AN IMPORTANT DECISION.

Taranaki Daily News, Volume XLVII, Issue 81855, 2 October 1906, Page 3

AN IMPORTANT DECISION.

TRANSFER OF MORTGAGES.

MORTGAGEE SUB-MORTGAGED MAI NOT TRANSFER.

At the Supreme Court on Sa'urday, Mr Jus.ice Cooper delivered his judgment in the appeal from the decision

or the district Land Registrar in refusing to register a certain transfer «t mortgages. The mortgages were trom different mortgagors over separate parcels of land to David Laing, who had sub-mortgaged the mortgage to Mr Gove t, and Mr Govri' s -üb-mortgage had been du y icgistered. Mr Laing had then transferred the mortgages subject to the submortgage to Mr Gove.t, to George Pott. Thetransfer to MrPott hda been presented for registration, and the District Land Registrar had refused to register it on the ground that D. Laing; having given a sub-moitgage of the same mortgages to C. W. Govett, the latter had by such sub-mort-gage and by virtue of section 94 of the "Land Transfer Aci ISS5'' become the transferee of the mortgages, and the Registrar declined to recog- , niso distinct owneis for die interest. Mr C. W. Govett appeared for the appellant and Mr W. Kerr on behalf of the Registrar. His Honor, after stating the particulars of the case, and the provisions of the Land Transfer Act bearing on it. upheld -lie Registrar s contention, and said :—The position of the parties is that, so long as the sub-mortgage in existence, the original mortgagee is divested of all the powers vested in him under the original mortgage. If default is made by the original mortgagee, and there is also a default by the original mortgagor, the sub-mortga-ge is entitled to realise the mortgaged property, and lie is trustee of the moneys realised by the sa'e, after payment of the amounts due to himself under the sub-mortgage, and of the expenses of the sale —first, to pay to the original mortgagee the difference between the amount due .0 him (the sub-mortgagee) and the amount due by the original mortgagor to the original mortgagee, and to apply any balance in the manner directed bv die third clause of section lot of tiie Act. li the mortgagor, during the existence of the sub-mort-gage, pays off the original morgtagc, Jien the sub-mortgagee has a right to receive ihe amount, and he holds the balance, after payment to himself of the amount due under the submortgage, in trust for the original mortgagee. A transfer by the original mortgagee, who has sub-ni"r-gaged the mortgage, parses, in my opinion, the right to receive from 'he this balance; but, so long a 5 the sub-mortgage is 111 existence, no estate or interest in the i-riginal mortgage, within the meaning of section 'M, can pass by virtue of the transfer. If, however, the 1 transferee performs the conditions f

the sub-mortgage, anc ' I >a s s ' n itrms of the submortgage. the submortgage debt, then the sub-mort-gagee must discharge the sub-mort-gage. Tlv registration of this discharge would wipe out the sub-mort-

gage, and the etfei t then would be that section- S2 and 83 would speak, and tile transfer (f the original mortgage would become effective under the A't, and could be registered, and the estate or interest of the transleror, with all rights, powers, and privileges thereto belonging, upon registration, xvou'd pass to the tratiswmf, the registration of the disof the sub-mortgage having re-vested such estate cr interest in the origin.!: mortgage,-. No instrument c.,r. b' regi-cred under tin- Land '! ransfer Act unles ; ic is one ilic r ! ' gistration of whiih will es t.Lte or interest lecognised under iliat Act. And. as section i) 4 enacts that a -übm'Ttgage is a transfer of the ■ :ate and interest of the original mortgagee in the original mortgage, i' follow that upen legistraiion of tie submortgage no registrable interest is I- it m th ( original moitgagee, and the :iansf,-r. :her'fore, not ■ being of a P'g-t: il,!» int>'r<M. cannot be registei v| - e' 1 * ion 37 of l\' Aet). 1 ani of ( pinion. titer,-foiL-. that I mu-'t uphold the refusal of the . Registrar to register 1 lie transfer in the present case. Uielher the transferee I'.a- the right, to lodge a cav.it is a question upon which 1 express no opinion. lie t ail, to some extent, proteei hi- rights by notice to the sub-mortgag'e, but as the law at pi - -en! sand- he is not entitled to do so | iiv registration. The question is one which ha- neve r b'vn previously decided, and is of considerable imj .rtance, I canno; r'",'' r-i' ih" Re-g;-!:ar-s d'cisiori without disregatd-

' \r\a i\w p'ain "f «MI ,im unabir to nmstrur the li'in Mr uracil rn (l ( l" v.vit.hit'njj it* 'annual f IU ' tj^'parvin.ti from the safe canons "f < r»f a statute. Mr K* rr aur'.r- that th<- »:»' both partes -lia ■ I/' paid Hiit of tin' a*?uranr? tn'l. I ilr.'ivf »ri ' rtl' i iliat i!n- Ke.uMr;ir'- t<» r«-fti c, «T the tr.'in^f< r b<- "t;~ air.' <l. and thai th<' j "f Ihc K-'i;i-frifr- Vvliirh I fix at £j ; , j 'ind th" « nf th'- k tran>f«'r(H\ whi'lt

I fix ;it (ho strno anvmnt. ancl O'urt b l ' p.v.'i nut of th«' Hi- H'<nor thai ir wa* a fair . nil prnji'i in whirh a Full Cm)!*; nibntr *iv>uld !>e obtainvd. Mr Govc:t gave formal notice of appeal,