The Secretary, Prime Minister's Department, has forwarded me the following memorandum for advice:

The following concrete case is submitted for direction as to the procedure to be adopted in this and similar instances-the facts are as follow:

Rudolph Wolff, a German national whose appeal has been dismissed, was the owner of Varzin plantation. In 1908 he gave a mortgage to a Mrs Ikien for 35,545.00 marks, due in 4 years, which was renewed in 1912. In 1913 the mortgage was increased by 19,205.91, the whole being due in 5 years. Mrs Ikien had remarried and the mortgage stands registered now in her name, as Mrs Merck. Interest was at 5%, increased to 6% from 1.5.13. As far as can be ascertained, no interest has been paid on this mortgage since 1914, but in that year 20,000.00 marks were paid in Germany, in reduction of the interest and principal.

Mrs Merck has not been prescribed.

In January 1914, Wolff gave a second mortgage over his plantation for 12,000.00 marks to J.O. Mouton, due on 6 months' notice. Interest at 6%, amounting to £36, hasbeen paid to Mouton during the Custodian period, and an amount of £18 for interest now due is being claimed by Mouton, who has not been prescribed, and is not liable for prescription, owing to being of Belgian nationality. Decisions are asked for on the following matters:

1. Should interest be paid to either Mrs Merck or Mouton, and if so how are the amounts so paid to be recovered?
2. If the decision is that the interest due to Mrs Merck and J.O. Mouton is not to be paid, how must the amounts already paid by the Board be treated?
3. If, at the date of the sale of the property, neither the principal or interest in respect to the mortgages have not been paid, will the title to the property be affected, or in other words will the purchaser obtain a clean title where the estate has been mortgaged to a German or other national?
4. Does Mouton stand in the shoes of an ordinary creditor of R. Wolff, and should he claim for his debt through his national Clearing House?
5. Should Mrs Merck, as a protection to the Board, be prescribed, on the grounds that she has property within the Territory, in the shape of a debt due under mortgage on the Varzin estate?

Where a prescribed person has been expropriated of real estate which is subject to mortgage the property which becomes vested in the Custodian is only the equity of redemption and the real estate remains liable to the claims upon it by the mortgagee in respect of the mortgage debt and interest thereon.
The listed questions are answered as follows:

1. Interest should continue to be paid upon the mortgages. The Custodian in lieu of the original mortgagor has the benefit of the loans and the interest paid by the Custodian is not recoverable.
2. See answer to (1).
3. A clean title to the property cannot be given to any purchaser from the Custodian unless the mortgage debts have first been paid.
4. Assuming that Mouton holds a mortgage over the property of Wolff, it is considered that he has a vested interest in that property, and that the amount of the mortgage debt is not a debt to be dealt with through the Clearing House.
5. If Mrs Merck was on 10 January 1920, an enemy national, I see no reason why she should not be prescribed, and her interest in the Varzin plantation expropriated. Such action would obviate the necessity to pay principal or interest to Mrs Merck.

[Vol. 19, p. 101]