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Operation and effect of floating chattel mortgages.
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27.—(1) A floating chattel mortgage shall, so long as it is duly registered under this Act and any moneys remain owing for principal or interest on the security thereof, and it has not become fixed as hereinafter provided, operate and have effect—
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(a) to create an ambulatory and shifting charge of the principal moneys and interest secured thereby on all farming stock from time to time on the farm to which the chattel mortgage relates (hereinafter referred to as the farm); and
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(b) to prohibit the mortgagor from selling any of the farming stock at any time on the farm otherwise than in the ordinary course of farming; and
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(c) to impose on the mortgagor the obligation of maintaining the farming stock from time to time on the farm at a level of value equivalent (as near as may be having regard to the ordinary course of farming) to the value of the farming stock on the farm at the date of the chattel mortgage; and
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(d) whenever the mortgagor sells any of the farming stock for the time being on the farm to impose on him the obligation of paying such (if any) part of the proceeds of such sale as the mortgagee shall require to the mortgagee in reduction or discharge of the principal moneys secured by the chattel mortgage and any interest due thereon and to confer on the mortgagor the right to pay the whole or any part of such proceeds of sale to the mortgagee in reduction or discharge of such principal moneys and interest.
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(2) Whenever the principal moneys secured by a floating chattel mortgage or any part of such moneys remain unpaid for one month after the date appointed by the chattel mortgage for payment thereof or some interest secured by a floating chattel mortgage is in arrear and unpaid for two months after becoming due or there has been a breach (whether of commission or omission) by the mortgagor of some provision contained in a floating chattel mortgage or implied therein by virtue of this section (other than a covenant for payment of the principal moneys or interest secured thereby), the mortgagee may serve on the mortgagor a notice in writing declaring that such floating chattel mortgage has become fixed and thereupon such floating chattel mortgage shall become and be fixed within the meaning of this section.
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(3) When a floating chattel mortgage has become fixed such chattel mortgage shall thenceforward operate and have effect as a specific chattel mortgage of all farming stock which is on the farm at the time of the service of the notice declaring such chattel mortgage to have become fixed and the provisions of this Act in relation to the operation and effect of a specific chattel mortgage shall apply accordingly.
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(4) A floating chattel mortgage shall so long as it is duly registered under this Act operate and have effect to imply a covenant on the part of the mortgagor, his heirs, executors, and administrators with the mortgagee to pay to the mortgagee the principal moneys and interest secured by the chattel mortgage at the times and in the manner appointed by the chattel mortgage.
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