MORTGAGEE’S RIGHTS

Wairarapa Daily Times, 30 June 1933, Page 5

MORTGAGEE’S RIGHTS

RESISTED BY GUARANTOR. Questions of law removed from the Supreme Court, New Plymouth, to the' Court of Appeal for argument before trial were considered by the Court of Appeal at Wellington yesterday afternoon. The case was one in which £4500 had been lent to a farmer on third mortgage, the .amount being guaranteed by Newton King, Ltd., of New Plymouth. The farmer subsequently .became insolvent, and the mortgagees applied to the guarantors for payment of the money advanced. The claim was resisted on the ground that the act of bankruptcy discharged the mortgagor’s liability to repay, and the case was taken to court. In effect, the Court of Appeal is asked to determine whether the liability of Newton King, Ltd., to pay under the terms of the guarantee has ceased by reason of the mortgagor’s bankruptcy. Legal argument was proceeding when the court adjourned until 10.30 o’clock this morning.

On 31st May, 1927, plaintiffs-, Albert. .James Perrott and Ada Mary Perrott, lent to James Wood, farmer, of Huiroa., the sum of £4500 on a mortgage duly registered, but subject t 6 prior mortgages .to the Public Trustee and 1 ...the State Advances Superintendent. ■ The mortgage was guaranteed by ■ NSwtou King, Ltd'., of New' Plymouth;''by* !: .an agreement dated sth May, 1927. After .the execution of the mortgage, James Wood was adjudicated bankrupt, and the plaintiffs had no longer any power ot right to recover any moneys from him. The whole of the property affected by the mortgage, lias since been sold, the first and second' >m"6r-tgagees exercising their power of sale, and on the sale no surplus arose, for payment of any moneys to the plaintiffs. James Wood obtained anorder of 'discharge from bankruptcy on 17th November, 1931.

The questions of law asked of the court were whether the liability of Newton King, Ltd., under the guarantee •has ceased, and if it has, upon the har>peninfr of what event did such liability cease? • •" , . v - • - . ' , Mr G. P. Finlay, Auckland, with him Mr P. H. Watts, Hamilton, is appearing for plaintiffs, and Mr T. B. Cooke, with him Mr R. H. Quilliam, New Plymouth, for defendant company.