ACTION TO RECOVER £967

Taranaki Daily News, 9 June 1931, Page 2

ACTION TO RECOVER £967

WAS MORTGAGOR RELEASED?

MORTGAGE EXTENSION CLAIMED.

NEW PLYMOUTH HOUSE PROPERTY

The question whether there was an extension of a mortgage for £9OO-and the legal implications involved were considered in the Supreme Court at New Plvmouth yesterday - before Mr. Justice Reed, who reserved his decision on a. claim for £967 2s 6d (moneys allegedly due under a memorandum of inort (r ao‘e) brought by Emma. Claia Cuitis and Minnie Violet. Mac Diarmid against Constance Mabel Le May and Eve Helena Madsen. The right of the plaintiffs to recover was admitted, subject to am affirmative defence that the original mortgagor (Mrs. Le May) had been leleased from liability on the grounds that an extension of the term of the mortgage to a subsequent moitgagoi had been granted without her knowledge or consent. Another proviso by the defendants was that account should be taken of the rents under a weekly tenancy of the property. Certain documents were admitted, ineludino- correspondence, a limited ceitificate of title, a deed or mortgage and a copy of the 1 will of the late Air. Curtis. Mr A. K. North appeared for the plaintiffs and Mr. C. H. Weston for Mrs. Le May. Airs. Ajadsen,. who was joined as,a third party, was not represented. ...... . His Honour remarked that the whole contest seemed to be whether the contract had been varied. In-view of the fact that the defence was affirmative Air. Weston opened. The facts were that on February *3, 1921. the late Air. Curtis sol(l to Alls. Afay a P' ece of land for £lO9O, the purchaser giving back a moitgage ioi His Honour: I assume the properly is not now worth the money? Mr. Weston: Yes. ,f• DETAILS OF TRANSACTION. Counsel said the mortgage was repayable on January 19, 1926, the interest being 6 per cent., payable q ua J’‘ t rly, on January 29, April 29, July and October 29. On Alay 14, 1921, Mrs. Le Alay sold the property to Airs. Madsen, subject to the mortgage. On April 4, 1923, Curtis died and under his will th ‘plaintiffs were appointed trustees. The beneficiaries were Mrs. AlacDiarmid and her brother (H. Curtis), who took an equal share of the whole estate, subject to the widow of Air. Curtis being a life tenant in half the estate. 'Probate was granted to the plaintiffs. On November 17, 1923, Airs. Aladsen sold the property by way of exchange to W- J- B - Hinkley, and he took possession on that date, though the convcyaßce was not Tegfet-ered till ruary 11, 19-4. After January 1, 1926, Hinkley developed the disease that caused his death on September 20, 1926. From the beginning o£ tl,c y ear “P 8 ’ Hinkley had to do his business. She n.ade all payments of interest, under the mortgage to Airs. AlacDiarmid, one of the trustees, who lived not far away. Hinkley entered the New Plymouth hospital on February 1, 1926, and was discharged on March 18. He again became a patient on July 31 and was there till, his death. The mortgage fell due on January •’9, 1926, two days, before Hinkler went fnto hospital. According to the evidence Airs. AlacDiarmid verbally agreed to extend the mortgage three, yeahs. This was done without Airs. Le Alay s knowledge or consent. The extension was acknowledged by Air. R. U. Hughes, solicitor for the plaintiffs, on February 8, 1929, when he wrote two letters, one of which was to Airs. Hinkley and the other to Airs. Le Alay. PROPERTY NOT SALEABLE. Hinkley died without a will and on December 23, 1926, the Public Trustee conveyed the property to the widow. On December 30 a limited certificate oi title was issued. Until July, 1928 (inr’usive), Mrs. Hinkley had paid her interest promptly and no demand of any sort or information of any kind was eriven to the defendant regarding the .mortgage. On October 8, 1928, Airs. Hinkley left New Plymouth for Hamilton, but for some weeks before that she had been endeavouring to sell the nrobertv. In some cases, however, would-be purchasers raised difficulties regarding the short term of the mortaa<re. the extension of which fell due in° January, 1929. Therefore Airs. Hinkley/ when paying her interest on one occasion—probably on September 5, 192S —mentioned the matter to . Mis. AlacDiarmid. Airs. AlacDiarmid said she would discuss the matter of a fuithei extension with her brother at Papakura. On. September 26, 1928, Airs. 'AlacDiarmid gave Airs. Hinkley a letter enclosed for her with one sent him bj his wife. If the first extension were not satisfactorily proved, eaid counsel, then, it was contended, defendant, was released on the second extension. ’ On January 25, 1929, Mr. Hughes wrote Mrs. Hinkley asking her intentions regarding the property payment of interest, and Airs. Hinkley replied on February 3 that she was not able to decide wbat to do. The place was expensive and since her husband’s death she had had. to support her five children. All the interest and insurance had been paid up to the previous October. There seemed no chance of tolling just then. On F^ ruai [.J’/ 19’9, Airs. Le Alay received the Icttei, which was the first intimation she had had from anyone since she sold the property to Mrs. Madsen. Directly the Extension expired on January 29, 19. 6, the trustees acted on the agreement by nuttimr the. matter into, their solicitoi « hands°td approach the original mortgagor and the present owner of the property. This was important because it showed the plaintiffs had acted on the extension and it was only then that they approached Airs. Le Alay took any steps to act on the mortgage. PARTIES’ CONFERENCE. Counsel produced a file of correspondence between Mr. Hughes, his own him, Mrs Hinkley and other parties show-, inm he submitted, that the extension ot the mortgage bad been made and acknowledged. • ’When Airs. AlacDiarmid returned to New Zealand‘from England 6 he saw Mr. Htghcs and told him she d 1 not consider Airs. Le Alay was released from the mortgage upon its extension-, and a formal demand was made c.i Airs. Le -Jay. The defence, said Mr. Weston, made the following live submissions and mipnoi’ted them with authorities: (I) lhe as a novation and rescinded Ihc pet sonal covenant by Airs. Le Alay m the mortgage. If the extension ol that date did not so operate, that o! September ”6 1928, did- (2) The contract was not within the Statute of Frauds. (3) If it was under the statute the lettelb were a sufficient memorandum. (4) 11 they were not a sufficient nienioran-, durn the old covenant was abrogated by the parol contract. (5) ’the dclend-

