I JliWHl! 51 IV UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY SI]Li:CT CASKS AM) OTHER Al TIIOIMTIKS (>X THE LAW OF MORTGAGE BY GEOKCUO \V. KIKCIIWEY NASIl I'UOFKSSOU or LAW IN ( ni.rMIlIA I NIVKi:-ITT PARTS L, II., AND III. BAKEIJ, VOOKIIIS & COMPANY 1 oo-i T" CoPYRionT, 1900, 1601, 1902 By GEORGE W. KIRCIIWEY TABLE OF CONTENTS OK PARTS I, II., AND III. BOOK I. INTKODUCTIOX— riJOPKlJTY SEn'niTY FOIJ DEBT. TACiK (,i) I'lt'due and II\ pot liocatiuii 1 ( /y ) Early Statutory Securitie.s " ( r y 'riie Conimon Law Mortgage '-* (il ) The EqiiitaJjle >Iortgage ^-i l^OOK II. ESSENTIAL ELEMENTS OF MORTGAGE CHAPTER I. COXVKYANCE. See. 1 . Mortgage. I'ledge ami Lien 28 2. After- Acquired Property 40 ^^. InfonnaMfortguges 11'"^ (ilAl'TLi: II. Skci'kity. Sec. 1. Mortgage aud Conditional Sale 1"4 •.*. Absolute Deed — Tarolc Evidence 175 ( llALri'.K III. Tin: OlU.KiATION Sr.CfKKI). Sec. 1. Is an Obligation Necessary 202 ".>. IlK'gal Oldigalions 2LS 3. Future Advances 2G5 GlIOT^ iv TABLE OF COXTENTS. BOOK III. NATURE AND INCIDENTS OF THE MORTGAGE RELATION CHAPTER I. Common Law Relations. PAOE Sec. ]. Title 28G 2. Possession 31 tJ 3. Dower and Cm tesy 344 4. Fixtnies 377 5. Waste and Repai i- 410 CHAPTER IL Equity Relations. Sec. 1. Once a Mortgage, ahvMvs a Mortgage ^oO 2. Release of the Equit}- of Redemption 445 3. Agreements for Collateral Advantage 401) 4. Tacking Collateral Claims 501) CHAPTER n.— (Continued). Equity Relations. Sec. 5. Mortgagee's Account ( a ) Waste, Repair and Improvements 50^ ( 1/ } Rents and Profits — Annual Rests 543 ( c ) Superior Liens 5(!3 {(l) Mortgagee, How far a Trustee 500 CHAPTER III. ExTKNsroN OF Mortgage GO'Z CHAPTER IV. Assignment of Mortgage. Sec. 1 . Mode of Transfer . . G21 2. Effect of Transfer 043 CHAPTER V. Discharge of Mortgage. Sec. 1 . Tender and Payment C95 ( (I ) In (loiieral 005 ( /j ) After Default 704 Sec -'. Other I )ischarge of 1 )ebt 704 SELKCT CASKS AND OTIIKU ArTII()inTIF:S ON TILE LAW OF MOiniiACiT BOOK I. INTRODUCTION: PROPERTY SECURITY FOR DEBT. (a) Plcdfje and II ypolliccation. Langdell, Classification of Rights and Wuokgs, 13 IIakv. \j. R. 539, 540. An obligation is either personal or real, according as the obligor is a person or a thing. . . , A real obligation is untloubtcdly a legal fiction, but it is a very useful one. It was invented by the Romans, from whom it has been inherited by the nations of modern Europe. That it would ever have been invented by the latter is very unlikely, partly l)ecausc they have needed it less than did the ancients, and partly because they have not, like the ancients, the habit of personifying inanimate things. The invention was used by the Romans for tlic accomplishment of several important legal objects, some of which no longer e.xist, but others still remain in full force. It was by mi'ans of this that one person acquired rights in things belonging to others {jura in rcfnis alienis). Such rights were called i>erv{- hites (i. e., states of slavery) in respect to the thing upon whicii the obligation was imposed, and they included every right whicii one could have in a thing, short of owning it. These servitudes were divided into real and personal servitudes, being called real when the obligee as well as the obligor, i, e., the master {(lominns) as well as the slave (srryt/.s-), was a thing, and personal when the obligee was a person. The former, which may be termed servi- tudes projHT, have ])asscd into our law under the names of ease- ments and profits a pmulrc. The latter included the pii/nufi and the hypnlhcni. t. e., the Roman mortgage — which was called pignn.s- when the thing mortgaged was delivered to the creditor, and 1 2 PROPERTY SECURITY FOR DEBT. [dook I. hypolheca when it was constituted by a mere agreement, the tiling mortgaged remaining in the possession of its owner. Originally, jiossession by the creditor of the thing mortgaged was indispen- sable, and so the pignus alone existed; but, at a later period, the parties to tlie transaction were permitted to choose between a pignus and a hypotheca. So long as the pignus was alone in use, it is obvious that the obligation could be created only by the act of the parties, as they alone could change the possession of the property. But when the step had been taken of permitting the mere agreement of the parties to be substituted for a change of jiossession, it was another easy step for the law, whenever it saw fit, to substitute its own will for the agreement of the parties; and hence hypothecations came to be divisible into such as were cre- ated l)y'the acts of the parties (conventional hypothecations), and such as were created by the act of the law (legal or tacit hypothe- cations). Again, so long as a change of possession was indispen- sable, it is plain that the obligation could attach only upon prop- crtv which was perfectly identified, and that there could be no change in the property subject to the obligation, except by a new change of possession. But when a change of possession had been disjK'nsod with, and particularly when legal or tacit hypotheca- tions had been introduced, it became perfectly feasible to make the obligation attach upon all property, or all property of a certain description, either then belonging to the debtor or afterward ac- (|uired by him, or upon all property, or all property of a certain (lescription, belonging to the debtor for the time being; and hence hypothecations came to be divided into those which were special and those which were general. The pignus has passed into our law under the name of pawn, or ])k'dge, as to things movable, but has been wholly rejected as to land. The conventional litipoilieca has been wholly rejected by our common law, though it has passed into our admiralty law. 'I'hc legal or tacit hypothecation, on the other hand, has been admitted into our common law to some extent, though under the name of lien (a word which has the same meaning and the same derivation as "obligation"). Thus, by the early statute of 13 E. 7.. (;. 18, a judgment and a recognizance (the latter being an ac- knowledgment of a debt in a court of record, of which acknowl- <'flgmcnt a record is made) are a general lien on all the land of the judgment debtor and recognizor respectively, whether then owned by them or afterwards acquired. So also, in many cases, llie law gives to a creditor a similar lien on the debtor's movable properly, already in the creditor's possession when the debt ac- crups, though, in respect to the creditor's possession, this lien has tiie features of a pignus rather tlian of a hypotheca. HouK 1.1 I'LEDiir: AND ll^ roiiiiccATiox. 6 JrsT., Inst , Lilt. IV., c G, § 7. Again, the Servian and (juasi- Servian aetiims. (lie latter of which is also called "hypothecary," are derived wholly from the Praetor's jurisdiction. Tlie Servian action is that l»y which a landlord sues for his tenant's property, over whicli he has a rijrhl in the nature of a pledge (inrjuus) as security for his rent. The quasi-Servian action is a similar remedy open to any creditor for the purpose of enforcing his pledge or luipoiheca. So far tlien as this action is concerned, there is no dif- ft-reneo between a pledge and a hi/potheca; and, indeed, when- <'ver a debtor and a creditor agree that certain property of the former shall be the hitter's security for his debt, the transaction is called by either name. In other respects, however, there is a distinction between them; for the term, pledge, is properly used only where possession of the propert}' in question is delivered to the creditor, especially if such property be movable; whereas by the term hi/pollirm, strictly speaking, we signify a right arising by mere agreement without delivery of possession. MoYLi:, I.Mi'. Jl'st. Ixst., Excur. II., p. G. The latest and most rctlned form of i)ledge is In/potheca, in which there was no con- veyance of either ownership or possession ; it was effected by a bare, formless agreement between the debtor and creditor, that certain specific property of the former should be liable in full for his del)t to the latter, who should be entitled to sell in default of ])ayment within a prescribed time: '^ CuntniJiltiir hi/potheca per pactum convcntum, cum fjuis paciscalur, ut res eius propter (tli(juam ohligationem siut Jiifpothecae nomine ohlif/atae: nee ad ri'in per'inef, quihus ft verbis" (Dig. 20, I. 1). Such an agree- ment, in itself, was inoperative to create rights, either real or jK-rsonal ; it was, however, enforced by the praetor, who treated the right of sale as a ius in re aliena, of whicli the creditor couhl not be deprived by any subsequent act of the debtor, and which he could successfully assert (by remedies of his own introduction) against any other ]K'r.son whatsoever, whether the creditor, hi-; successor, alienee or trustee in bankruptcy. . . . Ilypotheca possessed great advantages over the earlier foiins of ph'dg(% of which /iducid was quite obsol(>te in the time of Justinian, '['he pledgor was never deprived of the use and possession of his jiroperty, and yet the creditor was al>solutely secured. The class of pledgable objects was largely augmented: ^foney could now bo lent on the security of things not yet in existence, e. g., future crops and exp<>ctations (" et quae nondum sunt, future tamen sunt, hifpothecae dari possunt, ut fructus pendentes, partus anciUae. fetus pecorum." Dig. 20. 1.15) or of mere incorporeal rights, real and personal (Dig. 20, 9, I.; ih. 11, 2; Dig. 13, 7, 18 pr.). Moreover 4 TROrKKTY SECriUTY FOR DEBT. [BOOK I. it became possible to ereale a general mortgage, which v.as done by statute, in favor of many classes of persons : e. g., of a wife or other person who gave a dos over the property of her husband, to secure its return, and of pupils over that of their guardians. Glanville. Lib. X., c. G (Beames). A Loan is sometimes made \ipon the Credit of a putting in Pledge. When a Loan of this de- scription takes place, sometimes moveables, as Chattels, are put in l)ledge; sometimes immoveables, as Lands and Tenements, and Kent's, 'whether consisting in Money or in other things. When a Compact is made between a Creditor and Debtor, concerning the l)utting anything in pledge, then, whatever be the mode of pledg- ing, the Debtor upon his receiving the thing lent to him, either immediately delivers possession of the Pledge {vad'd seisinam) to the Creditor, or not. Sometimes also a thing is pledged for a cer- tain period, sometimes indefinitely. Again, sometimes a thing is pledged as a Mortgage (in mortuo radio), sometimes not. A pledge is designated by the term Mortgage when the fruits and Rents, which are received in the interval, in no measure tend to re- duce the demand for which the pledge has been given. When, therefore, moveables are put in pledge, so that possession be de- livered to the Creditor for a certain period, he is bound to keep the pledge safely, and neither to use it, nor in any other manner employ it, so as to render it of less Value. But should it, wdiilst in Custody and within the Term, suffer deterioration, hy the fault of the creditor, a Computation shall be made to the extent of the detriment and deducted from the Debt. But if the thing be of such a description that it necessarily requires some expense and cost, for Example, that it might be fed or repaired, then the stipu- lation of the parties on that subject shall be abided by. In addi- tion — when a thing is pledged for a definite period, it is either agreed between the Creditor and Debtor, that if, at the time ap- jjointed, the Debtor should not redeem his pledge, it should then belong to the Creditor so that he might dispose of it as his own ; or no such agreement is entered into between them. In the former case, the Agreement must be adhered to ; in the latter, the Term being unexpired without the Debtor's discharging the Debt, the Creditor may complain of him, and the Debtor shall be compelled to appear in Court, and answer by the following Writ. c. 7. "The King to the SherifT, Health: Command N. that justly and without delay, he redeem such a thing which he has pledged to R. for a hundred Marks, for a Term which is past, as he Hays, and of which he complains that he has not redeemed it; and,, unless he does so, &c." c. H. . . . Wlien a Compact is entered into between a Debtor ituoK I.] i'i.i;i)(;i: and m i-ui iii;(ati(»x. 5 ;iiul Civililor, coiuiTiiiii^^ the jilcd^Mn;,' (tf a |)articular lliin;r, if llif hthtor, artcr having ri-ceived IIr- Loan, slionld not deliver the jikdyi', it may be asked, what step shoukl the Creditor have rc- tourso to in such a ease, especially as the same thing may be |»U'dged to many other Creditors, both previously and subse- <|Uently ? Upon this subject, it should be remarked, that the King's Ctturt is not in the habit of giving protection to or warranting private Agreements of this description, concerning the giving or accepting things in pledge, or others of this kind, made out of Court, or even in any other Court than that of the King. If, therefore, such Compacts are not observed, the King's Court does not interfere; and hence it is not bound to answer concerning the right of difTercnt Creditors, as prior or siibscquont. or respecting their privileges. But, when an immoveable thing is put into pledge, and Seisin of it has been delivered to the Creditor for a delinite term, it has either been agreed between the Creditor and Debtor, tliat the pro- ceeds and rents shall in the moan time reduce the Debt, or that they shall in no measure be so applied. Tlu' former Agreement is just and binding; the other, imjust and di.shoncst, and is that called a Mortgage, but this is not prohibited by the King's Court, al- though it considers such a pledge as a species of Usury. Hence, if any one die having such a pledge, and this be proved after his death, his property shall be disposed of no otherwise than as the IvlTects of a Usurer. In other respects, the same Rules should b(^ observed as in pledges of moveables, concerning which we have already spoken. But it must be remarked, that if, after any one has paid his Debt, or has in a proper manner tendered it, the Cred- itor should maliciously detain the ])ledge, the Debtor npon com- plaining to the Court shall have the following Writ : c. 9. "The King to the Sheriff, Health: Command N. that j\islly and without delay he render to R. the whole Lands, or such Lands, in such a Vill, which ho has pledged to him for a Hundred Marks for a term which is past, as he says, and has nx-eived his Money, or which he has redeemed, as he says ; and. unless he does f-o, Summon him by good, etc." c. H. If the Cri'ditor lose his Seisin, either by means of the Hebtor, or any other jn-rson. he cannot recover it through the assistance of the Court; not even by a Recognition of Novel Dis- seisin, l-'or if he was unjustly and without a judgment disseised of his ])ledge. by any otluT jierson than the Debtor himself, the Debtor may hav(» an Assi.se of Novel Disseisin. If, however, the Creditor was disseised by the Debtor himself, the Court will not assist him against the Debtor, in recovering his ])ledge. or in giv- ing a Re-entry, unless through the Debtor himself; for the Crcd- C, PROPERTY SECURITY FOR DEBT. [djoz I. itor should resort to an original Plea of Debt, in order that the Debtor may be compelled to render him satisfaction for his Debt. In such case the debtor shall be summoned by the foregoing Writ of first summons. Chaplin, Story of Mortgage Law, 4 Harv. L. R. 6. Using the word vadium, gage, whether the possession was to be turned over to the pledgee or not, the Norman judges recognized gages or pledges of land, either with or without transfer of possession. If the pledgee took possession, the transaction was a pawn; if not, it was a hypothecation. It would be the greatest mistake to suppose that feudal seisin was essential to an effectual pledge of land in feudal times. The pledgee might leave the pledgor in possession, and still be secure by recording a written contract of pledge in the King's Court : precisely as, under Justinian, such a contract would have been registered in a public office, or, under the Saxon laws, in a county court or a monastery. This provision for registration was a mere adaptation to English ground of the Roman system. Even when the pledgee of land, in feudal times, took possession, he did not take a full feudal seisin; he took only a '^ quasi " seisin, a seisin " de radio," as it was called — a " pledgee's seisin'' — a seisin distinct from a general seisin, not exclusive of that of the pledgor, but consistent with and dependent upon it — a parasitic seisin. The word " seisin," of course, was not exclusively applied to freehold estates in land, but was used of chattels and of chattel estates in land, as leaseholds. And just as a lessee of land had not a seisin of his own, but had his landlord's seisin, so in the case of a pledge, even with the possession, the freehold was deemed to remain in the pledgor, and the pledgee was said to be seised " through " the owner of the fee — to be seised not in his own name, but in the name of another. The heirs of the pledgee who died in possession were spoken of in contradistinction from the " verus hoires." The fact that the land so in pledge, and even in the possession of the pledgee, was still viewed as in the seisin of the pledgor, appears from the fact tliat it was subject to dower, not of the pledgee's, but of the pledgor's widow ; and there could be no dower without seisin. If a pledgee in possession were ousted by a stranger, he could not maintain a writ of novel disseisin to recover possession ; the pledgor had to bring the action, counting on his own seisin. And where one seised as pledgee died in possession, and his heir, being excluded, brought a writ of mort d'ancestor, to get posses- .'^ion, he was provided, not with the ordinary writ of mort d'an- rpstor, counting upon seisin generally, but with a special Avrit, al- leging in his ancestor a seisin de vadio. HOOK 1.] KAHLY STATfTOHY SECURITIES. 