INVOLVED MORTGAGES

Sun (Auckland), Volume 1, Issue 113, 3 August 1927, Page 9

INVOLVED MORTGAGES

PROBLEM FOR COURT THE SMALLFIELD ESTATE (From Our Own Correspondent.) HAMILTON, Tuesday. Reserved judgment was delivered by Mr. Wyvern Wilson, S.M., to-day in the case where Alexander Hopkirk, farmer, Cambridge; Harry Dunstan Matthews, and Clive Matthews, farmers, Hamilton, and the Bank of New Zealand, sought to recover from Lucy Burbush, wife of Walter Harold Burbush, stock agent, Hamilton, £l5O interest allegedly due under a deed of mortgage. Evidence showed, stated the magistrate, that the late C. R. Smallfield had covenanted by deed of mortgage to pay Matthews Bros. £6,900, with interest at 8 per cent. The mortgagees sub-mortgaged to the Bank of New Zealand for £3,500, and interest, subsequently assigning the mortgage, subject to sub-mortgage, to Alexander Hopkirk for £3,400. On the death of the mortgagor, C. R. Smallfield, probate of the will was granted to the present defendant, who was then Mrs. Smallfield, and sole beneficiary. The present defendant and Alexander Hopkirk executed a reduction of the mortgage, whereby the principal owing was reduced from £6,900 to £3,500, that being effected by Mrs. Burbush paying off £2,600, and. Mr. Hopkirk foregoing £BOO. When that reduction was signed the principal moneys under the mortgage had not fallen due, and the mortgagor was not entitled to pay off instalments of interest. The moneys now claimed were due and unpaid under the mortgage.

It was further admitted that Mrs. Burbush had signed an agreement with Mr. Hopkirk whereby she undertook, in consideration of his consent as mortgagee, to the closing of the road through the property when called upon to execute in his favour a mortgage over such portions, and the closed road, as should become vested in her, such mortgage to be collateral to the mortgage originally given to Matthews Bros.

It was submitted by Mr. Hammond that defendant was in the position of a purchaser or assignee of equity of redemption, and not liable unless she became so by execution of the reduction of the mortgage and the agreement. He contended there had been a new contract between the parties compounded of the original mortgage and the reduction executed by the defendant.

“In this case,” said the magistrate, “the effect of the reduction could only be to decrease the liability on the property. and of the parties then personally liable.” He could not think the reduction of the mortgage imposed any further liability upon the defendant than formerly. The fact that, in consideration of Mrs. Burbush paying £2,600 before its due date, and being conceded £BOO, did not justify the court in interfering in any acceptance by her of liability for the balance of £3,500. With respect to the agreement relating to the closing of the road, plaintiffs could not found their action upon that as an equitable mortgage. Apparently nothing further had been done concerning the closing of the road, nor had the agreement ever been carried into effect. It did not seem to his Worship to create a new contract to accept liability for the principal secured by mortgage, but was merely an agreement to give a collateral mortgage on the happening of a future event. Judgment was given for defendant, with £7 costs. Security for appeal was fixed at £l7 17s 6d.