On The Priority Effect Of Mortgage Restrictions

Mortgage is referred to as Ring of security because of its feature that the subject matter is not to be transferred. The mortgagee has the right to control exclusively the gage and the priority of being discharged, therefore, the hypothec takes precedence of general creditor's rights, and could terminate complete real right as well as usufructuary right, under certain condition, has precedence over some of other security interests. Based on the precondition that hypothec is one sort of security interests, this article, with the background of continent legal system, elaborates in details all kinds of restraint on the precedence of hypothec coming from and outside security interests, such as lien, pledge on chattel, priorities, and among hypothecs set up on the same gage.The function of property is exerted to a rather broad extent, and the optimal configuration and highly efficient use of social resources become an important condition of advancing economic development. The civil law characterized by standard of right permits the full development of voluntary security interests. The development of real rights makes possible that several real rights with the same or different characters coexist on the same subject matter and their effects conflict with each other, thus results in coexistence and effect conflicts between hypothec and other real rights, particularly other security interests. Given some general rules of settling conflicts of rights, this article analyzes systematically various states of coexistence between hypothec and relevant rights, and compares their effects one by one. Where hypothec was set up before and the gage is retained, the lien shall precede over hypothec; where the owner of specific property, after its being retained, sets up hypothec on such property, the lien shall also precede whether the hypothec is registered or not. Where the owner of general chattel, after setting up hypothec thereon, sets up pledge, the right of pledge shall precede, although registration of hypothec, because the resistance arising from its registration aims just at the hypothec not registered and the pledge in bad faith, instead of the pledge in good faith. Where the owner of thing pledged, after transferring its possession, sets up hypothec thereon, the pledge shall dominate. With regard to evidence rules of civil procedure, there might be a situation that the pledge and hypothec are proposed simultaneous setup, if so, these security interests have equal status, and the hypothec shall not precede. In case of coexistence of various hypothecs on the same gage, registration order shall be decisive on their effects; the hypothecs on general chattel not registered shall equally be settled. This article also uses so many words to discuss the restraint on hypothec precedence by various priorities. Based on Chinese legislations practice, this article analyzes the coexistence and effect conflicts between hypothec and ship priority, civil aircraft priority, priority of works cost, and other priorities.The value of studying the restraint on hypothec precedence rests with the review of the design of Chinese hypothec system. The disorder, illegibility, even infancy of our hypothec system on chattel, as well as dispersion of priorities, make it necessary to reconstruct our hypothec system on chattel and to regulate priorities. The author makes conclusion as follows: specify the scope of chattel available to hypothec setup; divide hypothec into that of real estate and that of special chattel, exclude the hypothec on general chattel; unify public summons of gage, namely all hypothec shall be registered without any exception, unify the authorities in charge, procedure, form of public summons; limit the time bar of effect of hypothec registration. In addition, with reference to the sorts of priorities stipulated in French Civil Code and Japan Civil Code, we may provide the priorities in basic laws on basis of scientific and systematical division, and provide some supplements or amendment in regulations and rules. The f...