7 The legal remctly Tor cnrorcin": a sinijilc ^m^'c or plodgc of LiimI in the time of (Jlanvillo, so far from luivin<,' those harsli features whicli we are wont to attrihute to our early law, followed tliat just and equitahle system of Roman law which was the cradle of our equity. Wlu'n a debt secured upon land was due, the pledgee had a writ expressly framed for foreclosure.' substantially identical with the Massachusetts writ of entry for foreclosure of a mortgage. The process could be enforced by the courts by a seizure of ihe ])roperty pledged, if it remained in the pledgor's possession, or by other distraint ; and there was a conditional judgment, precisely a< there is upon the ^lassachusetts writ of entry for foreclosure, that the debtor should still have a reasonable time to pay before the fore- closure should become absolute. (h) Enrhj Statutory Securities. 2 Blackstoxe, Co:m., IGO. A fourth species of estates, defeas- ible on condition subsequent, are those held by statute merchant. and statute staple; which are very nearly related to the vivum radium before mentioned, or estate held till the profits thereof shall discharge a del)t licpiidated or ascertained. For both the statute merchant and statute staple are securities for money; the one entered into before the chief magistrate of some trading town, pursuant to the statute 13 Edw. I., De Mercatorihus, and thence called a Statute Merchant ; the other pursuant to the statute ?7 Edw. III., c. 0, before the Mayor of the Staple, that is to say, the grand mart for the ])rincipal commodities or manufactures of the kingdom, formerly held by act of Parliament in certain trading towns, from whence this security is called a Statute Staple. They are both, I say, securities for del)ts acknowledged to be du(^; and originally permitted only among traders, for the benefit of com- merce; whereby not only the body of the debtor may be impris- oned, and his goods seized in satisfaction of the debt, but also his lands may be delivered to the creditor, till out of the rents and ]trofits of them the debt may be satisfied; and, during such lime as the creditor so holds the lands, he is tenant by statute merchant or statute staple. There is also a similar .^security, the recogniz- ance in the nature of a statute staple, acknowledged before either of the chief justices, or (out of term) before their substitutes, th«' Mayor of the Staj)le at Westminster and the Recorder of T.ondoii ; whereby the benefit of this mercantile transaction is extended to all the King's subjects in general, by virtue of the statute 23 Ili^n. ' rilanv., 1. X, c. 7; pngo 4, sui>ia. S PROrERTY SECURITY FOR DEBT. [EOOK I. A'lII., c. G, amended by 8 Geo. I., c. 25, which directs such recog- nizances to be enrolled and certified into chancery. But these, by the statute of frauds, 29 Car. II., c. 3, are only binding upon the lands in the hands of bona fide purchasers, from the day of their enrollment, which is ordered to be marked on the record. Another similar conditional estate, created by operation of law, for security and satisfaction of debts, is called an estate by elegit. What an elegit is, and why so called, will be explained in the third part of these commentaries. At present I need only mention, that it is the name of a writ, founded on the statute of Westm. 2, by which, after a plaintiff has obtained judgment for his debt at law, the sheriff gives him possession of one-half of the defendant's lands and tenements, to be occupied and enjoyed until his debt and damages are fully paid ; and during the time he so holds them, he is called tenant by elegit. It is easy to observe that this is also a mere conditional estate, defeasible as soon as the debt is levied. But it is remarkable that the feudal restraints of alienating lands, and charging them with the debts of the owner, were softened much earlier and much more effectually for the benefit of trade and commerce, than for any other consideration. Before the statute of QuiaEmj)tores, it is generally thought that the proprietor of lands was enabled to alienate no more than a moiety of them; the statute, therefore, of Westm. II. permits only so much of them. to be affected by the process of law, as a man was capable of alien- ating by his own deed. But by the statute De Mercatorihus (passed in same year) the whole of a man's lands was liable to be ]»Iodgcd in a statute merchant, for a debt contracted in trade; though only half of them was liable to be taken in execution for any other debt of the owner. I shall conclude what I had to remark of these estates, by statute merchant, statute staple and elegit, with the observation of Sir Edward Coke. " These tenants have uncertain interests in lands and tenements, and yet they have but chattels and no freeholds" (which make them an exception to the general rule), "because, though they may hold an estate of inheritance, or for life, ut lihcrum iencmenium, until their debt be paid; yet it shall go to their executors; for ut is similitudinary ; and though to recover thtiir estates, they shall have the same remedy (by assize) as a tenant of the freehold shall have, yet it is but the similitude of a frccliold, and niiUuin simile est idem." This, indeed, only proves Ihcm to be chattel interests, because they go to the executors, which is inconsistent with the nature of a freehold; but it does not assign the reason why these estates, in contradistinction to other uncer- tain interests, shall vest in the executors of the tenant and not the heir, wliich is probably owing to this: That, being a security and IKMIK I.] Tin: COMMON LAW MORTOAOE. 9 remedy provided for j)er.sonal debts due to tlic deceased, to which debts the exeeiitor is entitled, the \a\v lias, therefore, thus directed their succession; as judging it reasonable from a principle of nat- ural equity, that the security and remedy should be vested in those to whom the debts, if recovered, would belong. For. upon the same j)rineijile, if lands be devised to a man's executor, until out of the profits the debts due from the testator be discharged, this interest in the lands shall be a chattel interest, and on the death of such executor shall go to his executors, because they being liable to pay the original testator's debts, so far as his assets will extend, are in reason (Mititled to possess that fund out of which he has ay >ueli a sum at such a day, &c., as is be- tween them by their di'ed indented agreed and limited, although ihe feoffor dietli before the day of payment. &e., yet if the heir of the feoffor pay the same sum of money at the same day to the feolfee, or tender to him the money, and the feoffee refuse to re- ceive it, then may th<' heir enter into the land, and yet the condition is, that if the f<'offor shall pay such a sum at such a day, &e.. not making mention in the condition of any payment to be made by his heir, l)ut for that tlu' lieir hath interest of right in the condition. Scr.. and the intent wa< but that the money should be paid at the day a-^sessod. See. and the feoffee hath no more loss, if it be paid IQ ntOPKlITY SKcrUlTY FOR DEBT. [nooK I. bv the heir, llian if it wore paid by the father, &c. ; therefore, if the heir pay the money, or tender the money at the day limited, &c., and the other refuse it, he may enter, &e. But if a stranger of lii.-; own liead, who hath not any interest, &c., will tender the aforesaid money to the feoffee at the day appointed, the feoffee is not bound to receive it. § 335. And be it remembered that in such case, where such tender of the money is made. &c., and the feoffee refuse to receive it, by which the feoffor or his heirs enter, &c., then the feoffee hath no remedy by the common law to have this money, because it shall l)e accounted his own folly that he refused the money, when a law- ful tender of it was made unto him. § 337. Also, if a feoffment be made upon condition, that if the feoffor pay a certain sum of money to the feoffee, then it shall bo lawful to the feoffor and his heirs to enter: in this case if the feoffor die before the payment made, and the heir will tender to the feoffee the money, such tender is veid, because the time within which this ought to be done is passed. For when the condition is, that if the feoffor pay the money to the feoffee, &c., this is as much to say, as if the feoffor during his life pay the money to the feoffee. &c., and when the feoffor dieth, then the time of the tender is passed. But otherwise it is where a day of payment is limited, and the feoffor die before the day, then may the heir tender the money as is aforesaid, for that the time of the tender was not passed l)y the death of the feoffor. Also, it scemeth, that in such case where the feoffor dieth before the day of payment, if the executors of the feoffor tender the money to the feoffee at the day of payment, this tender is good enough; and if the feoffee refuse it, the heirs of the feoffor may enter, &c. And the reason is, for that the execu- tors represent the person of their testator, &c. § 338. And note, that in all cases of condition for payment of a certain sum in gross touching lands or tenements, if lawful ten- der bo once refused, he which ought to tender the money is of this quit, mill fully discharged forever afterwards. Co. Lit. 209, a, b. This is to be understood, that he that ought to tender the money is of this discharged forever to make any other tender; but if it were a duty before, though the feoffor enter by force of the condition, yet the debt of duty remaineth. As if A. borrowcth a hundred pounds of B., and after morgageth land to B. upon condition for payment thereof. If A. tender the money to B. and he refuseth it, A. may enter into the land, and the land is freed forever of the condition, but yet the debt remaineth, and may be recovered by action of debt. But if A. without any loan, debt or duty preceding infeoff B. of land upon condition for the intoK 1. 1 'I'lii; COMMON- i.wv Moun; v(;i:. 11 piiN iiifiit (>r a liuiidird |iuuii til I). Ill iKitiirr of a ;,M'aluity or ;,Mft. In (hat i-asc il' he tciulcr the liimdrcd |ioiiiid> lo liiiii acfordiii;.' to the condilioii, and he ri'fiiscth il, li. hath no remedy ihercfor, and so is our autlioi' in ihis and liis other eases of like nature to he understood. Lit. i; 3.)!). Also, if the feollVe in nior;,M;j:e before the day of |»ay- nient whieh shoidd he made to iiini. makes liis exeeutor.s and by law, in case of non-payment a( the time limited, forever dead and ijnne from the mortgagor; and the mortgagee's estate in the ■JO PROPERTY SECURITY FOR DEBT. [BOOK I. lands is then no longer conditional, but absolute. But, so long as it continues conditional, that is, between the time of lending the money and time allotted for payment, the mortgagee is called tenant in mortgage. But as it was formerly a doubt, whether, by taking such estate in fee, it did not become liable to the wife's dower and other incumbrances of the mortgagee (though that doubt has been long ago overruled by our courts of equity), it, therefore, became usual to grant only a long term of years by way of mortgage, with condition to be void on repayment of the mort- gage monev, wliich course has been since pretty generally continued prfncipaliv because on the death of the mortgagee such term be- comes vested in his personal representatives, who alone are entitled in equity to receive the money lent, whatever nature the mortgage mav happen to be. As soon as the estate is created, the mortgagee may immediately enter upon the lands ; but is liable to be dispossessed, upon per- formance of the condition by payment of the mortgage money at the dav limited. And, therefore, the usual way is to agree that the mortgagor shall hold the land till the day assigned for payment; when, in case of failure, whereby the estate becomes absolute, the mortgagee may enter upon it and take possession, without any possibility at Jaw of being afterward evicted by the mortgagor, to whom the land is now forever dead. But here again the courts of equity interpose, and though a mortgage be thus forfeited, and the estate absolutely vested in the mortgagee at the common law, yet they will consider the real value of the tenements compared with the' sum borrowed. And, if the estate be of greater value than the sum lent thereon, they will allow the mortgagor at any reasonable time to recall or redeem his estate; paying to the mortgagee his j)rincipal, interest and expenses; for otherwise, in strictness of law, an estate worth £1000 might be forfeited for non-payment of £100, or a less sum. This reasonable advantage, allowed to mort- gagors, is called the equitij of redemption ; and this enables a mort- gagor to call on the mortgagee who has possession of his estate, to deliver it back and account for the rents and profits received, on payiiicnl f)!" liis wliole debt and interest; thereby turning the mor- inum into a kind of vivum vadium. But on the other hand, the mortgagee may either compel the sale of the estate in order to get the whole of Ids money immediately, or else call upon the mort- gagor to redeem his estate presently, or in default thereof, to bo forever forerlosed from redeeming the same; that is, to lose his equity of redemption without possibility of recall. And also, in Romo eases of fraudulent mortgages, the fraudulent mortgagor for- feits all equity of redemption whatsoever. It is not, however, usual for mortgagees to take possession of the mortgaged estate unless HOOK I.) TIIK COMMON LAW M< iltTC A(!F:. 13 v.Irtc llii- sfcnritv i^ |)r('(iiri(Uis. or small : or ulicrc tin- iiiort^M;,'or i!(';,Mf(ts even liu' i)iiyiiiciit of inU'n-sl ; wlicn llic mo rt ;,';!;,'»•(• is fro- (pR'ntly obli^'ed to liriii;: an ('jfctiiu'iil. ami take Uk- lam! into his own hands in the nature of a pledge. (»r llie pii/nits of the Roman law; whereas, while it remains in the hands of tho mort«,'agor, it more rosenihles their InipolJicin, which was. where the possession of the thinj: i)led<,'ed remained with the dehtor. But hy statute 7 (leo. II., e. "v'U, after j)ayment or tender hy the mort'/ non scquaturipsius rndii tradilio, curia domini regis hujusmodi privnfna • ■iinrnilinnrs tnrri noti sulci:" for which the reason given i-. to prevent snhsecjnent and fraudulent |)ledges of the same land. '" Cnni in tali casu possil cadmi res phiribw^ aJiis rrcdiloribiis htm prius turn posterius invadiari." And the frauds which have arisen, since the exchange of these public and notorious conveyances for more private and secret bargains, have well evinced the wisdom of our ancient law. CooTE ox Mortgage. 5, 0. The morluum vadium, or niorigage, is mentioned by Littleton, Coke, and others, as so called because on breach of condition the estate was rendered indefeasible in the mort- gagee,and absolutely lost to the mortgagor. In this light it is placed by Lord Coke, in contradistinction to the vivntn vadium, and such !-eems to be the opinion generally adoptt'd. But (Jlanville, as has l)een observed, gives a diiferent meaning to the origin of the term. ■He says, " Morluum vadium dicilur illud cujus fvuctus iv/ rt'ddifus interim pcrccpli in nuUo sc acquictant :"^ and ajjjdies it to the be- ft»re mentioned species of usury at common law, viz., a feoffment to ili(! creditor and his heirs, to 1k' held by him until his debtor j>aid him a given sum, and until which he received the n-nts without ac- count, so that the estate was unprofitable or dead to the mortgagor in the mean time; and the exj)osition given liy Cilanville .seems the more souiul, as it was rendered at a very early period of our history, and while yet the fetters on alienation were unreinoved. We may therefore consider the vivum vadium to have implied a security, by which the rents of land were from tinu' (o time applied in reduction of the princijial of the del)t ; and the mortuum vadium to iiave orig- inally implied a si'curity, by which, until payment of a given sum. the rents of land were ud interim lost to the owner, and reecMved by the creditor and \inaccounted for, so that the debt remained vin- ' Lili. 10. lap. r> ; page 1, supra. 11 rr.OPI-lITV SECURITY FOR DEBT. [book I. .liuiinislied, which was at common kw, as before remarked, in the event of the creditor dying possessed of the pledge, punishable as u^iirv • and it must be observod, there was the like advantage, m one respect, to the debtor in this form of mortgage, as in the vivum radiuvi viz., that the estate was never lost. . . . It is somewhat singular that Littleton should not refer to the ex- planation of the term as rendered l>y Glanville; and we may con- clude that the original murttiiim radium had by this time totally fallen into disuse,^ and become obsolete. The mortgage described bv Littleton was strictly an estate upon condition, that is, a feoff- nient of the land was niado to the creditor, with a condition in the deed of feolTment or in a deed of defeazance executed at the same time (for the common law does not allow a feoffment to be defeaz- anced l)y matter subsequent), l)y which it was provided, that on pay- uient by the mortgagor or feoffor of a given sum at a time and place certain", it should be lawful for him to re-enter. Lnmediately on tlie livery made, the mortgagee or feoffee became the legal owner of the \i\m\, and in him the legal estate instantly vested, subject to the condition. If the condition was performed, the feoffor re-entered and was in of his old estate, paramount all the charges and incum- l)rances of the feoffee, whether in the Per or in the Post, or in other words, above all persons, whether claiming through the feoffee, as heir, Avidow, or purchaser, or paramount, or collaterally to the feoffee, as the lord by escheat and the husband by curtesy. If the condition was broken, the feoffee's estate was absolute and his estate was indefeasible, and all the legal consequences followed as though he liad been absolute owner from the time of the feoffment. But until breach of condition, possession was not in general given, which was a further distinction between this mode of mortgage and the riniin vadium and did morluum vadium. And in order to protect* the mortgagor from the eviction of the mortgagee, to which he was become lia])le, a proviso was inserted, declaring that until breach of condition the mortgagor might hold the estate; and, on the other Iiand, the mortgagor engaged that, in such event, he would do all lawful acts for further assurance. .