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in effect the transfer of the perpetual lease granted by the Crown from the vendor to the purchaser who took the place of the former as the person inscribed as tax payer in the register.
When as was usually the case it was preferred to dispense with registration, a sale was inconvenient, for it left the vendor responsible for the tax and without any covenant of indemnity from the purchaser. On the other haud under a perpetual lease the purchaser got practically the full rights of ownership and could mortgage or lease or even sell the property provided always that the rent reserved under the old lease was punctually paid. The vendor got an annual sum sufficient to indemnify him for the tax to be paid but had otherwise no further interest in the land.
13. I have said that the annual sum reserved was sufficient to indemnify the vendor for the tax it was supposed he would continue to pay, but its amount was often very much larger than this. Frequently the rent under a perpetual lease is a full rack rent the explanation no doubt being that in such cases the true relationship of land lord and tenant exists and that through habit people in the New Territory have come to prefer this form of alienation to a regular sale.
14. The perpetual lease was sometimes in writing but very much oftener it was oral merely and so general was it and so popular that it seems usually to have been presumed in the absence of any explicit agreement between the parties. Thus if A builds a house on B's land and B ratifies his action by accepting rent the implied condition is that subject to the payment of annual sum initially fixed and not liable to be raised A can continue in occupation of the land and that B has meau while no interest therein beyond the receipt of this annual rent. B has it is true the reversion if A die without heirs but that is a remote contingency in China where in default of issue adoption is freely resorted to.
15. The annual rent may be very small-this usually means either that a capital sum was paid originally or that the value of the land was so insignificant that no more rent was reserved than was necessary to meet the tax. It may again amount to almost the full annual value of the land and in some localities this is said to be as high as $3 and $4 a mau-though in view of the exceedingly elastic ideas of measurement current amongst the villagers it is impossible to place much reliance on their figures.
16. The interest of the lessee then amounts to this that as long as the rent is paid the land belongs to him and to his heirs forever. It seems beside the purpose to ask whether he can leave it by will for the will as we know it does not exist in the New Territory. If the lessee parts with the possession and the rent is not paid he remains liable to the lessor for the amount. The lessor on the other band has a perpetual right to receive the rent originally stipulated for. He cannot increase it nor can he alienate more than the right to receive this annual sum. The land reverts to him if the lessee's family becomes extinct.
17. In several cases that have come to my notice since the Convention landlords have realized that in view of the recent enhancement in the value of property it is to their interest to compound with their perpetual lessees and resume for a money payment their original interest in the land. I anticipate frequent attempts to override the rights of lessees by persons who have recently acquired land for parts of which such leases have been originally granted. It may be well to note, that out of the several hundreds of such leases which have come to my notice I have not found a single instance of the lessee's rights not being respected under Chinese rule.
A man could only sell his land subject to the rights of any persons on it who had taken such a lease from him and the only result of the transfer was that the rent reserved under the lease became henceforward payable to the new landlord.
In several sales of land that have taken place since the Convention the purchasers have I believe failed to recognize the importance of ascertaining whether such leases had been previously granted on the property and they have now to face the alternative of either buying out the lessees or being satis- fied with the very small annual rent which is all that remains of the landlord's rights.
Mortgages.
18. Fourthly by a mortgage.-Mortgages of land are very common transactions in the New Territory. The Chinese mortgage, as I have found it, is like the Welsh mortgage of the text books, a conditional sale. It inay be in writing but is very often oral and in spite of the great strictness of Chinese Laws upon the subject it is hardly ever registered. It is faithfully described in the follow- ing account of a Welsh mortgage taken from a well known Text book:
"What is known as a Welsh mortgage is a transaction whereby the estate is conveyed to the mortgagee, who is to go into possession and take the rents and profits as an equiva- lent for his interest, the principal remaining undiminished. In such a transaction there is no contract, express or implied, between the parties, for the repayment of the debt at a given time, and though the mortgagee has no remedy by action to enforce payment of his money, yet the mortgagor or his heirs may redeem at any time."