that shortly before the sale the property had on different occasions been submitted to auction by Mr Quin, who had been unable to sell it. They denied that the land was sold at an undervalue, and said that at the time of the aalo it was worth no more than £300. They denied tbat tuey received no part of the purchase money, and said that they received £25 on account thereof, and that although the mortgage purported to Beoure £300 it in reality only secured £275. They admitted that they purported to sell for the default «w alleged, but denie'l that there was no interest in arrear at the date of the sale, and alleged that at the time of the sale there was due to them as interest the sum of £12 14a 6d.

Sir Robert Stout, in opening the case, said he hoped to be able to show that there had been an exercise by the mortgagees of a power of sale which the court would not permit. The position was that the plaintiff bought the land from Government at £300, er at the rate of 30s per acre. It was then altogether unimproved, but he fenced it all round with a sod and wire fence, put a two-roomed honce on it, broke np about 20 acres, and up to 1882 must have improved it to the extent of £250. After that he borrowed £300 from his brothers in order to pay off the balance of £200 of his purchase money, and £100 he spent in further improvements. He arranged to lease the place to Edgar at £45 per annum, cm condition that he made certain improvements. Edgar coatinued in possession for three years from the Ist September 1882, and during that time erected a four-stalled stable, broke np 40 or 50 acres of the farm, and laid down a portion in grass. At the end of the term, however, Edgai'B rent was

in arrear, and he arranged to give up possession. The plaintiff then kept the place for some months, after whioh he went on a visit to Ireland, leaving Mr Quin to receive his rents and to pay his interest to his brothers, for whom also Mr Quin acted as agent. The place was afterwards let to different parties, the lowest rent at whioh it was let being always sufficient to cover the interest due on the mortgage. The plaintiff never knew that his interest was in arrear, and received no notice of the mortgagees' intention to exercise their power of sale. Tbe defendants took from the new purchaser a fresh mortgage, on the face of which it appeared that the mortgagees lent exactly the same money, at the same interest, on the same farm, and the mortgage was registered on the same day as the transfer was registered. It seemed as if the mortgagees did this not for the purpose of getting back their money, but to destroy the equity of redemption that the plaintiff had in the property. If he could show that the property was sold at an undervalue and without notice, learned counsel snbmitted that the plaintiff was entitled to recover.

John Doake (the plaintiff), Adam Edgar, Francis Wallace Mackenzie (chairman of the Clutha County Council), and Moses Maclean (property tax valuer) gave evidence in support of the plaintiff's case. Mr Solomon submitted that a more hopeless case for a mortgagor had never been brought before the court. It bad been suggested that there was collusion and fraud, but he wonld submit evidence whicb, he bad no doubt, would show that it was utterly ridioulous to suggest anything of the sort. Learned counsel referred to authorities on the question of values, and proceeded to state that when Bremner bought the property it was in a very bad state of repair, and the Doakes told Mr Quin that if he could raise £250 on it they would be willing to lose £50 on the mortgage. Mr Quin put the place up to auction twice, but obtained no bid, and he kept it open for months. He (Mr Quin) tried hard to raise money on the property in Dunedin and Tapanui, but could not get £250 on it. After keeping the property in his hands for 18 months he ultimately disposed of it to Bremner for £300, it being a condition that Bremner should pay £25 down, and that he should try to pay another £25 in cash. Since tbat time the Doakes had been obtaining their interest regularly. There was no collusion whatever between Bremner and tbe Doakes and Quin. The property waß bought in the ordinary way in the ordinary market, and afterwards Bremner's friends told him that he was very foolish to buy the property, as he would never be able to make it pay. If a mortgagee who sold under these circumstances was to be held responsible, then no man would ever become a mortgagee at all. William Quin (auctioneer), William Bremner, James Henderson, James Doake, and David Doake were examined for the defence.

Learned counsel having addressed the court. His Honor said that he was satisfied of this, that if the power of sale had arisen there was not sufficient to show that it had been improperly exercised. His only difficulty was whether there had been such default in payment of principal to justify the exercise of such power. He would take time to consider the question. The court rose at 3.40 p.m.