\lt hough the common law did not favor conditions, but required strict performance of them, yet it was in certain cases satisfied witli the performance of the intent of the condition, though not per- formed in words; and although a difference was taken between conditions to preserve and conditions to destroy an estate, the former being allowed to be performed as near the condition as could bo, and the hitter being strirtissimi juris, yet conditions in mortgages, the performance of M-hich, in fact, destroyed the estate of the mortgagee. were favoured in the eye of the law. and rather considered as belong- ing to the class of conditions for preserving estates. . . . i;,„,K I ] Tin: COMMnN I.WV MOK TO ACIK. 15 'riius mortgages stood at roiiniioii law, inciiuilx'rt'd with the sys- i.iii from wlucli lliry orijrinalcd, and altciidi'd with ruinous consc- .liiriiccs lo the unrnrhmalc (l('lil(»r; and it is ditlifull to conceive, liad tlif ('i)ur(s of law hccn h) inc-lint-d (which it docs^not seem they were), on what |)rinentence pas.^ed. It has been seen how decidedly opposed to this is the doctrine of forfeiture at common law. The ab.solutc forfeiture of the estate, whatever might be its value, on breach of the condition, was, in the eye of e(piity, a tlagrant injustice and hard.^hip, although per- fectly accordant with the system on which the mortgage itself wa^5 grounded. Xo wonder then that our Courts of equity, founded on the principles of the civil law, should, as they increased in power, attempt, by an introduction of those principles, to moderate the ,-everity with which the common law followed the breach of the con- dition. They did not indeed make the attempt of altering the legal elTc* t of the forfeiture at connnon law ; they could not, as they might have wished, in ccmfonnity to the principles of the civil law, declare that the conveyance shoidd, notwithstanding forfeiture committed, cease at any time befcu-e sentence of foreclosure', on payment of the mortgage-money ; but leaving the forfeiture to its legal conse- quences. theyoperated on the conscience of the mortgagee,and acting ill pn'snnnni and not //( rnn, they declared it unreasonable that he 'Ndlwilli-taiiiliii;: tlic rii:<'iir willi uliiili tlic idiunKHi law puni^^lifd tlu- tin'ucli t»f tho cniiilitinii. yd it i- cliMr from tlio ooiicurrciil tpstiinony of all our old diaiiial ic writiis. (lu- .liroiiicIiTs of llii'ir tiinos. that the law- was opi)oscd to the l.cUtT fcidinj:-^ of tin- pcopli'. ami that a (■oiisidpral)lt' df<,'rf«- of oliloipiy attfiiili'd tlio-i- wli.. to.ik ad\ aiitatrt- of it. Tim-, in I'.raimionl and riotclicr: Mnllii.- Tin. II lia-t iiniloMo a failliful pontloiiiaii. r.\ takiiij: forfrit of his land. Ahrr\i'i-. — \ do confi'N-. I will honrcfoith pra<-tiso ropontanoe. I will rc-ton> nil innrtpaum, forswoar «t)oininable usury. Tlu- Mfilit iValko; or Little Thief.— Coote. 16 PROrERTY SECURITY FOR DEBT. [BOOK I. should retain for his own benefit what was intended as a mere- pledge; and thev adjudged that the breach of the condition was in the nature of a penalty, which ought to be relieved against, and that the mortgagor had an equity to redeem on payment of principal, interest, and costs, notwithstanding the forfeiture at law. Against the introduction of this novelty, the Judges of common law 'strenuously opposed themselves ; and though ultimately de- feated by the increasing power of equity, they nevertheless in their own Courts still adhered to the rigid doctrine of forfeiture, and in the result, the law of mortgage fell almost entirely within the juris- diction of equity. There is no record of the time when this equity was first granted. In the before-mentioned cases of Wade^ and Goodall/ which were decided towards the end of the reign of Queen Elizabeth, the parties do not seem to have entertained the idea of any remedy existing for the mortgagor's relief, if the forfeiture was established at law, although Tothill mentions a case in the 3Tth year of Elizabeth's reign,^ in which the equity was decreed ; and it must soon after this time have been generally in practice, for there is a case decided in the first year of Charles the First,* in which the doctrine seems fully admitted. It was a question as to a mortgage term which had been forfeited by non-payment according to the con- dition; and the Court held, that although the money was not paid at the day, but afterwards, yet the term ought to be void in equity, as .well as on a legal payment it would have been void at law. In the- intermediate reign of King James the First, the Courts of equity became established in power, and the same period may be reasonably assigned as that in which the doctrine of equity of redemption was^ fully recognised. . . . Spence, Equit. Juris., 601. The doctrine that a pledge should l)c forfeited on non-payment at the day, which seems to have pre- vailed throughout Europe, was considered by the clergy so inequit- able, that at the Council of Lateran, a.d. 1178, temp. Hen. II., at whicli l)isliops from all parts of Christendom attended, it was de- (larcd (no doubt with reference to the doctrines which Constantine had promulgated) that where a creditor had been paid his debt and •■•xpenses out of t1io profits, he should restore the pledge to the creditor.-'' The king's court, as we learn from Glanville, took no cognizance- of agreements to ])ledge, which were not perfected by delivery ; these were left to tlie Court Christian, as cases of fidei Jcesio, of which that ' .'i Co. 11."). — Cootr. 'Jhid. Wt.—Coote. * Lanyford v. liurnard, Tothill, l;}4. — Cootc. * i'mamul Collrrir v. Erans, 1 Rep. in Chancery, 10. — Coote. •-MiiU. I'aii^. 114-.-).— ,S'/>r>if<; HOOK I.] Tin; COMMON' LAW MORTGAGE. 17 (oim then had (•o<,riiizaiuf ;' tlif king's court, tlierefori', took n<» iioticr of (iiu'stions as to the prioritit-s of creditors, l)y way of murt- gagc or plcdirc where the h-gal interest did not jjuss.^ Mortgages of hinds appear to have het'n i-oinnion in the time of lien. VI. an<1 Kdw. IV. Sonietinies they were in the form that the feofTee sliould take tlie prolits till the mortgagor paid him the del)t. Where ]tro])erty was delivered or conveyi-d as a security, and: or, if there were any other acknowledged equitable ground, as a col- lateral agreement that, notwithstanding the forfeiture, the mort- gagor should have a right to redeem. But it was a long time before the Court of ("hancery could obtain jurisdiction to relieve where the jiledge was actually forfeited, and there were no special circum- stances. It is stated by Sir Matthew Hale, that the rarliament in the 1 Ith Rich. II. would not admit of redemption after forfeiture;^ but it a))pears, on reference to the Parliament Kolls, that the case referred to was a petition addressed to Parliament by a person who alleged, that the mortgage money had been paid before the tinte: all parties were ordered to atti-nd. and on debate it ajipeared, "as Seignors du Parliament," that the matter was cognizable at law ; so the petitioner took nothing by his suit.* The general jurisdiction to relieve against a forfeiture actually in- curred aj)pears to have been introduced in this way. Creat favour was always shown to sureties, even at law. By Magna Charta, c. S. the pledge was not to be distrained if the ])rincipal debtor were suflieient to jiay ; but this growing troublesome to the creditor, it Til into use that the pledge should be bound as the principal. However, it seems to have been <'onsidered in the Court of Cham-ery, that 'So lute as H Ktlw. I\'. (\. 15. fo. 4l lli-«|iop Stilliii^'tun. Cliaiufllor. held tliat for lnoacli of faitli i pro lasinni- fidri) a nmn was at lil)or1y <>» .sue oitlipr ii> tlio spiritual court {('(tnuniru InjiiriA), or oIt in llu> ('!i;ui fory. for tlic daiua^c (i< <-a.sioiif(l by tho i>ri>a('li. — >S'/*riir«'. MU'auics ItJlaiivillc], p. '2."»7, lii». x. c. 12. — Spcncc. ' liosrnnick v. Bartuii, 1 f'li. Ci\. 210. — .S'/»«»i(r. *Rot. Pari. vol. iii. No. 10, p. 2.')8. {).—Spcncc. 2 IS PROPERTY SECURITY FOR DEBT. [BOOK X. wIkto a person gave a mortgage as surety only, if he paid the debt due from the principal debtor with interest even after the day, he did all that he really contracted to do, for it was only on non-pay- ment that he was to be called upon; and out of favour to him the rigid doctrine of the law as to the time of payment was relaxed. Thus an advantage was given to the surety that the principal debtor liad not, for he could only obtain relief on grounds that were ap- l)licablc to forfeitures generally. From this time down to the reign of James I., Ave find the notion of the existence of a general equity in the mortgagor himself to re- deem after forfeiture, gradually gaining ground. At length, in the reign of Charles I. it was established, that in all cases of mortgage, where the money was actually paid or tendered, though after the day, the mortgage should be considered as redeemed in equitv, as it woukl have been at law on payment before the day; and from that time bills began to be filed by mortgagees for the ex- tinction or foreclosure of this equity, imless payment Avere made by a sliort day to be named.^ . . . The jurisdiction Avhich the Court of Chancery exercises in regard to the equity of redemption of mortgaged premises, so far as regards the co-existent legal rights, is, in some respects, analogous to that wliich it exercises as regards trust estates, where the mortgage is created Ijy a deed which conveys the legal estate. The Court, to a certain extent,, controls the exercise of the le^al incidents of the es- tate or interest Avhich is acquired, making it subservient to the pur- poses for which it is assumed that it was created, namely, security only ; but there is this material difference, that the holder of the legal estate is not, as in the case of a trustee, completely at the com- mand of tlie court, for the mortgagee does not acquire it in the char- acter of trustee, or for the purposes of the mortgagor or that it may continue to be subservient to the equitable interest. So long, how- ever, as tlie mortgagee suffers the equitable interest to exist, Avhich, unlike a trustee, he may at his pleasure put an end to by filing a bill for foreclosure, the Court of Chancery moulds and directs the enjoy- men't and transmission of that equitable interest according to rules and doctrines of its OAvn, though hero also taking the common law rules as to property as its guide, just as in the instance of a trust estate, of wiiich we have lately treated. The estate in the hands of the mortgagee and his representatives, is considered, for almost all purpo.ses, as personal estate; the equity of redemption is treated as an cslafe in the land, and as having all the qualities and incidents of real eslale; when the mortgage money is paid off the mortgagee heeoines in the nature oi' a trustee for +lie mortgagor: but the full efjnsideralion of these subjects cannot be entered upon at present. ' Kinnnucl College v. Evans, 1 Ch. Rep. 11, 1 Cha. I. — Spence, UutJK 1.] Tin: CO.M.M»»N LAW MoliTd.VCi:. 19 I Ki;nt, Tom., 1 in. Tlic law ul" i)k'd;^^'s .>.|io\\> an accurale ami rrliiU'd si'iisi" uf justice; aiul tlu- wisdom of tlic i»rovi>i()ns hy wliicli tho inti'ivsts of tlu' debtor and creditor are etiually guarded, is to he I raced to tile IJomaii law, and shines with almost eipial advanla<,'e, and with the most attractive .simi)licity, in the i)afj:es of (lianviilc. it forms a strikin;^' contrast to the common-law morlj,M;,'o of the rreehold, which was a feofTment ujton condition, or the creation of a base or determinable fee, with a right of reverter attached to it. The legal estate vested immediately in the feoffee, and a mere right of re-entry, upon performance of the condition, by payment of the debt strii'tly at the day, remained with the mortgagor and his heirs, and which right of entry was neither alienable nor devisable. If the mortgagor was in default, the condition was forfeited, and the estate became absolute in the mortgagee, without tlie right or tin- ho]ie of redemi»tion. So rigorous a doctrine, aiul ])n)ductive of such forbidding, an tei-hnical scruples and difficulties behind us. Xot only the original severity of the common ' Gooduir.s case, fi Co. O.'i ; Co. Lilt. 210. This case of Cloodall, ami Wade's case, 5 Co. 114, aro samples of the discussions on what was, in the time of Lord Coke, a very momentous question, whether tlie absolute forfeiture of the estate hatl or had not !)een incurred l>y reason of non- liayment at the day. Such a question, wliidi would now be only material as to the costs, was in one of those cases decided, on error from the K. H . after argument and dcliatc. i)y all the judges of England. — Krnl. 20 PROPERTY SECURITY FOR DEBT. [BOOK I, law, treating the mortgagor's interest as resting upon the exact per- formanfc of a condition, and holding the forfeiture or the breach of a condition to be absolute, by non-payment or tender at the day, is en- tirely relaxed; but the narrow and precarious character of the mort- gagor at law is changed, under the more enlarged and liberal juris- diction of the courts of equity. Their influence has reached tlu^ courts of law, and the case of mortgages is one of the most splendid instances in the history of our jurisprudence, of the triumph of (•quitablc principles over technical rules, and of the homage which those principles have received by their adoption in the courts of law. Without any prophetic anticipation, we may well say, that " return- ing justice "lifts aloft her scale." The doctrine, now regarded as a settled principle, was laid down in the reign of Charles I., ver}^ cautiously, and with a scrupulousness of opinion. " The Court con- ceived, as it was observed in chancery, that the said lease being but a security, and the money paid, though not at the day, the lease ought to be void in equity." ^ The equity of redemption grew in time to be such a favorite with the courts of equity, and was so liighly cherished and protected, that it became a maxim, that " once a mortgage, always a mortgage." The object of the rule is to pre- vent oppression; and contracts made with the mortgagor, to lessen, embarrass, or restrain the right of redemption, are regarded with jealousy, and generally set aside as dangerous agreements, founded in unconscientious advantages assumed over the necessities of the mortgagor. . . . The equity doctrine is, that the mortgage is a mere security for the debt, and only a chattel interest, and that until a decree of fore- closure, the mortgagor continues the real owner of the fee. The equity of redemption is considered to be the real and beneficial estate, tantamount to the fee at law ; and it is accordingly held to be de- scendible by inheritance, devisable by will, and alienable by deed. ])recisely as if it were an absolute estate of inheritance at law.- The courts of law have, also, by a gradual and almost insensible prog- ress, adopted these equitable views of the subject, which are ' Kiuanuel College v. Evans, 1 Rep. in Cli. 10. In the case of Roscarrick V. Burton, 1 Cases in Ch. 217, Sir Matthew Hale, when chief-justieo. showed tlial he had not risen above the mists and prejudices of his ape on tliis subject, for he complained very severely of the growth of equitie-i of redemption, as having ))een too much favored, and been carried too far. In 14 P.icli. 11., tlie Parliament, he said, would not admit of this equity of redemption. P.y the growth of equity, the heart of the common law was eaten out. He eomjilained that an equity of redemption was transferable from one to another, though at common law a feoffment or fine would have extinguished it: and he declared he would not favor the equity of redcniptir)n beyond existing precedents. — Kent. '■ 1 Vern. 7, 232, and 2 Vent. ZM.—Kcnt. B..,.K 1 TIIK COMMON LAW .\[OHTOA(ii:. 21 fuuiKk'd in jii.4ii.v, and iuiord with the triif intent and inherent natuiv of every sueli transaction. Kxccpt as a;i;ainst tlie mortgagee, the mortgagor, while in possession, and l)efore f<)rc< losure, is re- garded as the real owner, and a freeholder, with the civil an at a certain day, then he shall re-enter, &c. Here the land and all the feoffor'.^ ( tate in it ])ass presently to the feoffee by common law; and the feoflTor has only the condition left, and no estate in the land that h • .m assign over (Co. Lit. 205 a. 210 a). So if one here, by dee 1 luly acknowledged and registered, conveys his land to another and his heirs upon the like condition, the land and all the mortgagor's estate in it pass presently to the mortgagee by force of the provincial act of 9 Will. 3, c. 7(11*. Will. T4). . . . It is objected to this doctrine, that Lord Mansfield, in consider- ing what species of ])roperty a mortgagee has in the estate morl- gaged, lately said (2 Burr. 978, 979), that " a mortgage is a charge upon the land, and whatever would give the money, will carry th > • -tate in the land along with it, to every purpose. The estate in the land is the same thing as the money due upon it. It will bj liable to debts; it will go to executors; it will pass by a will not ' 77(c King v. .S7. Michruls, Douj;. (530; The King v. Edington, 1 Eu>t, JS8; Jackson V. Willnnl, 4 .Johns. 41; Ritniitin v. Mnscrcau, 11 ibid, ii^i: lluntiiigh.n v. Smith, 4 Conn. 'i.3."> ; Milliiigtoii v. dnlr. 7 Mass. LIS; M'CoU V. Lciiuor, Sor.,'. & Rnwlo. 3!»