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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 1 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 satisfied 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 may 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 following 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 equivalent 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."
It is only necessary to add that these mortgages when not evidenced by a deed are a fertile source of litigation. If the value of land should go up the mortgagor naturally claims to redeem but the mortgagee frequently resists on the ground that the sale was unconditional.
The mortgagee being from the nature of the transaction in possession becomes the owner for the time being of the property subject to the possibility of redemption at some future time by the mortgagor. Mortgages are frequently assigned three or four times over and this of course increases the possibilities of dispute when the original owner comes to redeem.
19. Short leases of agricultural land for a year are not uncommon but present no features worthy of particular atteution—they are usually determined at the end of either the Spring or the Autumn harvest by six months' notice on either side.
20. After a District has been dealt with by the Land Court and all claims finally heard and determined there are two important questions that still remain to be considered,
Firstly. Who are the persons to be made liable for the Crown Rent and in what propor-
tions ?
Secondly. What titles are to be issued to persons having interests in land and what form
of registration is most suitable?
Crown Rent-Incidence of.
21. As regards cases where the cultivator is himself the owner holding direct from the Crown and paying his own taxes there is of course no difficulty,
It will be found, however, that a large proportion of the land is held on perpetual lease. In such cases Government should I consider deal directly with the (perpetual) lessee and make him responsible for the Crown Rent. He should then be allowed to deduct the amount he contributes as Crown Rent from the sum he pays his landlord.
If the lessor's rent is small in amount--this means either that he received full value for the land originally and that the annual payment was arranged simply to cover the taxes for the payment of which he continued liable-or that he had no real title to the land but has levied this amount under the name of tax from persons who were not in a position to resist the claim.
In such cases the lessor will no longer get anything; for the Crown Rent to be now paid by the lessee will be greater in amount than the old rent under the lease and there will be nothing left for
him.
If however the relation between the parties was really that of landlord and tenant the sum paid will approximate more nearly to a rack rent and this sum less the amount paid for Crown Rear by the lessee will still come to the hands of the lessor.
22. In many cases the perpetual lessors are absentee landlords with no other concern in the land than the receipt of their rent, as for instance the Li family on the northern half of Lan Tao. In such cases the tendency will be for the lessee to buy out his lessor and gradually to get the full ownership, subject to the rights of the Crown, into bis own hands. Where conversely the lessors are powerful and wealthy families resident in the neighbourhood of their lands the tendency will probably be the other way and they are more likely to buy out the enltivator and either till the laud themselves or let it on auunal lease.
In the case of a mortgage the mortgagee, if he be, as he usually is, in possession, should pay the Crown Rent: the mortgagor has often severed all connection with the land and gone to California or to Singapore whence his return is at least problematical.
Titles.
23. Next as to the form of title. In my opinion it will be safest to keep at any rate for the present to the tenures which obtain and are well understood among the people.
A person who has a grant of land from the Chinese Government has in effect a perpetual lease- subject to the payment of Crown Reut. If he converts the land to other uses than those to which it was put when he first took it up, his Crown Rent may be raised, but, subject to this and perhaps to some reservation with regard to minerals the land is his own, as long as he continues to pay the tax. Such person need not I think be given ordinarily a Crown lease. He should be entered on a Register as a "Customary land holder" and be permitted to have an extract from this Register as evidence of his title upon payment of a small fee. The rights and liabilities incident to such tenure might be summarily defined in a short Ordinance which however we need be in no pressing hurry to draft. After a year or two's experience we shall know much more abont New Territory customs. than we do at present.
24. Such a certificate of title to be issued on payment of a small fee would be amply sufficient or the ordinary cultivator. It would not however satisfy the needs of Europeans who might wish fo acquire land and it would probably be of little use to a registered company taking up land for tndustrial purposes. The proper course would be for them to make their own arrangements with