ant had performed her part of the contract of novation by losing her right to take over the property or to sue Mrs. Madsen for three years. Animus Novendi,, proceeded counsel, was not a thing to'be proved aS a fact, but Was an inference from the facts that were .proved. The he said, was not merely technical, but had merits. But for the extension Mrs. Le May would have had. much better market's for the sale of the property between 1926 and 1929 than later. It was generally known that deflation of values had. been going on for some years. The property was really a shack rebuilt /y Curtis on a rather damp and uninviting site, and it was only saleable in 1921 because of the extraordinary demand for houses then existing. Once that deniaiid for houses was satisfied that class of house was practically unsaleable. v Evidence on the lines indicated was given by Mrs. Alice Eliza Hinkley, who said she had. not known Mrs. Le May in the matter, and by Mrs. Le May. The latter said that at the time she took the property she knew nothing of such matters and believed that on the sale she was, relieved of further liability. i For the defence, Mrs. Mac Diarmid said she and her mother were the trustees in her father’s estate. She hg.d no idea when the mortgage was falling due. She never troubled as long as the interest was paid. She then had no experience of mortgages. She could not remember Mrs. Hinkley seeing her about an extension in 1926. In 1928 Mrs. Hinkley saw her, and writness promised to see her brother. Later she said she was willing to renew for two years. She could not remember any other occasion when a renewal was mentioned. To Dlr. Weston: She first learnt of the legal effect of the extension of a piortgage quite recently, after her return from England. She had felt herself capable of managing her own affairs without a solicitor. She had invested money in shares, but that was her own and not the estate’s. When she saw Mr. Hughes in January, 1929, she was unaware an extension would release Mrs. La May. s. Mrs. Curtis co-trustee, said she Knew nothing about a renewal of Mrs. Le May’s inortgage. It was not h_dis- - with her and she had never agreed to it. Robert Clinton Hughes, ’solicitor, said that ivith the exception of one interview with Mrs. Mac Diarmid on January 25, '1929, the business relating to the mortgage was handled by his nephew, Mr. L. C, Hughes, ivho ( ,was his manager. Mrs. Mac Diarmid had-said nothing to him about, an extension. Leonard Clinton Hughes, solicitor, manager for his uncle, said his first interview with Mrs. Mac Diarmid was on February 5, 1929, when lie received instructions to call up the mortgage. Addressing the court Mr. North submitted this was an attempt to extend Lhe doctrine of novation, and if it were allowed the effects on conveyancing wnuld be revolutionary. Even assuming Airs. Mac Diarmid at the interview in 1926 had expressed willingness to extend the ’mortgage, a legal agreement should not be spelled out of that; otherwise solicitors would have to warn their clients on no account to have preliminary conversations on such matters because of the legal obligations involved. 'lhe other side must first establish that there was an agreement. A discussion cf such a matter, he submitted, could, at most, only amount to an agreement to enter into an agreement and could not have any binding force; it could not amount to a contract or affect a right to call up a.inortgage.

Dlrs. AlacDiarmid was only one of two trustees. Her mother had known nothing about the matter, and anything .Mrs. Mac Diarmid said could not be binding because one trustee could not delegate her responsibility to the other, in matters involving decisions of this kind. Before there could be a novation there must be a valid, enforcable contract in substitution.