-2 : Fr>; lUilmt v. U7(i7i»i;t, and that it poes to the oveeutor, as personal assets, and thonjjh. tof-hnicaily speaking, the f<'P descends to the heir, yet ho is Init a trustee for the personal re|)re- -entative-. and need not he a party to a hill hy the exe<'Utor for a fore«Io-.ure, Ails fnlly shown and ahly illustrated hy the Chief-. lustier of Conne«tieut, ill flail, v. liravh, (5 Conn. 142, and hy tin- Chit-f-.Iu-tiee of Maine, in U'i7/.i»i.s V. Frvnrh, 20 Maine. Ill ; and hy the Chainidlor of New .Jersey, in Kitinn v. Sniilh. 2 (Jreen. 14; and tlie-e pi'iieral principles were not quo?- tiiuied hv the courts. — Kvtil. 22 rROPKRTY SECURITY FOR DEBT. [BOOK I. made and executed with the solemnities required by the statute of frauds. The assignment of the debt, or forgiving it, will draw the land after it, as a consequence, nay, it would do it though the debt were forgiven only by parole; for the right to the land would follow, notwithstanding the statute of frauds" (3 Cha. Kep. 3). Upon this authority it is said that the mortgagee has no legal estate in the land; that all mortgages are personal estate; and if the land is not redeemed nor redeemable, the judge of probate has a right to assign to the widow, where there are children, a third, and where there are none, half the land, to hold, not during life, but forever, in fee. ... In order the better to settle the authority of these propositions, said to have fallen from Lord Mansfield, it may not be amiss, first to consider the third proposition, viz. : " that the estate in the land is the same thing as the money due upon it;" as it may serve to illustrate the rest, and show what is intended to be implied in some or all of them. If the mortgagee's estate in the land is the same thing as the money due upon it, then the money due upon the land is the mort- gagee's estate in it ; and consequently there is no difference between the mortgage of land for a term only, and a mortgage of it in fee, if it be for the same sum; the money, which is the estate in the land, being exactly the same in both cases; and the mortgagee in fee has no other nor greater estate in the land than the mortgagee of a term only hath. This proposition, if true, when taken accord- ing to the words of it, Avithout restriction or limitation, at once destroys the distinction between the vadium vivum and the vadium mortuum. It renders idle the invention and substitution of mort- gages for a term instead of mortgages in fee, and tends to prove that tlie mortgagee has no estate, according to the legal sense of words, in tlie land. But surely Lord Mansfield did not so under- stand tlie proposition ; for in that which immediately precedes it, he plainly distinguishes between the money and the estate in the land, and so he doth in those which follow. In the same case he just Ijeforc says, that if it appeared that the testator really meant and intended to devise the close as land, it would be a devise of the land, the mortgage being forfeited by law, and the estate in the laud having become absolute. What, was the money become abso- hitc? Xo, surely. His lordshi]) meant, that the conditional fee simple which the mortgagee had in the close by the non-payment of the money by the day, had become an absolute fee simple in law; so that he might devise the land to his son and daughter in fee tail ; and if that was his intent in the will, the close would pass accord- ingly, iv< an estate of inheritance in fee tail so long as it continued, which would be until it was redeemed, or the estate tail was spent. „()(iK l] Till-: fOM.MoN LAW M< tl£l(iAGE, 23 iij,'ret'ubly to what Lord Kci|Mr \Vii;,dit .-iiid in dill). K<|. Ca. •^. in the t-asu of a mort^'agt' in U.v. The inoiicy due on the mortgage couiil not, hy Lord Miinsfield, 1)(> consiih'red as the estate in the hind, ho as to make the money real estate, nor the estate in the lanil money, so as to make an estate in fee in hind or the hind itself personal estate. Ilis lordshij) douI)tless well knew there was a dilTercncc between a mortgage of land for a term only and a mortgage in fee: That the former was hut a chattel and the latter an estate of inheritance; that the for- mer, uidess dependent upon the inheritance, was legal assets, and the latter (•(jititable assets only; that the former went directly t() the executor, &e., but the latter descended to the heir, and the executor could n(»t have the land without the aid of the Court of Chani-ery. And yet the several projHisitions, as tlu-y stand, con- found mortgages for a term and mortgages in fee together; as ihougli there was no difference between them, which is not rea- sonable to supjiose Lord Mansfield ever did ; and, therefore, it must he su])i)osed the reporter did not take down the restrictions, with which his lordship (pialified his propositions, and left them to he implied hy the reader. . . . For if the mortgagor in fee shall, after the day of payment is elapsed, pay the mortgage money to the mortgagee, it doth not revest the fee in him in law, nor even in equity; because the mort- gagee is deemed in such a case by the Court of Chancery a trus- tee of the mortgagor, &c., until the estate is reconveyed; and so is a vendor after jt contract to convey, and the land, though not con- veyed, will in cfpiity pass by the will of the vendee as his land ('-^ Chan. IJep. 3). And surely, forgiving the di'bt will not vest the estate in tiic mortgagor, nuire than payment of the mortgage money. Xay, where mortgages are devised to executors, upon payment of the money to them, the heir is decreed to join in the reconvey- ance. . . . I'pou the whole the futility of the allegations, " that mortgagt s are personal estate, that a mortgagee has no estate in the land, and that the land mortgaged, even after it has become irredeem- able, may be distributed by the judge of ])robate as personal (Es- tate." is evident. . . . .\ufhorilies showing the estati-, both legal aiul e(piitable. tu be in the mortgagee: ".' .\tk. :]yi-\; 2 Cha. Ca. !>r : 1 Cha. Ca. '.'S.').' '" If tlic r-itale on wliiih a paiijior residc.H is sulistant ially his pio|)i'i t \ . tlial is sullicicnt wliatcviT fmins of coiivfyaiifo tliorc may l>i' ; aiul ttnitf(in' ji iiit)rt<,'a;,'<>r in possrssion j»aiiis a soltlpinont, hccnusp the inort^apro. iiol\vilh^la?iiliiiir 1h<' form, has hiif n rhallol, and (ho mort.rn^i> to say \ho niortpajjor is not th*- roal owner." . . . — I'rr Lord MaM>tii-!d. in Tin Kim/ v. SI. .l/i'7i,i.7s, Douf,'. (;32 (1781). 24 PROFERTY SECUIUTY POR DEJiT. [::ooK I. (d) The E'juKahle Mortgage. BURGH V. FRAl^CIS. Court of Chancery, 1673. (Rep. temp. Finch, 28.) Thi^: bill was brought by the executors of the mortgagee against the lieir of the mortgagor, to perfect a defective deed of mortgage bv feotl'nient, without livery and seisin, and to be relieved against certain Judgments confessed by the defendant Henry Francis, and bv Sherrcr and his wife, by collusion to defeat the plaintiffs. The defendants acknowledge by their answers, that they had con- fessed several judgments all in one term, and most of them at the same time, and to several persons for considerable sums of money, which they set forth, but deny they were since the bill exhibited, tho' they cannot tell when the warrants of attorney were sealed. This cause being lieard by the Lord Keeper Bridgman, he di- rected the matter to be examined before a master, and more par- ticularly whether the bill was a new or an amended bill, and when the judgments were ol^tained, and when the warrants of attorney were dated and sealed, and whether the judgments were confessed after tlie bill, and after notice of the mortgage; and after the mas- ter had made his report, he would give his opinion, &;c. the cause was reheard by the Lord Siiaftsbury', and an accommodation pro- ])osed, which took no effect, and being now reheard by the Lord Kkki'ER Finch, he decreed that the plaintiffs should be relieved, and tliat the several judgments ought not to incumber the mortgaged premisses, until the mortgage money was all paid. This decree was not founded on the manner of obtaining these judgments, nor on the special way by which they were endeavored to charge the lands, viz., by pleading that the heir had nothing by descent besides the lands in mortgage, nor upon the priority of the icste of the subpoena, which was before the teste of the originals ujton which the judgments were had, but it was founded on the nature f>f the case. Fcr the del)t due upon this mortgage did originally charge the land which the debts by bond did not, till they were reduced into judgments; and altho' the mortgage was defective in point of law for want of livery, yet equity, which supplies that defect, did ptill charge the land, and it ought not to, be in the power of the heir uooK I.] 8IU SIM RON stkwaict's t a.-^i;. 25 at law to charfjc it, hv aiknowk-d/^Mii^' jiul^'ments in prfjudico to sucli equity; the rather, beeause in this cause it appeared, that the mortgagor had covenanted for him and his heirs, to make any far- ther assurance; so that when the hind descends upon the heir charged with this mortgage, he is in nature of a trustee for tlie mortgagee till the money is paid, und cannot incumber it; and tho' the creditors had not any notice of this mortgage, yet they shall be bound in this case, because they are not put in a worse condition than they ought to be, viz., to be postponed to the mort- gage; and it appeared in proof, that the heir once offered to pay the )uortgage money, but u])on sight of the defect of the deed he rc- fuscd> and presently acknowledged all those judgments on bonds, on purpose to load the land with incumbrances, and in effect to pay his father's debts with the money due on the mortgage. Wherefore the decree was, that the defi'udant Henry Francis, who was to be heir at law, shall convey to the plaintilTs, or to such whom he shall apjioint, a sullicient and perfect estate of inheritance in the premisses, in such manner as the master shall direct, subject to bo redeemed ujion the payjnent of the principal and interest due on the former defective deed, and the said lands shall be held as mortgaged, and be quietly enjoyed against the defendants, and all claiming under them since the date of the former mortgage; and thai he, to whom the redeinjition doth belong, may exhibit his Ijill in convenient time, or in default thereof the plaintilT may exhibit 'i^ bill to foreclose. -Vnd a perpetual injunction was awarded to quiet the plaintiff's possession against all the said defendants, and to stay all proceed- ings at hiw, but no costs until redemption, or the jdaintilT enforced to exhibit his bill to foreclose, and then costs to be allo.vcd a. in such cases. SIi; SIM 1:0 X STKWAKT'S CASE. CofKT or ('itAXCKKV. (2 Sch. a- Lr. in which he slated that he would make a mortgage lo him on some part of his ITamp- fihirc estate; and the question was whether that was a contract 26 l>ROrEl{TY SECURITY FOR DEBT. [BOOK I. ^vllic•h bound the trustees,, who were trustees for general creditors. The creditors insisted they were purchasers for valuable considera- tion, without notice of this contract. The fact of notice could not be brought home to the creditors ; but it was sufficiently established that the persons who prepared the trust deeds, and were therefore the agents of the creditors and the trustees in that transaction, had full notice : and therefore the only question was, whether this bound the estate in the hands of the trustees, as being an equity affecting Sir Simeon Stewart, prior to his conveyance; for if it bound him, the consequence would be that it bound his trustees, under the cir- cumstances of that deed. The Court did determine that the letter was sufficient to bind him. — Per Eedesdale, L. Ch., in Card v. Jaf- fray, 2 Sch. & Lef. 374 (1805). PoMEROY, Equity Jurisp., § 368. The full significance of the principle that equity regards and treats as done what ought to be done throughout the whole scope of its effects upon equity juris- prudence is disclosed in the clearest light by the manner in which equity deals with executory contracts for the sale of land or chat- tels, which presents such a striking and complete contrast with the legal method above described. While the legal relations between the two contracting parties are wholly personal — things in action — equity views all these relations from a very different standpoint. In some respects and for some purposes, the contract is executory in equity as well as at law ; but so far as the interest or estate in the land of the two parties is concerned, it is regarded as executed and as operating to transfer the estate from the vendor and to vest it in the vendee. By the terms of the contract the land ought to be conveyed to the vendee, and the purchase price ought to be trans- ferred to the vendor; equity therefore regards these as done: the vendee as having acquired the property in the land, and the vendor as having acquired the property in the price. The vendee is looked upon and treated as the oivner of the land; an equitable estate has vested in him, commensurate with that provided for by the con- tract, whetlier in fee, for life or for years; although the vendor remains owner of the legal estate, he holds it as a trustee for the vendee, to wliom all the beneficial interest has passed, having a lien on the land, even if in possession of the vendee, as security for any nnjiaid portion of the purchase money. The consequences of lliis doctrine are all followed out. As the vendee has acquired the full equitable estate— though still wanting the confirmation of the legal title for purposes of security against third persons— he may i;o;k I.] Tin: KiillTAHLi: MORTOAOK. 2 1 convey or (.■luiiinlxT it; may devise it by will; on liis death, in- testate, it dt'seends to his heirs and n<»t. to his administrators; in this country iiis wife is entitled to (h)\ver in it; a specific per- formance is, after liis death, enforced l)y liis lieirs; in short, all tin; incidents of a real ownership belong tf) it. . . . Id. 8 1335. The doctrine may be stated in its most general form, that every express executory agreement in writing, whereby the contracting jiarly sulliciently indicates an intention to makt; Bome particular property, real or personal, or fund therein de- scribed or identified, a security for a debt or other obligation, or whereby the party promises to convey or assign or transfer the property as security, creates an equitable lien upon the proj)erly >o indicated, which is enforceable against the property in the hands not only of the original contractor, but of his heirs, administrators, executor?, voluntary assignees, and purchasers or encumbrancers with notice. Under like circumstances, a merely verbal agreement may create a similar lien upon personal property. The ultimate grounds and motives of this doctrine are exj)lained in the preceding section; but the doctrine it.self is clearly an application of tht; maxim, equity regards as done that which ought to be done.' . . . ' " The doctrine secni.s to be well established that an aj^reenu-nt in writing' to give a mortfrage, or a mortgage defectively executed, or an imperfect, attempt to create a mortgage, or to appropriate specific property to the discharge of a particular debt, will create a mortgage in equity, or a specific lien on the property so intended to be mortgaged (1 Am. Lead. Cas. in Kq. 510: Howe's Case, 1 Paige. 125). The maxim of equity xipnn which this doctrine rests is, that equity looks upon things agreed to be done as actually i>erformed : the true meaning of which is that equity will treat the subject-matter as to collateral consequences and incidents in the same manner as if the final acts contemplated by the parties had been executed exactly as they ought to have been (Story. K<\. .lur.. sees. (14 and 7!>0: Will. Kq. Jur. 289, 299)."— /Vr Curry, Ch. J., in Daggett v. liaiikin, 31 Cal. 321 (1866). BOOK II; ESSENTIAL ELEMENTS OF MORTGAGE. CHAPTER I. CONVEYANCE. Sectiox I. — Mortgage, Pledge axd Lien. RATCLIFF V. DAYIES. King's Bench, 1010. • {Cro. Jac. 214.) Action of Trover and Conversion of an hatband set xi'ltli pearls and diamonds; upon not guilty pleaded, a special verdict was found, that the plaintiff was possessed thereof, and pawned it to John Whitlock for £25, but no certain time appointed for the re- demption thereof; that Whitlock being sick, his wife in presence, and with his assent, delivered it to the defendant, and afterward lie made his said wife his executrix, and died, who proved the will; that the plaintiff tendered to the said executrix the said £25, who refused, and afterward demanded the hatband of the defendant, who refused to deliver it; but converted it to his own use: where- upon, (S:c. And in this case three points were moved : First, there being no time appointed for the redemption, whether it may be made after the death of him to whom it was pawned, or ought to be in the lives of both the parties, and all the justices re- solved, it may be well made after the death of him to whom it was plodged, but not after the death of him who pledged it. Yelverton iiud T'roke doul)ted, and held, .that it could not; for he at his peril ought to redeem it in his time, as it is upon a mortgage; but SKC. I.] I KAN KLIN r. NKATK. 29 I'LKMiMi iiiul llu! others a^Min.-l it : for i>lcil;,'in.Lr «lotli not iiiak"- an al^;olutL' i)roiH'rty, but it is a ddiviTv only until lie pays, &(;., so it is a debt unto the one, and a n-taincr of the thing unto the other: fop which there may be a rc-dcniaiid at any tinio upon the payment fendant the r 30 CONVEYANCE. [CHAP. I, amount due, and demanded possession of it, and on the defendant's refusing to deliver it. brought the present action. It was contended for the defendant, that no property passed to the plaintiff by the sale ; that it was merely an assignment of a right of action, with an equity of redemption ; and the learned Judge, being of that opinion, directed the jury to find their verdict in favor of the defendant; giving leave to the plaintiff to move to enter a verdict for him for the sum of £19 10s. Humfrey having, in the early part of this term, obtained a rule accordingly, Petersdorff showed cause (ISTov. 