A Legal Analysis to Re-Seizure of Mortgaged Stock; Formation of an Allowed Kind of Re-Mortgage

Civil Act discussing the mortgage brings regulations on characteristics of subject of mortgage, mortgagor’s rights and mortgagee’s rights. But only exceptionally has regulations on the debt mortgaged for. Depending on determining whether mortgaged stock is mortgaged for present or for future debts of directors, this question would be answerable that if somebody re-seized the mortgaged stock and after it director damaged the company, which one would prevail, re-seizing person or mortgagee of that stock? Despite what at first glance under the influence of Civil Act seems, Commerce Act and its Amending By-Law in addition to taking mortgage for existing debt, approve taking mortgage for existing pledge and for non-existing debt which its cause has been formed. So, the company takes mortgaged stocks from directors not for existing debts i.e. for putting its asset under the directors’ custody but for future and possible damages which may occur from their managerial conduct (i.e. non-existing debt which its cause has been formed). So, until the damage has not been sustained and the mortgage is not established, the re-seizure would prevail the mortgage. As a result some allowed kind of re-mortgage forms.