MORTGAGEES5 RIGHTS.

Waikato Times, Volume 109, Issue 18344, 2 June 1931, Page 8

MORTGAGEES 5 RIGHTS.

A CLAIM FOR £3OO. RESERVED JUDGMENT DELIVERED. PLAINTIFF NON-SUITED.

Plaintiff was non-suited in a reserved judgment delivered by i Wyvern Wilson, S.M., In the Hamilton Magistrate’s Court this morning In a claim for £3OO brought by F ■Baker Ltd., motor importers, Coliingwood Street, against 11. Zimmerman, farmer, of Mapiu, near Te Kuiti. The action was one for moneys allegedlj due by defendant to plaintiff under an instrument by way of security over three motor vehicles, the property of defendant. , It was admitted that the plaintiff seized and sold the three motor vehicles which were subject to the security. The sale was by auction and the plaintiff bought in twm of the vehicles for sums aggregating £55 and the third vehicle was sold to one, Thomas, for £ll. His Worship was satisfied that the advertising and other steps leading up to the holding of the auction were Ibona fide and not unreasonable and that the defendant was not in any way prejudiced by l the irregularity between the terms of advertisement and the conditions of sale. The principal ground of defence was one on which there did not appear to (be any direct authority. It was contended that plaintiff could not sell to himself except through the intervention of the Registrar of the Supreme Court and that consequently there had been no sale of the chattels and that until there had been a completed sale the balance, (if any) due by defendant to plaintiff could not be ascertained or recovered. Plaintiff’s Only Rights. The debt was due and payable before the instrument toy way of security was entered into and by that instrument further credit was given in terms of the security, the debt being made payable by instalments. No provision was made that the whole amount should become payable if default was made in payment of one instalment. The plaintiff’s only rights on default being made, were to either sue for tho instalment under the covenant in the instrument or to seize the chattels and realise them towards liquidation of the whole secured debt and then claim the balance as an unsecured debt. The plaintiff had elected to take the latter alternative. The plaintiff contended that he had exercised his power of sale in'accordance with the seventh paragraph of the fourth schedule to the Chattels Transfer Act, 1924, by selling the vehicles .by auction and that at such auction he had purchased two of the vehicles himsflf and sold the third to someone else and had thereby completed the exercise of the statutory powers. The costs of seizure and sale were not disputed. The question for the decision of the Court, was, said His Wo|rshii|p, “Can a mortgagee of chattels, when exercising his power of sale by auction, be a bidder and become the purchaser of the chattels, or if he was to - become the purchaser must he adopt the procedure laid down by the Property Act, 1908, and Incorporated in the Chattels Transfer Act, 1924, and sell the chattels through the intervention of the Registrar of the Supreme CourtPrinciple of Equity. A distinction formerly existed between the rights of a mortgagee of lands and those of a mortgagee of chattels. The former had the power to foreclose with no power of sale unless conferred by covenant. The latter had at common law a power of sale analogous to the power of sale of a pledge. The matter was now of importance as both had now statutory powers. The principle of equity was that a mortgagee may not sell to himself and His Worship did not think the spirit of that principle had been departed from in the Property Law Act, 1908, and the Chattels Transfer Act, 1924. In the schedule to each of those acts were powers of sale deemed by the Acts to be implied in all mortgages and instruments by way of security. He authorised exercise of the power of sale either by private contract or by public auction and then followed the words which caused the difficulty in Interpretation “with power to allow time for payment of purchase money, or to buy in the said chattels or any part thereof at such auction and to rescind or vary the terms of any contract or sale and to resell without being answerable for any loss or expense occasioned thereby." Ilis Worship was of opinion that the only way in which the grantee of an instrument by way of security could himself obtain the ownership of chattels subject to his security was by a sale conducted by the Registrar of the Supreme Court under the powers oonferred upon him by Section 48 of the Chattels Transfer Act, 1924. The use of the words “if any" in that section showed that tho legislature contemplated the section being applicable to sales where there was no collateral security over land. No Conflict Apparent. There did not appear to be any oonfiict between the procedure under Section 48 and that implied in the fourth schedule. His Worship took the view of the power “to buy in" in the schedule was that it did not affect any transference of the property in the goods. Similarly under the Property Law Act, if a mortgagee of land bought in at an auction arranged by himself and not through the Registrar, he would acquire no liLle to the land- To buy in at auction meant something quite different from “to become the purchaser.” He thought the phrase was intended to relate closely to the following sentences and that it only protected the grantee should he not be prepared to let the chattels go at the bid offered. He might in such case buy in and resell without being answerable for loss. Until he did resell he had not completed the exercise of his power of sale and he still held the chattels as a trustee. .To assign such meaning to the words “buy in" did no violenoe ito their grammatical use and it seemed to him that the interpretation most in accord with the purport of the enactment was the definition of “buy in" in Funck and Wagnalls’ dictionary, "lo buy for ttic owner, as at auction when the bids are too low.” On Ihc form in which this action went to trial His Worship thought that plaintiff must be non-suiled, Ihc plaintiff having failed to prove- the allegation that tlie chattels had been sold at-auction for £O6 and that a balance of £3OO was owing. It might, be, however, lie added, that the company rr-nn tinned in next column.).

still had a remedy by appropriate auction in another form In which different issues of fact and law could be tried. Security for appeal was fixed *4 £ 15.