14). — The question here is, whether the assignee of the right of a pawnor to redeem an article pledged can maintain an action of trover against the party with whom it is pledged, he having refused to deliver it up. Now, that depends upon the contract made between the parties. The pawnee agrees to deliver the article to the party pledging it, but he does not undertake to deliver it to his assignee. The only right that the pawnor could give to the buyer was a right to claim restitution of tlie article jjledgcd. The pawnor retained nothing more than a mere right of action. Suppose an injury had happened to the chronometer, could the assignee have sued the defendant ? Or sup- pose the property pawned consisted of twenty different articles, could the pawnor, by selling them separately to twenty different per- sons, give each of them a right of action against the defendant? It is submitted he clearly could not. In Story on Bailments, p. 377, pi. 350, it is said, " Subject to the rights of the pledgee, the owner has a right to sell or assign his property in the pawn ; and in such a case the vendee will be substituted for the pledger, and the pledgee will be bound to redeem, and to account to him for the pledge and its proceeds. If he refuses, an action at law will lie for damages, as well as a bill in equity to compel a redemption and ac- count." But it is not there said that an action of trover will lie. In nich V. Aldred, G Mod. 21G, which was an action of detinue for Oliver Cromwell's picture, it was ruled by Lord Holt, C. J., at Nisi Priui3, that " if A. bail goods to C. and after give his whole right in them to B., B. cannot maintain detinue for them against C, because the .special property that C. acquires by the bailments is not thereby transferred to B."— He also referred to Eyall v. BoUe, 1 Atk. 167; Kemp V. We^tlrrool', 1 Yes. sen. 278; Beeves v. Capper. 5 Bing. N. V. 1 :5n ; Scott, 877 ; Legy v. Evans, 6 M. & W. 3G ; Clarle v. Gilhert, 2 Bing. N. 0. 313; 2 Scott, 520, and Com. Dig. tit. " ^rortgage," B. Ilumfrey (Crouch with him) in support of the rule. The pawnor retained a special projjcrty in the thing pawned, which he was fapablc of transferring to the plaintiff. The law as to pawns is derived from tlu" civil law; and in Story on Bailments, pi. 307, it HEC. 1.] FRANKLIN' V. NEATE. 31 is said, " In tho Roman law it shoul.l sicni tliat the pledgee lias n..t liroiKTty in the thin^', but lu' luis a mere right of detention or re- tainer. ri(jnus, manrnte proprietate dehiloris, solum possrssionem Iransfcrl ad creditorcm : or, as we shouhl say, the pawnee has a mere lien, and no property." In Ri/nll v. liolle, Burnet, J., says, " The ilistinetion between mortgages and pawns is laid down in Noy, 137, and in Cro. Jae. 245. There is a dilTcTenee between mortgaging of lands and pledging of goods; for the mortgagee has an absolute in- terest in the land, whereas the other has but a special property in the goods, to retain them for his security." The passage cited on the other side from Story on Bailments, pi. 350, that "subject to the rights of the pledgee, the owner has a right to sell or assign his prop- erty in the pawn," is clearly in the plaintiff's favor; for, if the pawnor may sell the property pawned, all the consequences of the .-ale attach to the purchaser, and he may ])ring trover for a conver- sion of the chattel ; for, by the sale of a chattel, the interest in it is transferred without delivery. It is a perfect fallacy to say that this was a mere assignment of a chose in action. Cur. adv. viilt. The judgment of the Court was delivered on the 10th of De- cember by RoLFE, B. This was an action of trover for a chronometer. It appeared on the trial that the chronometer in question had been pawned by the owner witli the defendant, and at the time of the jiawn, the owner delivered to the defendant a written paper, au- thorizing him to sell if the chronometer was not redeemed within a year. The owner afterward sold it to the jilaintilT, su1)ject to the defendant's right as pawnee. The plaintilT, then, after the vear had expired, tendered to the defendant the amount due on the pawn, but the defendant denied the plaintiff's right to redeem, and refused to deliver up the chronometer, and, therefore, the plain- lilT brought this action. On this state of facts, the verdict on the issue on the plea denying the plaintiff's pos.se.ssion, was by the direction of my brother Parke, who tried the cause, taken for the defendant, with liberty, nevertheless, for the plaintiff to move t<> enter a verdict for him, with CI!) 10s. damages, in case the Court should be of opinion that he had |)roved the issue. The learned Judge was inclini'd to think that this was not the case of a simjil'' ])awn, but that the terms on which the chronometer was picdgrd were such as to give the defendant something more than the right mption, which only renuiined in the original owner, eouhl have 33 COXYEYAXCE. [CHAP. I, maintained no action of trover after tendering the money: but, considering the terms of the instrument which accompanied the deposit, we all agree in thinking, that, though they gave more than the ordinary right of a pawnee, viz., the right to sell, which, being part of the security for the advance, was irrevocable by the pledgor or liis assignee, they did not constitute a mortgage or transfer of the entire legal property in the chattel itself. The case, therefore, stands on the same footing, as far as relates to the right of the pawnor, with an ordinary pledge. A rule nisi having been granted, pursuant to the leave reserved. Mr. Petersdorlf, for the defendant, showed cause, and contended that the verdict w^as right, on the ground that a pawnor cannot transfer to another such a right of possession as enables him to bring an action of trover. There is very little to be found in the books on the subject of the right of a pawnor over the chattel pawned; but this is very clear, that, notwithstanding the pawn, the pawnor still retains a qualified property; and, in the absence of direct authority on the point, this seems to us decisive in favor of his right to sell, and by the sale to transfer to the purchaser liis qualified property in the goods pawned, together with all the riglits incident thereto. The case was argued for the defendant, as if wluit this pawnor transferred, or sought to transfer, Avas a mere riglit of action. But this is not so; he transfers the property in tlie chattel, qualified, indeed, by the right existing in the pawnee, but still a right of property, and the right of action afterward* exists in the purchaser, not in consequence of its having been trans- ferred to liim by the original paA\Tior, but by reason of the pawnee having wrongfully converted to his own use that which by the sale became the property of the purchaser. We do not feel at all pressed by the argument ah iiiconvcnioiti. urged by Mr. Petersdorff. " If several chattels," he asked, " should be pawned for one sum, could separate sales be made of each to different purchasers?" "We answer, undoubtedly they may; the ])awnce will, of course, not be bound to part with any of the chat- tels until his whole debt is paid; but, subject to the claim of the pawnee, the pawnor has the same right over each chattel r.epa- rafcly which lie had before the pawn was made. Again, it is said, t^uppose the chattel is injured by default of the pawnee, while in his custody, who was to sue the pawnee, the original pawnor or the purchaser? The answer is obvious. The person with whom iho contract is made, that is, the original depositor, is the proper plain- lifF, if the action be for a breach of contract express or implied, un- less a new one be made with the purchaser; the owner for the time being is the proper plaintiff, if the injury be by the destruction or conversion of the chattel; just as, in the case of a carrier, the SKC. 1.] I-ltANKI.IN' r. NKATi:. 33 original eiuplovcr is the jmi-sou to sue for llif loss for iK-gligont carriage, or other breaeli of contraet — tlie otlur -ulisiMjiicnt pur- cliaser for the conversion after the purchase. That in ordinary cases of bailment, not by way of i)a\vn. th"' bailor niav sell, is a proposition ailrnitting of no di^ibt ; iiulced, it is assumed to be hiw by Lord Holt, in one of the cases relied on by Mr. PetersdoriT {liick v. Aldrcil, G Mod. 'l\^\), where he says: "If A. bails goods to C, and after gives his whole right in them to 1?., B. cannot maintain detinue for them against C. because the special propt-rty that C. acion has been introduoeil into this subject l)y tlie sonu-wliat indiscriiniiiate use of the words ' special property.' as alike aiipliial)h' to the ri;;ht of personal retention in ease of a lien and tlic actual interest in the goods crerted by contract of pledge to secure the payment of money. In Lt^oP ^'^ ^> '""■'». C M. & W. 42, the nature of a lien is defined to be a ' personal right whidi cannot be parted with: ' iiut ' the contract of |>lcdge carries an implication that the security '-hail be made elTectual to dischaige the obligation.' Story on Bailments, § 311. In each ca-^e the {icmrtil pKjpnIii nnniiiis in the pninior: but tlie question is as to the nature and extent of the interest, or special property, passing to the bailee, in the two cases. Mr. .Justice Story, in his treatise on Hailments, § ,324, thus describes the riglit and interest of the pawnee: ' He may by the common law deliver over the pawn into the hands of a stranger for safe custody, without consideration, or he may sell or assign all his interest in the pawn, or he may convey the same interest, conditionally, by way of ])a\vn to another jjcrson, witlwnit in either ca>i» destroying or invalidating his security; biit if the pawnee should under- take to j)ledge the prrtpcrty (not being negotiable securities) for a debt beyond his own, or to make a transfer thereof to liis own creditor as if he were the abscdute owner, it is clear that in such a case he would be gtiilty of a breach of trust, and his cretlitor would actpiire no title beyonst ion i-*. whether the creditor should be entitled to retain the pledge until the original debt was diM-hargcd. or whether the owner might recover the plcilge ijt the same nninner as in the rase of a naked tort, without any (jualilicd right in the lirst pawnee." . . . " There would therefore appear to be s(mie real dilTerence in the incidents between a simple lien, like tliat in l.ri/fi v. Hrnns, (I M. & W. ,3(5, and tho lien of a broker or factor l)efore the Factor's Act, and the case of n deposit by way of pledge to secure the repayment of money, which latter more 3 5^4 CONVEYANCE. [chap. I. BROWN V. BEMENT. Supreme Court of New York, 1811. (8 Johns. 75.) This was an action of trover, for three horses and a chair. The hall not in the meantime part with the possession thereof to the extent of his interest? It may be that upon a deposit by way of pledge the ••xpress contract between the parties may operate so as to make a parting with the possession, even to the extent of his interest, before condition broken, so essential a violation of it as to revest the right of possession in the pawnor; but in the absence of such terms, why are they to be implied? There may possibly be cases in which the very nature of the tiling deposited might induce a jury to believe and find that it was depos- ited on the understanding that the possession should not be parted with; but in the cai^e before us we have only to deal with the agreement which i-< stated in the plea. The object of the deposit is to secure the repayment of a loan, and the efTect is to create an interest and a right of property in llip pawnee, to the extent of the loan, in the goods deposited; but what i-< the authority for saying that until condition broken the pawnee has only a personal right to retain the goods in his own possession? " — Per ■\fellor, J., in Donald v. Suckling, 1 Q. B. .^85 (1866). t,K<:. 1.] llliOUN c. HKMKVT. 35 iunl ;)5 cents. Aiul [\w plnintilT ^mvo in i-vidonev a wrilin/? bearing the same date, executed by tlie defendants, by which they stipuhitcd, on tlie payment of 210 dolhirs and ']'> cents to them, by the plain- tiff, in 14 days from the date, to deliver to the plaintifT the horses and the chair; but if the property was lost in llie meantime, they were not to be responsible; nor for any expenses attending the property during the time. It was proved, that before the commencement of the suit, IJement bad told the i)laintilT he was willing to return the projjcrty which rcmaini'd, l)ut that one of the horses had \)oon sold. The plaintifT answered, that if they could agree as to tjie price of the horse sold, that would create no dilficulty. A verdict was found for the plain- tiff, by consent, sul)je(t to the opinion of the Court; and it was agreed that if tlie ])laintifT was entitled to recover the whole? prop- erty, the verdict should be entered for 438 dollars; but if for the one horse only which had been sold, then the verdict was to be for 85 dollars; and if the Court should be of opinion that the plaintifT was not entitled to recover at all, then a judgment of non-suit was to be entered. Three points were raised for the consideration of the Court: 1. That the writing given by the defendants to the plaintifT made the property a pledge, redeemable at any time. '?. That on tender of the money, the plaintiff's right of action was eomplete. '^. That the ])laimitT was entitled, at least, to recover the value of the horse sold. Pir Curiam. The plaintilV has not shown a right of action. Here was a complete transfer of the title to the goods in question, with a condition of defeasance, on the payment of 210 dollars and .15 cents, in 1 I day-. This was a mortgage, not a technical pledge; and all that was said in the case of Cortchjou v. Lansiiuj (2 Caines's Cases in Error, 200) resjiecting the nature and redeemableness of pledges, has no ajiplication to the case. The distinction between a pledge and a mortgage of goods was recognized by this court in Barrow v. Pa.rfon (5 Johns. Rep. 258). A mortgage of goods is a pledge and more: for it is an absolute jdedge to beeomi^ an absolute interest, if not redeemed at th<> sjx'cifii'd time. AftiT the cimdition forfeited, the mortgagee has an absolute interest in the thing mort- gaged ; whereas the pawnee has but a special property in the goods to detain them for his security (2 Ves. Jun. 378; 1 Powell on ^fort. 3). The title of the defendants here became absolute aftiT the 14 days; and though it does not apj)ear whether one of the horses was sold after or before the expiration of the time to redeem, that omission is not luaterial. as no attempt was luade, in season, to redeem. 36 COXVEYAXCE. [CIIAP. I. Judgment of nonsuit must, therefore, be entered according to the stipulation in the case. BEACE V. MARLBOEOUGH; Court of Chaxcery, 1728, (3 Peerc Wms. -191.) After a decree which referred it to a master to state the several incumbrances and their priority, affecting the estate of Sir Wil- liam Gostwick, this case arose : A puisne judgment creditor bought in the first mortgage without notice of the second mortgage when he lent his money on the judgment, and the question was, whether this puisne judgment creditor should tack and unite his judgment to the first mortgage, so as to gain a preference on his judgment before the mesne mortgage? And the Master of the Eolls [Sir Joseph Jcl-yll] on considering the cases and precedents, held,i First. That if a third mortgagee buys in the first mortgage, though it be pendente lite, pending a bill brought by the second mortgagee to redeem the first, yet the third mortgagee having ob- tained the first mortgage and got the law on his side, and equal equity, ho shall thercl)y squeeze out the second mortgage ; and this the Lord Chief Justice Hale called a planh gained by the third mortgagee, or tabula in naufragio, which construction is in favor of a purchaser, every mortgagee being such pro tanto. Secondly. If a judgment creditor, or creditor by statute or re- cognizance buys in the first mortgage, he shall not tack or unite this to his judgment, (Src, and thereby gain a preference : for one can- not call a judgment. &c., creditor, a purchaser, nor has such cred- itor any right to the land; he has neither jus in re, nor ad rem, and, therefore, tho' he releases all his right to the land he may extend it afterward. All that he has by the judgment is a lien upon the land, but non constat whether he ever will make use thereof; for he may recover the debt out of the goods of the cog- nizor l)y fieri facias, or may take the body, and then during the defendant's life he can have no other execution; besides, the judg- ment creditor does not lend his money upon the immediate view or contemplation of the cognizor's real estate, for the land afterward purchased may be extended on the judgment, nor is he deceive! or defrauded, tbo' the cognizor of the judgment had before made" twenty mortgages of all his real estate, whereas a mortgagee i^ ' Only fio much of tlie njiinion is given as deals with the question under consideration. SEP. i.l COXARD C. ATI.AVTir IXSfRAVrK CO. 37 (lil'iautlfd or ckrcived if Uk' ni(»rlga;,'()r iK-lun' that tim<> mort^'ago his land to another; and 'lis such u fraud as the Parliament takes notice of and punishes by foreclosing such mortgagor wlio mort- gages his hmd a second time, without giving notice of tlie first mortgage, and in that respect this case differs from a puisne mort- gagee's buying in the first mortgage. Fourlhli/. If a first mortgagee lends a further sum to the mortgagor upon a statute or judgment, he shall retain against a mesne mortgagee, till both the mortgage and statute or judgment be paid; because it is to be presume any absolute •'■ p'lrtc Foster. 