, 1874-07-15

the sOlvencY, IN the one case u Inc POI
sonal guarantee, in the other OF the pro-
perty, as far as it's value exceeds the
amount of the loan received Now a per-
son, who was generally known to be liza
BILE as security for sums disproportionate
to his wv means and for parties OF very
doubtful solvency, would in vain make APP
plication for assistance on credit whereas
if the debt, for which he had made himself
responsible, was small in proportion to his
fortune, and the probability of his being
called upon for payment, very remote, the
fact of his liability would have little or no
effect on his trustworthineSs.
If we examine the case, with which we
are concerned, viz. that of an Estate, upon
which a Credit Association holds a mort
gage to the extent of its full value, the ST.
tuation will be found to be similar to that
of the case we have Just considered.
Let us take an Estate worth $4,000,
on which a loan from the Association has
been given to the amount of S25 600.
We have first to state, that, although the
Association holds a lien, that is, a condl-
tional one, on the whole value OF the pro-
perty, it cannot forbid the owner giving
a mortgage next to its own claim all it
can insist upon is, that its right Is not
limited to the one half, and that the Sc
condary mOrtgage-holder will IN case 9fa
collision, have to yield preference. But it
is not the business of the Association, but
of the party himself, who takes the later
mortgage, to Judge, what real value may
attach to the right he acquires, in other
words, whether his secondary mortgage in
the one half of the value will ever come
into actual collision with that of the AS
ISOLATION in the whole value. The whole
question will only have significance in the
event, that a considerable number OF the
properties concerned in the Institution
should be reduced in value to less than
one half value, of what they were apprais-
ed at, or what amounts to the same
thing, that the whole island was ruined, and
that this individual Estate had escaped the
fate of the others 0or without that there
would be no supplementary security for
the Association to fall back UpOn). Now
this event, in which alone there would be
any occasion to have recourse to the pro-
perry for more than the mount OF the
loan, is so improbable, that nobody could
be accused of raShness, if he, in reliance
on that improbability, were to lend a sum,
of let US say $4,000, on mortgage inferior
to the existing one.
We hope, thus to have proved in the
first instance, that there is nothing to
prevent a mortgage from being given,
although the property is already mort
gagged to the Credit-Association nominally
to its full value; secondly, that the later
mortgage in one half of the value may be a
fully substantial one, Notwithstanding that
this value may in a certain sense be
said to be already disposed Of. But it is
further to be remembered, that in men
tioning a loan of Sl2,5O0 we have gone
beyond what it was our business to prove,
viz. that already existing mortgage-claims
may be changed, one part to a bond in
favour of the Credit-A Association, and the
remainder into a mortgage in favour of the
original creditor or creditors, with Sc
cond, third etc priority.
How far it would be necessary or not,
that the posterior mortgage bonds should
expressly mention the unusual right vested
in the bond to the Association, is a ques-
ton, which does not concern our present
object.