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German and British Concessions in China.
I had a further interview on this subject on the 25th ultimo with M. Göppert, the German Legal Delegate to the Naval Conference.
I gave him the explanations that Mr. Hanson had given me, and he asked me various further questions, about which I am consulting Mr. Hanson again.
He also informed me that up to 1906 British Consuls in China signed a Declaration on behalf of British purchasers of land in German Settlements that they (the purchasers) would submit to German law and jurisdiction.
Since 1906 this Declaration has been refused in one case- -(the Hankow case I think).
If I remember right, our information does disclose the fact that such a Declaration as I have mentioned above was signed in one case. I think inquiry should be made as to whether it ever happened in other cases, or amounted to a general practice.
M. Göppert also told me that Germany cannot chauge her system of enforcing the German law in the German Settlements, because of the mortgages that have been This entered into on the footing and upon the terms implied by German law. argument is not dissimilar to one that I have mentioned in previous Minutes, viz., that we feel a difficulty in accepting the German proposal, because all the lots in British Concessions have been sold upon the footing that a foreigner can become the purchaser and remain subject to his national jurisdiction.
Foreign Office, March 1, 1909.
C. J. B. H.
AFFAIRS OF CHINA.
CONFIDENTIAL.
19871]
No. 1.
Foreign Office to Mr. Hanson.
PEC?
Kree 5 MAY 098 [March 1.]
SECTION 4.
188
Dear Mr. Hanson,
Foreign Office, March 1, 1909, I HAVE had a further conversation with the Germans about jurisdiction in the Concessions in China. I explained to him all the system as you had described it to me, and he posed the following as examples of the difficulties that beset the present position.
What is the situation when a mortgager wishes to transfer his equity of redemp- tion to a third person-and the third person repudiates the obligations of the mortgage deed? or if the third person attempts to sell the land irrespective of the mortgage-or to mortgage it to a new party ignoring the existing mortgage?
Are all these cases provided for in the mortgage deed--and when such third person is a foreigner-is it quite certain that a foreign Court will enforce upon him the terms of the original mortgage deed?
*
Again cases might arise where the foreign Court was bound to enforce against a person of its own nationality provisions of his own land that ran counter to the terms of the deed of mortgage.
E.g., A.B. (British) mortgages his land to the Hong Kong and Shanghae Bank; A.B. transfers his interest to P.Q. (a German). P.Q. borrows 5001, from the Deutsche Bank and spends it on improving the premises, the Hong Kong Bank have to sue P.Q. in the German Court to enforce the mortgage-the German Court will be bound to German Bank as having a lieu on the premises which ranks before the Hong Kong Bank's mortgage.
Similarly under certain conditions interest due on a mortgage enjoys the same security as the secured principle.
Would you let me know whether in your opinion these are good points-and what you take the answer to be.
I should be so very much obliged if you would.
Very truly yours, (Signed)
C. J. B. HURST.
Minute by Mr. Hurst
Mr. Hanson came to see me on the 12th March, 1909, to give me some more information on the points raised in my letter of the 1st March to him. (He explained the delay in coming by stating that he had been married in the meantime).
In his opinion a mortgagee is sufficiently protected against an assignee of the mortgager who attempts to repudiate the mortgage by the fact that when the mort- gage was first entered into the title deeds would have been handed over to the mortagee and the mortgage would have been registered at the Consulate where the land was registered; therefore, no person other than the mortgagee could either by sale or mortgage obtain rights over the land which would oust the mortgagee's rights, because the latter would have the title deeds, and no one would purchase or lend or mortgage without delivery of the title deeds and the mortgage would have been registered, and inspection of the Consular registers would at once disclose the mortgage.
In cases where the mortgager was of a nationality whose Courts the mortgagee could not trust, the mortgagee could further protect himself, if he thought it necessary, by taking from the mortgager not a mortgage of the land, but an absolute transfer.
In all these cases the fender of the money can make his own terms because he is master of the situation.
For the same reason Mr. Hanson thinks that if a British lender chose to insert a clause saying that British law was to apply in enforcing the terms of the mortgage deed such a clause would be good and would be acted upon by a foreign Court." If
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