39 lias boon truly said Ijy Lord Cuko. no simile holds' in evcryilnn^'. Xiilluin {■liinilr iiimdnir pcdihus citrrit. Lord Tt-ntcrdcn has said that the word lien, in its j)roj)er sense, in the law of l-]n^dand, im- ports that the party is in possession of the thin^ that he elaims to detain, and that where there is no possession, actual or constructive, there can be no lien. And this is generally true, perhaps univer- sally true at the oonnnon law. indei)endently of statutory provisir)ns. or of special contract. The doctrine was explicitly as.serted by Mr. Justice Buller in delivering his opinion in the great case of Licl- harrow v. Mason, before the House of Lords (G East., R. 21, note; id. 25), where he says: ' Liens e.\ist at law only in ca.scs where the ])arty entitled to them has the possession of the good.<, and if he once part with the possession after the lien attaches, the lien is gone.' . . . " In cquitv, also, liens exist independent of possession, either actual or constructive ; as, for example, the lien of a vendor on the land for the unpaid purchase money. But it has been the long es- tablished doctrine, in equity, that a lien is not, in strictness, either a jus in re, or a jus ad rem; that is, it is not a property in the thing itself, nor does it constitute a right of action for the thing. It more properly constitutes a charge upon the thing. It is, therefore, at most, a simple right to possess and retain property until some charge attaching to it is paid or discharged ; or a mere right to maintain a suit in rem to enforce payment of the charge. Mr. Justice Buller. speaking of liens at tlie common law, is equally expressive. Tit- says: 'Liens are not founded on property, but they necessarily suppose the property to be in some other person, and not in him who sets up the right. They are qualified rights.' "Now, an attachment does not come up to the exact definition or meaning of a lien, either in the general sense of the common law, or in that of the maritime law, or in that of equity jurispru- dence. Xot in that of the common law, because the creditor is not in possession of the j)roperty ; but it is in custodia legis, if personal property; if real ])roj)(Tly. it is not a fixed and vested charge, but it is a contingent, conditional charge, until the judgment and levy. Not in the sense of the maritime law, which does not recognizi> or enforce any claim as a lien, until it has become absolute, fixed and vested. Not in that of e(|uity jurisj)rudence, for there a lien is n<»t a jus in re or a jus nd rem. It is but a charge upon the thing, anil then only win ii it has, in like manner, become absolute, fixed and vested." . . . — Per Storv, J. 40 CONVEYANCE, [CHAP. I. CHAPTER I. (Continued.) Section II. xVfter-acquired Property. Perkins, Laws of England (about 1550). Grants. § G5. Now i? to shew of things to be granted or charged : And as to that Tcnow, that it is a common learning in the law, that a man cannot grant or charge that which he hath not: And therefore, if a man grant a rent charge out of the Manoiir of Dale, and in truth he hath net anything in the Manour of Dale, and after he purchase the Manour of Dale, j^et he shall hold it discharged. . . . § 86. And, therefore, if the Disseisee of one acre of land grant his right vmto a stranger, it is nothing worth; but if he release all his right unto thiS Disseisor, it is good, if it be b}- deed. And if he confirm the estate of the Disseisor, the confirmation is good. . . . § 90. A Parson of a Church may grant his tythes for yeares, and yet they are not in him at the time. But if Lord and Tenant be, the Lord cannot grant the wardship of the heir of the Tenant, living the Tenant. But if a man grants unto mee all the wooll of his sheep for seven yeares, the grant is good, &c. GRAXTIIAM V. IIAWLEY. Court of Common Pleas, 1615. {Ilohart, 132.) "Robert Grantham brought an action of debt upon an obligation of £40 against Edward nawle}^ the condition whereof was, that if a certain crop of corn growing upon a certain piece of ground, late in (ho oceiipalion of Richard Sankcc, did of riglit belong to the ])laintifr, tlien the defendant should pay him for it £30. Now the case upon the pleading and demurrer fell out thus: That one Sutton was seised of the land, and 30 Eliz., in April made a lease of it to Riciiard Sankeo for 21 years by indenture, and did thereby covenant, grant to and with Sankee, his executors and assigns, that it shall be \\\\\U\\ for him to take and carry away to his own SEC. 11. GItANTII.VM V. II.VWI.KY. '11 use such corn as should hv ^nowinfj upon the ground at the cn«l of the Icnn. Then Sullon conveyed the reversion to tiie phiintifT, an-i' ujion it after, and the jirojierty shall pass as soon as the fruits are extant, as 21 II. (!. A parson may grant all the tithewool that lie shall have in such a year; yet, perhaps, he shall have none; hut a man cannot grant all the wool that shall grow upon his sheep that he shall hiiy hereafter: for there he hatli it neither actually nor potentially. And though the words ;ire here not hy words of gift of tli(> corn, hut that it shall he lawful for him to take it to his own use, it is as good |o irini-rer the jiroperty, for tlu> intent and common us(> of such words, as a leasi* without im|M'achment of waste, for the like reason, and not c.r vi termini, gives the trees. 43 CONVEYANCE. [CHAP. I. HOLKOYD V. MARSHALL. The House of Lords, 1861. (10/7. L. C. 191.) James Taylor carried on the bvisiness of a damask manufac- turer at Hayes Mill, Ovenden, near Halifax, in the county of York. In 1858 he became embarrassed, a sale of his effects by auction took place, and the Holroyds, who had previously employed him in the way of his business, purchased all the machinery at the mill. The machinery was not removed, and it was agreed that Taylor should buy it back for 5000Z. An indenture, dated the 20th Sep- tember, 1858, was executed, to which A. P. and W. Holroyd wore parties of the first part, James Taylor of the second part, and Isaac Brunt of the third part. This indenture declared the " macliinery, implements, and things specified in the schedule hereunder writ- ten and fixed in the said mill," to belong to the Holroyds; that Taylor had agreed to purchase the same for 5000/., but could not then pay the purchase money, wherefore it was agreed, &c. that " all the machinery, implements, and things specified in the sched- ule (hereinafter designated ' the said premises ') " were assigncil to Brunt, in trust for Taylor, until a certain demand for payment should be made upon him, and then, in case he should pay to the Holroyds a sum of 5000?., with interest, for him absolutely. If default in payment was made. Brunt was to have power to sell, and hold the moneys, in pursuance of the trust for sale, upon trust, to pay off the Holroyds, and to pay the surplus, if any, to Taylor. The indenture, in addition to a clause binding Taylor, during the continuance of the trust, to insure to the extent of 50007. contained the following covenant : " That all machinery, implements, and things which, during the continuance of this security, shall be fixed or placed in or about the said mill, buildings, and appur- tenances, in addition to or substitution for the said premises, or any part thereof, shall, during such continuance as aforesaid, be subject to the trusts, powers, provisoes, and declarations hereinbe- fore declared and expressed concerning the said premises; and that the said James Taylor, his executors. &c. will at all times, durinir such continuance as aforesaid, at the request, &c. of the said Hol- royds, their executors, &c. do all necessary acts for assuring such added or substituted machinery, implements, and things, so that the same may become vested accordingly." The deed was, four days afterwards, duly registered, as a bill of sale, under the 17 & 18 Vict. c. 36. Taylor, who remained in possession, sold and ex- m.C. II. J HOI.nOYI) C. MAKSItAI.I.. K' changed some of the ohl iiiiichiiicry, and introdiiocd some new machinery, of wliich lie rcnikTi-d an account to the Ilolroyds before April, 18(10; hut no eonveyanci; was made of this nrw machinery to them, nor was any act done hy them, or on their hchalf, to con- stitute a formal taking of ])ossession of the added machinery. On the 2d April, 18G0, the Holroyds served Taylor wiih a demand for payment of the r)(K)(i/. and interest, and no payment heing niar iiiorlgagttr a^^iccs; lu m-U ur ninit^'a^c prop- erty, real or pL-rsoiial, of wliich ho is not ])ossi'ss(.'L Tlic <|iic^linii iii llie ciisl' is, whelluT Ihr iipix'llants, wlio have an ciuilaljlc lillr as in(.r(ga;,'ci-s of ccrlaiii iiiachinery ri\<'(l and {.lacctl in a mill, of wliidi tlic mort^jagor, James Taylor, was ti'nant, aiv tntitlcl to (lie property which was seized hy Ihe slierilV. under two writs of exeention issued against the mortgagor, in jiriority to those executions, or either of them? The title of the appellants tlepends upon a deed dated llu- *i<»th Stptemher, ISoS. [His I.ordship here stated the hill of sale and the other fact's of the case— see aiitr.] The machinery sold hy the sherifT was more than sufhcient to satisfy the first execution, and the appellants claiming a preference over hoth executions, contend that the possession taken hy them on the 30th April entitled them, at all events, to priority over the second execution of the lltli May. The great cpiestion, however, is, whether they are entitled to a preference over the first execution hy the mere effect of their 4leed? or whether it was necessary that some act should have been «lone after the new machinery was fixed or placed in the mill, in order to complete the title of the appellants? It was admitted that the right of the judgment creditor, who has no specific lien, hut only a general security over his debtor's jiropcrty, must be subject to all the ecpiities which attach upon whatever property is taken under his execution. But it was said (and truly said) that those equities must be complete, and not in- choate or imperfect, or, in other words, that they must be actual « (luitable estates, and not mere executory rights. What. then, was the nature of the title which the mortgagees nhtaineil under their mortgage deed? If the question had to be erty would pass. It seemed to be supposed ui)on the first argument that an assign- ment of this kind would not be void in law if the deed containeiaicrdriis nunr snrtiatur rffrrtum, iiitrrrvniciitc not'o actu. 4S COXVEYAXCE. [CIIAP. I. Lunn V. Thornton, said, "It is not a question whether a deed might not have been so framed as to give the defendant a power of seizing the future personal goods,"' he must have meant, that under such a power the assignee might have talven possession, and so have done the act which was necessary to perfect his title at law. This will clearly appear from the case of Congnve v. Evetts, 10 Exch. 298, in which there was an assignment of growing crops and effects as a security for money lent, with a ix)wer for the assignee to seize and take possession of the crops and effects bar- gained and sold, and of all such crops and effects as might be sub- stituted for them ; and Baron Parke said, " If the authority given by the debtor by the bill of sale had not been executed, it would have been of no avail against the execution. It gave no legal title, nor even equitable title, to any specific goods ; but when executed not fully or entirely, but only to the extent of taking possession of the growing crops, it is the same in our judgment as if the debtor him- self had put the plaintiff in actual possession of those crops." x\nd in Hope v. HaijUy, 5 Ellis & B. 830, 84:5 (a case much relied upon by the Vice-Chancellor), where there was an agreement to transfer goods, to be afterwards acquired and substituted, with a power to take possession of all original and substituted goods, Lord Camp- bell, Chief Justice, said, " The intention of the contracting parties was, that the present and future property should pass by the deed. That could not be carried into effect by a mere transfer; but the deed contained a license to the grantee to enter upon the property, and that license, when acted upon, took effect independently of the transfer." I have thought it right to dwell a little upon these cases, both on account of some expressions which were used in argument re- specting them, and also because in determining the present ques- tion it is useful to ascertain the precise limits of the doctrine as to the assignment of future property at law. The decree appealed against proceeds upon the ground, not indeed that an assignment of future property, without possession taken of it, would be void in equity (as the cases to which I have referred show that it would be at law), but that the equitable right is incomplete and imperfect imless there is subsequent possession, or some act equivalent to it to perfect the title. In considering the case, it will be unnecessary to examine the authorities cited in argument, to show that if there is an agree- ment to transfer or to charge future acquired property, the prop- erty passes, or becomes liable to the charge in equity, where the question has arisen between the parties to the agreement them- selves. In order to determine whether the equity which is created under agreements of this kind is a personal equity to be enforced SLC. 11.] IIOI.KOVI) r. MAIISIIAlJi. 4& hy suit, or to he made available l»y some ait to he clone belueeii the i)arties, or is in the nature <>f a trust attaeliinj? upon and liindinj,' the projjerty at the instant of its eomin",' into existence, we must look to cases where the rights of the third persons in- tervene. The respondents, in support of the decree, relied strongly on what was laid down I)V IJaron Parke in Mo;/;/ v. linker, ."5 M. iS: W. IDo, VJS, as the rule in e(|uity which he staled he had derived from a very high authority, " that if the agrei-ment was to mortgage cer- tain specific furniture, of which the corpus was ascertained, tiiat would constitute an ecpiitable title in the defendant, so as to pre- vent it passing to the assignees of the insolvent, and then the assign- • mcnt would make that equitable title a legal one; but if it was only an agreement to mortgage furniture to be subsequently ac(iuircd, or " (the word " or " is omitted in the report) " to give a bill of sale at a future day of the furniture and other goods of the insolvent, then it would cover no specific furniture, and would confer no right in equity." The meaning of these latter words must be that there would be no complete etiuitable transfer of the property, because there can be no doubt tliat the agreement stated would create a right in equitv upon which the party entitled might file a bill for specific performance. This point is so clear that it is almost unnecessary to refer to the observations of Lord Eldon, in the case of the ship Warre, S Price, 2G1), n., in su]>port of it. It must also be observed, that the proposition in Mo(jossession, the act of jdacing the machinery in the mill would ai)itcar to be an act binding his conscience to the agreed trust on behalf of the appellants, and nothing more woidd appear lo be requisite, uidess by the established doctrine of a Court of equity some further act was indispensable to complete tlieir etpiitable title. The judgment of Lord Campbell rr^tiuL', as he states, upon 4 50 COXVEYAXCE. [cilAP. I. Lord Bacon's maxim, determines that some subsequent act is neces- sary to enable "the equitable interest to prevail against a legal interest subsequently bona fide acquired." It is agreed that this maxim relates only to the acquisition of a legal title to future prop- erty. It can be extended to equitable rights and interests (if at all) merely by analogy; but in thus proposing to enlarge the sphere of the rule, it appears to me that sufficient attention has not been paid to the different effect and operation of agreements relating to future property at law and in equity. x\t law property, non-exist- ing, but to be acquired at a future time, is not assignable ; in equity it is so. At law (as we have seen), although a power is given in the deed of assignment to take possession of after-acquired prop- erty, no interest is transferred, even as between the parties them- selves, unless possession is actually taken; in equity it is not disputed that the moment the property comes into existence the agreement operates upon it. No case has been mentioned in which it has been held that upon an agreement of this kind the beneficial interest does not pass in equity to a mortgagee or purchaser immediately upon the acquisi- tion of the property, except that of Langton v. Horton, 1 Hare, 549, which was relied upon by the respondents as a conclusive authority in their favor. I need not say that I examine every judgment of that able and careful Judge, Vice-Chaneellor Wigram, with the def- erence due to such a highly respected authority. Langton v. Hor- ton was the case of a ship, her tackle and appurtenances, and all oil, head matter, and other cargo which might be caught and brought home. The Vice-Chancellor decided, in the first place, that as against the assignor there was a valid assignment in eqiiity of the future cargo. But the question arising between the mortgagees and a judgment creditor, who had afterwards sued out a writ of fi. fa., bis Honor, assuming that the equitable title which was good against the assignor would not, under the circumstances of the case, be avail- able against the judgment creditor, proceeded to consider whether enough had been done to perfect the title of the mortgagees, and ultimately decided in their favour upon the acts done by them to obtain possession of the cargo. It was said upon the first argument of this case by the counsel for the appellants that the judgment of the Vice-Chancellor was, upon this occasion, fettered by his deference to the opinion appar- ently entertained and expressed by Lord Cottenham in the case of Whilworth v. Gaugain, 1 Phill. 