Mr. J..K, Choy's Explanation To the Editor of the "Nonru-Cumna Daty News"
'Sum—We thank you for your comment on the subject of mortgages which appeared in your Leader of November 23rd, and appreciate th: interest evinced on a question which at once peculiar and unique in the' City of Shanghai. In order to clarity the points underlying the proposals for reform, we wish to dwell on some aspects of the complicated and defective land system which justify our proposed scheme for the foreclosure of mortgages.
Let us take the familiar Consular Title Deed for instance. Essentially, a consular title deed is a deed registered Ina consulate in the name of a foreigner, who holds the land in many cases In trust for a beneflclary owner, who is given the title deed besides the declaration of trust cly the registered owner, This is a very extraordinary case which can be found only in China. Cases have occurred where land title changes hands through the issuance of a new deed to a new owner upon applica~ tion by the registered owner without the cognizance of the old owner, and where the court invariably rules that the original owner still retains the legal title and that the subsequent owner is merely a trespasser in the land of the original owner.
Again, cases abound where the reg {istered owners have failed to keep track of the whereabouts and addresses of the beneficiary owners and have no means of communicating with them. Consequently registered owners in many instances have been bearing the burden of taxation intended for the beneficiary owners.
The best land system is the Tor-ens System, and even in this System. court procedure concerning the foreclosure of mortgages is not eliminated. In the Torrens System, as practised in the United States, all transactions, such as leases, and liens must be recorded in. the certificate of title. The title deeds are guaranteed by the government and every transfer of deeds must be authorized by an authorized gent. A mortgage is generally prepared by an attorney for the mort-Engee, and the mortgagor must fexecule it before a notary public undertaking to comply with the terms fand conditions of the mortgagee. In the event of the mortgagor failing to comply with the conditions in the mortgage, the mortgagee may at one: take legal steps to foreclose the mortgage. A petition to the Land Court may be sent by the mortgagee for the foreclosure, and after a cer-lain period of grace, usually about }30 days, as provided by law the mortgage may be sold by auction. A. system as such is simple, and contains many commendable points that} may. be used as reference In our efforts for the reform of our Land system.
We realize that the land situation in Shanghai needs a thorough study from all angles. We feel that it is only through the ce-operation of all the parties concerned such as the press, the Land Associations, Realty Companies, Consular—Registration 'OMces, legal practioners, "bankers and other experts that Shanghai could effect some fundamental reform on land. We shall welcome all constructive suggestions that may. be conducive to the solution of this great. problem.
J. K. Cuoy.
Commissioner of Land, Shanghai, Nov. 26.
The relation between the registered owner and the beneficiary owner has been found most unsatisfactory. 'There are many cases in which the beneflelary owner furnishes only specimen chop in the record of the istered owner instead of a speci-en signature in addition, of, for people who cannot write,' a finger print for Indentifieation. Due to this Inadequate record and the lack of other detailed informations about the beneficiary owner, and also to the ignorance of legal procedures and practices on the part of the general public, many unscrupulous parties have secured tle deeds, trustee' ertifeates and even the chops of Jawtul owners by illegal means, and obtained Joans on mortgages. The lenders of such money may be acting in good faith, but legally they ceive no protection for the money ent on stolen property.
In view of the complicated nature of the land problem and the defects as aforesaid, the registration of mortgages with the Land Bureau is the only effective measure of affording legal protection to both parties, the mortgagor and the mortgagee. The procedure of registration requires the careful scrutiny of the title deeds and all relevant tacts relating to ownership; hence the acceptance of the deeds for registration bespeaks the legality of their possess or. Makers of loans on registered mortgages may feel assured that they are dealing with legal title owners, and unscrupulous persons will find more dimeult to exploit the unprotected, lawful owners. The proce dure, therefore, is a necessary one for the protection of the public.
For the equitable protection of both the interests of the mortgagor and mortgagee, the court must be the final authority for the redress of grievances. On this question, a contrary view also seems to have been shared by a very prominent financier who, in his letter addressed to the undersigned, remarked that "so long appeals can be made to the courts, there are obvious possibilities of obstruction" But in view of the peculiar and extraordinary land situation in Shanghai, we fail to find adequate reasons for abolishing final appeals to courts. By our register tion methods the cases for appeal would be lessened, if not eliminated, since many of the existing detec's and abuses will be removed. Before the establishment of the Land Tri burial according to the Land Laws, the Special District Court wilt only. handle provisionally special cases re~ Sarding mortgages that cannot be. Adjusted administratively "under the registration system.
The provision requiring the mort-age to furnish a guarantee as a condition for a sale by auction is for disputed cases as the above for the protection of the true legal owners, but in practice the Land Commis. sioner. will seldom exercise such ower unless he. is absolutely certain that the mortgagee has 100 per cent. legal evidences in his favour.
Text read from the printed page and cleaned; old type leaves the occasional error.