The daily phoenix. [volume] (Columbia, S.C.) 1865-1878, 1867-04-05
The bankrupt Law and Mortgages.

The BANKRUPT Law and Mortgages.
The commercial editor of the New
Orleans Times refers to point of
paramount Importance to holders of
mortgages on real estate. The ques-
ton is this: Whether, under the
bankrupt Act, in cases of parties
availing themselves of the Act, sur
rendering property which may be
under mortgage, the judge of the
United States court can order oil
mortgages standing against the bank
rupt, or any one petitioning for the
benefit thereof, can order the erasure
of mortgages on the records of the
mortgage Office. The editor says:
'It will be remembered that under
the Act of 1042, or the last national
bankrupt Act, the presiding Judge
could direct the erasure of all mort
cages; that the mortgages merely
could lave privilege on the assets
or proceeds of the property released.
1t will be remembered that the pro-
ceeds of much real estate, sold under
the order of bankruptcy, under that
law, did not command one-fourth or
half the sum for which it was valued
or cost"
The editor then quotes the case of
a Mr.. Thomas Banks, wealthy citi-
zen, who went into court being
forced into bankruptcy-with pro-
perty of real estate valued at 81, $780,
900, which property only realized
S45O,000. The same property is
valued, to- day, at $7,000,OOO or S.
100000.
The New York Times comments on
the article of its New Orleans cotem-
porary, from which we extract:
eff the owner of incumbered pro-
patty becomes bankrupt, and the
whole of his assets pass into the
hands of receiver for the benefit of
the creditors, should the existence of
a mortgage upon the real part of the
estate relieve it from liability to forced
sale? The creditors are entitled to
the entire body of assets, and, to
secure the benefit of all, the power to
anticipate the conditions of mort
gage, and even to direct its erasure,
must rest somewhere. OF this au-
thority, the jadge is the proper Gus
todian.
"On the other hand, the exercise
Of the authority may, in seasons of
business depression or disaster, ope-
rate prejudicially to the rights Of the
mortgage. True, his privilege rs
creditor of the mortgagor might re-
main first charge upon the proceeds
of his estate, into which the available
price of the real property would enter.
But forced sales Of lands or houses,
in the midst of panic, ere not likely
to realize moro than small proper
ton Of their real value. At such q
time, hundreds of dollars buy what
is intrinsically worth-and what may
be actually mortgaged for-thou-
sands. The case cited in the state
ment we have copied, where less than
half million resulted from the sale
Of property valued at millions, is a
fair illustration of the sacrifices that
would follow an unyielding exercise
of the right of Judge in bank
ruptcy to order sale. Of course, as
compared with ordinary creditors,
the mortgagee retains his advantage.
But in the instance supposed, sale
in pursuance of the mortgagor's
bankruptcy, might easily be equiva.
lent to the forfeiture of large part
OF the amount covered by the mort.
gage"
AS this matter will doubtless be o1
interest, at least to some Of our read
ers, we publish the remarks above
for their information.