728. [The noble and learned Lord then discusses the case of Whit- irorth v. Gaugain, and concludes as follows :] Whatever doubts, therefore, may have been formerly entertained upon the subject, the right of priority of an equitable mortgagee SKC. II.] IIOLHOVI) r. MAHSIIAI.I.. 51 <»V(.'r a judirnicm creilitor, tliou could have been done for this purpose, '{'he trustee could not 52 CONVEYANCE. [CHAP. 1. take possession of the new machinery, for that would have been contrary to the provisions of the deed under which Taylor was to remain in possession until default in payment of the mortgage money after a demand in writing, or until interest should have be- come in arrear for three months-; and in either of these events a power of sale of the machinery might be exercised. And if the intervenient act to perfect the title in trust be one proceeding from the mortgagor, what stronger one could be done by him than the fixing and placing the new machinery in the mill, by which it be- came, to his knowledge, immediately subject to the operation of the deed ? I asked Mr. Amphlett, upon the second argument, what novus actus he contended to be necessary, and he replied " a new deed."' But this would be inconsistent with the terms of the original deed, which embraces the substituted machinery, and which certainly was operative upon the future property as between the parties them- selves. And it seems to be neither a convenient nor a reasonable view of the rights acquired under the deed, to hold that for any separate article brought upon the mill a new deed was necessary, not to transfer it to the mortgagee, but to protect it against the legal claims of third persons. But if something was still requisite to be done, and that by the mortgagor, I cannot help thinking that the account delivered by Taylor to the mortgagees of the old machinery sold, and of the new machinery which was added and substituted, was a sufficient novus actus intervcniens, amounting to a declaration that Taylor held the new machinery upon the trusts of the deed. Lord Wensleydale. My noble and learned friend will forgive me, but that was not mentioned in the l)ill. Lord Chelmsford. j\Iy noble and learned friend is quite cor- rect in that ; it must be taken that that was not mentioned in the bill, and that was the answer given when I urged, in the course of the argument, that that account must be taken to be a sufficient actus. But still I am stating what my views are of the whole of the case. I tliink that the account delivered by Taylor to the mort- gagees of the whole machinery which w^as added and substituted, was a sufficient novus actus interveniens, amounting to a declaration that Taylor held the new machinery upon the trusts of the deed, the only act which could be done by him in conformity with it; and it is difficult to understand for what other reason such an ac- count should have been rendered. As between themselves, it is quite clear that a new deed of the added and substituted machinery was unnecessary; no possession could be delivered of it, because it woukl have been inconsistent with the agreement of the parties; and anything, therefore, beyond this recognition of the mort- bKi'. 11. J IIULUOVI) /•. MAKSIIALL. 53 ^M^'t'f's right appears to be cxchuktl liy tin- natiirf of tin* transac- tion. I will add a wvy lew words mi I tit; sul)JL'ct of the notice of the claim of liie inort^'a^^-es to tiic jud-^Miu-nt creditor. I think that llic ('(iuitaijle title would prevail even if the jud^Mni'nt crctlitor hail no notice of it, according to the authorities which have been al- ready ohservt'd upon. It is true that liord C'ottenhani, in the case t take the property, subject to every liability under which the debtor held it. The present case, however, meets any possible difliculty upon the subject of notice, because it aj^pears that the deed was regis- tered as a bill of sale, under the provisions of the 17 & 18 Vict., c. 3(». It was argued that this Act was intended to apply to bills of sale of actual existing property only, and it j»robably may be the case that sales of future pro|)erty were not within the contemplation "f the Legislature; but there is no ground for excluding them from the j)rovisions of the Act ; and upon the question of notice, the reg- i>ter would furnish the same information of the dealing witli future as with existing properly, which is all that is required to answer the objection. I think that the late Lord Chancellor was right in holding that if actual possession of the machinery in question before the sher- itT's ofTicer entered was necessary, there was no proof of such pos- session having becm taken on behalf of the mortgagee. But \ipon a careful consideration of the whole cas»\ I am compelled to differ with him upon the ground on wl\ich he ultimately reversed Vici»- f'hancellor Stuart's decree. I think, therefore, that his decnv should be reversed, and that of the Vieo-Chnncellor affirmed. . . . The following order was afterwards entered on the Journals: "That the decree or decn>tnl order of the Court of Chancery, of the "P^d of Deopmhor. ISHO. lie reversed: and that the petition for 54 CONVEYANCE. [CUAP. I. rehearing, presented by the said respondent, Emil Preller, to the Lord High Chancellor, be dismissed, with costs ; and that the cause be remitted back to the Court of Chancery, to do therein as shall be just, and consistent with this judgment." MOODY V. WEIGHT. Supreme Judicial Court of Massachusetts, 1847. (13 MetcaJf, 17.) This was a petition, under St. 1838, c. 163, § 18, for the inter- position of the Court, as a court of chancery, in behalf of a creditor of two insolvent partners. The petitioner alleged that Horace Wright and Benjamin B. Hoxse, tanners, and partners in business,, applied to the Judge of Probate for the County of Hampshire, in December, 1846, for the benefit of the insolvent laws, and that such proceedings were had, upon their application, that all their estate was assigned to the defendant, as assignee : That the petitioner, in July, 1839, sold and delivered to said Wright & Hoxse, hides, skins and hark, for the sum of $2371.34, on credit, and took their promissory note therefor, payable in four months, with anmial interest, and also took a mortgage of said propcrt}^ and of other property, which mortgage was duly recorded, and by which they secured to the plaintiff whatever hides, skins, bark or stock, which might afterwards belong to them, wherever situated, and whether manufactured or not, and whether at market or not, or the proceeds- of the same, if sold, and also all leather thereafter manufactured from the proceeds of the property then on hand, and in what- ever shape it might afterwards exist, or whatever form it might assume, so that the then present and future earnings of the said Wright & Hoxse's tan works, both stock and proceeds, and whether sold or unsold, might stand conveyed, pledged and hypothecated to the petitioner, for tlie payment of said purchase money and note: That said note and mortgage had never been satisfied, dis- charged or cancelled, and that their validity had been repeatedly recognized and confirmed by said Wright «& Hoxse, by the pay- ment, and in(lf)rsemont on the note, of the annual interest thereby secured: That the petitioner, at the first meeting of the creditors of said Wright & Hoxse, presented a petition to said judge of pro- bate, setting forth the facts above mentioned, and also stating that the property intended to be secured by the mortgage aforesaid had been taken l>y the inessenger, under the warrant issued accord- ing to the provisions of the insolvent laws, and praying that said ^Ee. II.] MOOPY r. WIMOIIT. 55 property might be sold, and the proceeds thereof applied to the payment of said note, and that lie might he admitted as a creditor for the residue, if any; referring to the schedides and return of the messenger for a description of the i)roi)erty to l>e sold; hut that said judge of probate " did order and decree that tlu; prayer of said petition should not be granted:" That a large amount of the j)roperty intended to bo conveyed and hyj)othecated, as afore- said, was taken by said messenger, and afterwards by the defendant, as assignee, in behalf of the general creditors of said Wright 6c Jloxse : That although, in the course of the business of said Wriglil & Iloxse, the identical property which was sold and delivered to them, as aforesaid, by the petitioner, was changed into other forms, yet the ])rocceds thereof were so used and invested as to assume th<' form of and become the i)roperty thus taken by said messenger and the defendant; that said property, thus taken and held by force of said mortgage, was a portion of the property and earnings of Wriglit t.^' Hoxse's tan works, and was described in said mortgage, and therein pledged and hypothecated to the i)etitioner; and that said Wright and Iloxse continued their business as tanners until said warrant issued. The petitioner's prayer was, that the i)roperty aforesaid, taken by the defendant, as assignee, or the proceeds tiiereof, might be a|iplied towards the payment of said note, and that he might be admitted as a creditor, for the residue thereof, if any, according to the pro- visions of St. 1838, c. 1G3, § 3; and that such other order or decree might be made in the premises, as law and justice might require. The answer of the resjmndent averred, that all the property be- longing to the said Wright & Iloxse, at the date of said note and mortgage, was afterwards, from time to time, dispo.scd of by them, at their pleasure, and that at no time between the date of ."^aid mort- gage and the taking of their jjroperty by the defendant, as a.ssignec. did they ever set apart to the petitioner any specific portion of their ])roperty, which might have been purcha.sed, if any was so ])ur- ehased, with the proceeds of the property included in said mortgage : nor did they ever account to the petitioner, specifically, for the proceeds of the same, or any part thereof; nor did they, in the purchase and aetpiisition of stock, or other property which might iiave belonged or come to them, after the date of said mortgage, make any distinction between such, if any. as was purcha.sed or accpiired with the specific proceeds of the |)roperty belonging to them when said mortgage was executed, and that which was the l>roper fruit of their own personal labor, money and inecune. or wjiich accrued to them from any other source than the sale of said hypothecated projiertv. When>fore the respondent prayed tliat the decree of the Judge of I'robate miglit be allirmed. 56 CONVEYANCE. [cilAr. I. The arguments in this case were submitted in writing. Huntington for tlie petitioner. Delano for the respondent. Dewey, J. The positions taken by the opposing counsel have been fully and ably presented, in their respective arguments, but, in the view we have taken of the case, it has become unnecessary to express any opinion upon several of the points raised. We have directed our attention more particularly to one, which is a leading iind material one, and decisive of the case. The instrument offered in evidence by the petitioner, as the foundation of his claim, purports to convey to him certain articles of personal property, consisting of hides, skins and bark, all then in existence, and in possession of the grantors, and also whatever hides, skins, bark or stock, of whatever description, that may here- after belong to the grantors, wherever situated, and whether manu- factured or not, and at market or not, or the proceeds if sold; also, all leather thereafter manufactured from the proceeds of prop- erty then on hand, and in whatever shape the property might there- after exist, or whatever form it might assume; so that the then present and future property and earnings of the tan works might stand conveyed, pledged and hypothecated to the petitioner. This instrument, so far as it purports to mortgage the prop- erty of the mortgagors then in existence, and held by them, was in all respects a valid instrument; and if any such property now re- mains for it to operate upon, it will be effectual to pass the same to the petitioner. We understand, however, that the case shows no such property in llic hands of the assignee, and that the specific property conveyed by the petitioner to Wright & Hoxse, and by tliem reconveyed in mortgage to him, has no longer any existence, and that the only ground of sustaining this petition is that of a lien upon subsequently acquired property, -which had no existence at the time of the execution of the mortgage, and which has no other connection with it, than that, to some extent, it may have been ])urchascd with funds which were the proceeds of various sales from the tannery; first, of the articles purchased, and their proceeds applied to the purchase of new stock, which, when manu- fnr-tured, was again sold, and its proceeds invested; and so from lime to time. This instrument is clearly, therefore, an attempt to mortgage or hypothecate after acquired property. Can such secur- ity be made effoetual ])y the making and recording of such instru- ment, without any further act of the parties, with no delivery by the mortgagor, and no act on the part of the mortgagee, taking possession or exercising any rights of property in the newly ac- quired articles, l)y virtue f)f the provisions in the mortgage as to proj)erty ? .SKC. II.] M^(»|)^ ;. WlMtlllT. 57 This siibji'ct ha> hccn rrcciilly Ixfon- us, in the cmsc of Jonrs v. Jiichaiilsun, 10 Mv{. AS], iinolvin;; tlio (|ucsti()n as to the validity of such a iiiorl<;agc in a cnuii of law. 'I'hc suhjccl was very ina- luix'ly considiTcd, and tin- Coiiit wm-c all cloarly of (tpinion that such ni()rtfiae like the jtresent, that the after acquired property should be h(tlden by the one ])arty or the other; whether the claims of the intlividual cred- itor would, in an equitable view, be more meritoriou>< than those of the entire body of creditors, seeking a distribution pro raid, would depend, not so much on anything disclosed on the face of the mortgage, as upon a full knowledge of the entire course of busi- ness of the mortgagor, and the circumstances a])pertaining to the ]iroperty which is now the subject of controver-v. the moib' of its aoqm'sition, &c. Supposing ourselves clothed with full e(|uily powers, and treat- ing this case as before us uiu'mbarrassed by any (piestion as to our limited jurisdiction in chaiu-ery, we are not satisdeil that the j)e- titioner has shown any such title to this proj)erty as would author- ize us to hold it to be subject to a lien for the note of Wright & Hoxse to the jietitioner, as against crcilitors who have acfpiired n right to it before any act of the petitioner had taken jdace, reduc- ing the property to his possession, or by asserting eiTectimlly any right under the prospective hypothecation, as by making a claim and taking po.s.session under it. while in the possession of Wright A' Iloxse. There are doubtless ei|uitable liens which nuiy be en- forced in courts of ecpiity. though not available in a court of law. Many such might be enumi'rated. That which nearest approaches the present case is that of an agreenuMit to convey property, or do some act, the perfornuince of which has Imhmi casually postponed; 58 CONVEYANCE. [CHAP. I. and in dealing with ilie rights of the parties in such case, a court of equity will consider a thing done which was agreed to be done. That class of cases does not present, however, the difficulties that arise in the present case The property which is the subject of the agreement, in the case supposed, was in existence, and the power to convey the same, or stipulate for a conveyance, existed. Nor do the cases of Davis v. Newton, 6 Met. 537, and Eastman V. Foster, 8 Met. 19, at all conflict with the view we have taken of the present case. The property, in reference to which those cases presented questions, was in existence, was susceptible of being conveyed and was the subject of bargain and sale. In the case JEastman v. Foster, more particularly relied upon, the mortgage j^^as a good and valid mortgage in law, and of property then in existence, and the party only went into equity to enforce a claim qrising under such valid mortgage. The case was one of implied trust, of which this Court has jurisdiction, and which it may well enforce. The difficulty that presses in the present case is the want of any binding original contract, which per se could have force and effect to change the after acquired property, without some further act by the parties, after the property should have come into ex- istence. Such act we deem to have been necessary to perfect the title of the petitioner, whether his rights of property in such after acquired articles are sought to be enforced in equity or at law. We are fully aware that a different view of this question was taken by Mr. Justice Story in the case of Mitchell v. Winslow, 2 Story, E. 630, and that the result to which he came differs from ours as to the effect to be given to such mortgages in a court of equity.^ In relation to that case, it is supposed by the counsel for the pe- titioner, that it had, to some extent, the sanction of this Court, in the remarks of the judge who delivered the opinion in the case of Jones v. Richardson. But we apprehend that no such view was intended to be suggested. The case then before the Court was an action at law; and the obvious and quite sufficient answer to the case of Mitchell v. Winslotv which was relied upon by the then plaintiffs, was " that was a case in equity," without entering upon the further inquiry wliether we shoukl. as a court of equity, in a * " It seems to me a dear result of all the authorities that wherever the parties by their contract intended to create a positive lien or charge, either upon real or tipon personal property, whether then owned by the assignor or contractor or not, or, if personal property, whether it is then in esse or not, it attaches in equity as a lien or charge upon the particular prop- erty as swrn as the assignor or contractor acquires a title thereto, against the latter and all persons asserting a claim thereto under him, either voluntarily, or with notice, or in bankruptcy." — Per Story, J., in Mitchell V. Wmslow, 2 Story, G30, G44 (1843). tjKc. M.] iioubi r. uicKiirr. 