The Waikato Times With which is Incorporated The Waikato Argus. WEDNESDAY, May 7, 1924. WORD AND BOND.

Waikato Times, Volume 97, Issue 15980, 7 May 1924, Page 4

The Waikato Times With which is Incorporated The Waikato Argus. WEDNESDAY, May 7, 1924. WORD AND BOND.

The reserved judgment delivered at Hamilton by Mr Justice McGregor, and published in the Waikato Times on Monday, on an appeal from the decision of the Magistrate at Tc Aroha, holds a point of very great importance. Briefly re-stated, the case heard by the Magistrate at Te Aroha was a claim by a mortgagee for interest at G per cent, the rate covenanted for in the mortgage, which was contested by the mortgagor, whose defence was that the mortgagee had agreed in writing with him for the future to accept interest at 5 per cent if actually paid. Mr J. H. Salmon, S.M., held that this agreement, being a simple contract, and made without consideration, was not binding on the mortgagee, for whom he gave judgment accordingly. Against this judgment the mortgagor appealed, but the soundness of the Magistrate's law was vindicated by Mr Justice McGregor, who, in the Supreme Court judgment referred to above, found for respondent (the mortgagee)'. In His Honor's judgment the letter agreeing to accept 5 per cent interest instead of G per cent did not amount to a valid contract or agreement, for the lack of the essential element of consideration, and therefore the appeal could not succeed. This result inevitably followed from the strict operation of the doctrine of consideration, as applied to parol contracts. His' Honor added that he might also say with Lord Dunedin: "The effect of this doctrine (of consideration) in the present case is to make it feasible for a person to snap his Angers at a bargain deliberately made." The light thus thrown upon the legal position in regard to such arrangements is of great moment to the Waikato and other parts of New Zealand. It is common knowledge that, owing to the inflated prices paid for land during the "boom" years, when the "slump" arrived later many hundreds of such arrangements were made between mortgagees and mortgagors in reduction of amounts due for interest or principal. It seems', however, thai, in law a mortgagee who has made such concessions, unless as the result of valuable consideration from the mortgagor, may subsequently decide to go back on his' word, expressed or written, and successfully exercise

against the mortgagor the full rights conferred on the mortgagee by the terms of the mortgage. It may be urged that few mortgagees would hold their self-respect so lightly as to break their promises' to mortgagors, made deliberately and intended when made to be binding. The fa ! ct is that if they so desire they can do so, and the law will uphold their action. It may even be that the trustees of a deceased person's estate will be in law bound to demand recission of any such arrangement made, as' mortgagee, by the person whose estate they are administering during his lifetime. In such cases as those referred to the law as it at present stands does' not appear to be in conformity with equity. Mr Justice McGregor, in his judgment, added that it might perhaps be desirable by statute to extend protection to mortgagors, in cases where their mortgagees had agreed to reduction of principal or interest moneys without valuable consideration for their promises. In view of the many distressing cases likely otherwise to arise, we are quite in accord with His Honor's suggestion, and trust that legislation in the direction indicated may figure among the early business for the coming Parlamentary session.