59 ra^o before us, come to tlu' same ri'sult. 'I'lie case <»f Lniujlon \. llmidii, 1 Hare, 5J!>, imieh relied upon as sanetioniii;; the doetriiie that fi^iieh eonveyanee might l>e supjiorted in a court of equity, isccms to us to go no further than this, viz., that tliere having lx»en «ueh a eontraet hctween the parties as wouM in et|iiity have given the phiintitT a titU' to the eargo when it arrived, and that contract having been j)erfected In' possession hnvfully taken, it being a case of property mortgaged while at sea, and it being sullicient to take possession forthwith on its arrival, the jdaintitTs were entitled to Iiold under this contract as against a judgment creditor. On the other hand, another adjudication nuiy be rcfi-rred to as strongly sustaining the view we take of the invalidity of this mortgagj' in equity. I allude to the case of Mofj(j v. Baker, 3 M. & \V. 195, in the Court of Exchequer. As I understand that case, the doctrine thaf a lien may bi- enforted in e(piity, in a case like the present, is wholly repudiated. The Court held that an agreement to mort- gage certain specific furniture then in existence would constitute an equitable title in the party holding such agreement, and pre- vent its passing to the assignees of the insolvent ; but if it was only an agreement to mortgage the furniture to be subsequently ae- (juired, then it would confer no right in equity. It is true, as was remarked by the counsel for the petitioner, that the Court wen* dealing there with the equity principle of construing that to have been done which was agreed to be done; but no question arose as to the correctness of that princijile of equity, and the only point of controversy was, whether, taking that to have been done which was agreed to be done, it would constitute a valid, equitable lien. .\nd whether it would do so or not, was made to depend ui>on the fact whether the propi-rty was subseqiu-ntly acquired; and, if so, it was held that the agreement would confer no right in equity. The doctrine of that case, which seems fully to sanction the prin- cij)le we have adopted in the present ease, was aHirmed by the Court of Queen's liench. in Gale v. Bunirll. 7 A. & E., X. R. 8>)0. The residt to which we have come, upon the present petition, may be stated in the following propositions: The petitioner can- not hold the property in controversy, as mortgaged property. l)e- causc it was not in existence, and, therefore, not ca|)able of l)eiiig conveyed in mortgage, at the time when the mortgage was nuule. The instrunu'ut could not operate to pass the pnqu'rty as a pledge, because the custody of the sanu* was not taken and retained by thi' pledgee. The jiroperly cannot be held as charged with a lien, be- cause a lien cannot be creatccl by an executory agreement without b(Mng accompanied by possession or delivery of the property. .V stipulation that future acijuired property shall be holden as secur- ity for some present engagement, is an executory agreement, of Co CONVEY AXCE. [cilAP. I. such a character, that the creditor with whom it is made may, under it, take the property into his possession, when it comes into existence, and is the subject of transfer by his debtor, and hold it for his security; and whenever he does so take it into his posses- sion, before any attachment has been made of the same, or any alienation thereof, such creditor, under his executory agreement, may hold the same; but, until such an act done by him, he has no title to the same ; and that, such act being done, and the possession thus acquired, the executory agreement of the debtor authorizing it, it will then become holden by virtue of a valid lien or pledge. The executory agreement of the owner, in such a case, is a con- tinuing agreement, so that when the creditor does take possession under it, he acts lawfully under the agreement of one then having the disposing power, and this makes the lien good. If, however, before taking possession, or doing such acts as are necessary to give vitality to the mortgage, as to the subsequently acquired prop- erty, an attachment or assignment for the benefit of creditors takes place, the opportunity for completing the lien is lost, and the mort- gage or pledge not being perfected, the property passes to the as- signee, and must be held i)y him for the benefit of the creditors generally. There was no act done by the petitioner and by "Wright & Hoxse jointly, or by either of the parties, which was sufficient to give effect to the original mortgage, as to the after acquired property. The recording of the mortgage by the petitioner did not ; for that was before such property was acquired. The annual payment of interest by Wright & Hoxse could have no such effect. It was neither actually nor symbolically accepting the transfer or x:;onvcy- ance of the articles after they were acquired by Wright & Hoxse. As to the point suggested, that this agreement between these parties might be treated as a conditional sale by the petitioner, the change of property to take effect only on payment of the note, it was competent for the petitioner to have made such a condi- tional sale, and the effect of such sale would have been, that ho would not have been divested of the property in the articles thus conditionally sold. But no such principle can avail the petitioner here, as no articles remain in existence that were his property and possessed by him at the time of the sale. The petitioner seeks not lo reclaim such articles, but those subsequently acquired by his debtors. Nor is there any ground for the suggestion that this may be treated as the constitution of an agency on the part of Wright & Hoxse, and that, as such agents, all their acquisitions would omire to the petitioner as the principal until the note of Wright & Hoxse was fully paid. In no way, that we perceive, can we give effect to this contract, SEC. II. J SMirilli;>r c. l.DMINDS. 61 so iis (() ^'ivi' the lu'iitioiifP lln' litn. u|i»>m llic after ai"(|uirt'(| prop- erty, that lie .Iace, or cause to be purchased and placed uj)on said demised premises during the said term, it being then known to and con- templated by said ])arties that it would be necessary for the lessee to purchase and place a large amount of furniture on said premises, in addition to that which was then there, and it being the agree-s by the lessee, it shotdd be deemed and considered as belonging to llu> complainant as collateral security for the payment of said rent. .Vnd the lessee, among other things, covenanted and agreed with the les.-or that the said furniture and other household articb'«. as well as that which then was on said premises as tlint which should thereafter be placed thereon by the lessee, shoidd not ho sold or otherwi.. 11.] SMITIIUBST V. EDMCKDS. 83 It is not a pledge. These chattels were not delivered, and they were not capable of (Iclivcry at the time of the contract. They liad no existence. At tlic coninion law, there cannot he a technical pledge of property not tlicn in existence or to l)e acquired by the pledgor in futuro (Story on Bailments, ^i^ 286, 291). It is equally clear tiiat the contract eannot operate a.s a legal -ale or niortga^fc of the ehattels. To constitute a valid sale at law, the vendor must have a present property, either actual or potential, in the thing sold {Graniham v. Ifnirlei/, Ilobart's R. 1.32; Co. Lit. •.'(J5, a, note 1; Robinson v. MacdonncU, 5 Maule & S. 228; 2 Kent's Com. 408; 1 Parsons on Cont. 437; Story on Sales, ^ij 185, 18G). It is not necessary that the vendor should have the actual prf)p- erty, or that the chattels should have an actual existence. It is <'nough that he have it potentially. The distinction was taken in the early case of Grantham v. Ilairlei/, already referred to. The lessor in that ease covenanted tliat the lessee of a term might take the corn that should be growing at the end of the term. It was held that the words were good to transfer the property as soon as it was extant, the les.sor of the land having the crops not actually, but potentially. So it was said, a parson may grant all the titlus of wool that he may have in a certain year. But a man cannot grant all the wool that shall grow upon his sheep that he shall hereafter buy, for there he hath it neither actually nor potentially. Till' distinction will ho found recognized in most of the leading eases, and fully stated by the elementary writers already cited. In this ca.se the lessee had neither actual nor potential property in the chattels mortgaged. They were articles which it was con- templated should be thereafter purchased by the lessee, and the agreement is, that when and so often as any additional furniture shall be purchased and placed on the premises by the les.see, it shall belong to the lessor as collateral security for the payment of rent, and shall not be sold or otherwise disposed of or removed from the l^reniises during the term. It will be assumed, as the authorities < learly establish, that the agreement does not ennstilute a valid transfer or mortgage at law of the after acquired i-hattcls. The real question is, whether the contract creates an equitable mort- gage of the ehattels which a court of equity will enforce and \no- tect as against a subsequent execution creditor. In the case of Lanrjfon v. Norton, 1 Hare. TjIO, tliis (piestion was carefully examined and decided by Vice-Chancellor Wigrani. The owner of a whaling ship, then on her voyage to the South Seas, in order to scn-ure to tlie assigniMs certain inpurtenances, and aUo all il and bead matter atid other cargo whicli might Ik' caught and 64 CONVEYANCE. [CIIAP. I. brought home in the said ship on and from her then present voy- age. It was held that the assignment was, as against the assignor, a valid assignment in equity, as well of the future cargo to be taken during the particular voyage as of the cargo, if any, which existed at the time of the assignment; and the master, having delivered up possession of the ship and cargo to the mortgagees immediately upon his return from the voyage, it was further held, that the equitable title of the mortgagees to the cargo was perfected, and could not be defeated by a judgment creditor of the assignor, who afterward sued out a writ of jieri facias, and proceeded to take the ship and cargo in execution. It may be suggested that the owner of the ship might be deemed to have a potential ownership in the whales to be thereafter caught during that particular voyage, and that upon this ground the assignment might be held valid at law. It was held otherwise, and a similar assignment was declared to be invalid at law by Lord Ellenborough, in Robinson v. Macdonncll, 5 Maule & Sel. 228. But if by any latitude of interpretation that view might be taken, it manifestly did not influence the result of the cause. In the course of his opinion, the Yice-Chancellor says : " I lay out of the view all questions as to the operation of the instrument at law, and look at the case only as a question in equity.'" And again he says : " I rely in this case on the general principle, that there having been such a contract as would in equity entitle the plaintiffs, as against the owner, to the cargo when it arrived, and the title under that contract having been perfected by a posses- sion lawfully taken under the deed, which there is no attempt on the part of the owner to impeach, the subsequent judgment creditor cannot take that property from the plaintiffs." It may bo again suggested that there is this further dissimilarity between the cases. In the reported case, the ship and cargo, on her return from the voyage, was delivered to the mortgagees, and thus the equitable title of the mortgagees was perfect(?d; whereas in the present case the chattels were not delivered to the mortgagee, but remained in the possession of the mortgagor. It is true the chat- tels were not in the actual possession of the lessor, but they were delivered to the lessee upon the demised premises, where, in ac- cordance with the contemplation of the parties and the terms of tbe agreement, ihey were to be used by the tenant, and from which they were not to l)e removed during the continuance of the term. This in no wise affected the validity of the contract, but was a delivery according to the terms and spirit of the contract, which ],erf('cted the equitable title of the mortgagee. In this regard there is no real dissimilarity between the cases. In the more recent case of Milchell v. Winsloiv, 2 Story's E. SEC. II.] SMITH llt.sT r. KDMINDS. <;5 630, this question undorwont a iiion- claltoriitc f.xamnation, l»v Mr. Justice Story, in the (.'ireuit Court of tlie I'nited Slates. 'VUr Court lu'hl tluit to make a ^'raiit or assi^Minicnt valid at hiw. the lhin«,' which is the suhjcct of it must have au existence, actual or potential, at the time of such ^'rant or assi;,Miment. But the court- of equity support assignments, not only of ehoses in action, hut of contingent interests and expectations, and also of things which have no ])resent actual or potential existence, hut rest in mere possi- hility only. . . . In the cour.^e of a very elahorate opinion, after quoting at some length from the opinion of the Vice-Chancellor in Lnn;/ton v. Ifor- ion, Judge Story said: " Xow it seems to me that this reasoning is exceedingly cogent and striking, and it stands upon grounds en- tirely satisfactory and conclusive upon the whole suhject." \n 1 as the result of his investigation, he adds: "It .seems to me the clear result of all the authorities, that wherever the parties hy their contract intended to create a ])ositive lien or charge, either u|iiin real or personal jiroperty, wheth(>r then owned hy the assignor or not, or if pergonal property, whether it is then in esse or not, it attaches in equity as a lien or charge upon the particular propertv, as soon as the assignor or contractor acquires a title thereto, against the latter, and all pcr.>;ons asserting a claim thereto under him. either voluntary or willi notice, or in hankruptcy." These cases, I think, in principle clearly control the jiresent case, and I am quite satisfied to rest my conclusion upon their authoritv. Ii, would he ditlicult. indeed, upon a question of erpiitv, to cite higher authority, u|ion either side of the Atlantic, than the eminent judg<- who.se opinions have heen referred to. A further question occurs, viz.. whetlier. adiuilting the equitahle mortgage to he valid against the mortgagor, and all persons claim- ing under him with notice, it will he enforced against a suhsequeiit judgment creditor of the mortgagor. It was so held hv Vice- Chaneellor Wigram in the case of Lnngfon v. IFortoti. already citeil. The suhject afterwards underwent a more elahorate examination hy the same learned judge, in the case of Wliihmrlh v. (niui/din. '^ Hare, IK!, where the grounds of hi.s conclusion are clearly nnd convincingly staled. . . . T/if III ol ion lo dissolve the injunction is denied trith costs. ^g CONVEYANCE. [CHAF. I. LOOKER V. PECKWELL. Supreme Court of New Jersey, 1876. (38 N. J. Law, 253.) In replevin. On error to the Essex Circuit. The opinion of the Court was delivered by Van Syckel. J. This cause was tried in the Essex County Cir- <-uit Court, by consent of parties, before the Court without a jury, upon admitted facts. A brief statement will present the point in issue. One John M. Mackenzie, to secure his debt to the plaintiff. <^\ecuted to him a mortgage upon the fixtures, stock and materials, &c., of his bakery in Newark, described therein as follows: "All tbc bake-house fixtures and utensils now being in and about my bakery. No. 413 Broad street; also, all flour, &c., and all other stock manufactured, and unmanufactured, and all materials what- soever being in and about said bakery, or that may at any time during the continuance of this mortgage be purchased and ob- tained to replenish and replace the same or any part thereof, to- gether with," &c. The mortgage was duly registered, as required by law. After the delivery of the mortgage, Mackenzie, in order to replenish his stock, purchased twenty barrels of flour, which Avere delivered to iiim on the sidewalk in front of his bakery, where they were seized l)y the defendant as slieriff, by virtue of an execution in his hands, upon a judgment in favor of Totten against said Mackenzie, for goods sold to him after the making and registering of the mort- gage, and before tlie purchase of said twenty barrels of flour, which were purchased of other parties. The question submitted on the case is, whether the twenty barrels of flour were subject to the lien of the mortgage? Perkins, tit. Grants, § 65, says: "It is a common learning in llie law, that a man cannot grant or charge that which he hath not." A grant will operate only upon goods which the grantor has actually or ])otentially at the time of the grant. Chief Justice Tindall fully recognized this rule in lAinn v. Tlior- l'>n. 1 Com. Bench, 370, which has since been received as authority l)otb in England and this country, as applicable to sales as well a- 1m mortgages. Tb(! suggestion of Chief Justice Tindall, that the grant migh*: be <() framed as to give the grantee a right between themselves 1 1 seize after-acquired goods of the grantor, was acted upon in Co»- (jrpvp V. Evem, 10 Exch. 208; Uopp v. Hayley. 5 Ellis & B. 830, . . i:.] ItlM'.TT V. CAIlTrK. 67 ;iinl in otlur lascs cited below, Init tin- doctrine litld in the priii- , note A-). Tliat this is the rule at law, is regarded by Chancellor Green in >fititlturst V. Edmunds, 1 McCarter, 408, as beyond controversy. lli> says that to constitute a valid lepil sale, the vendor must have a present property, either actual or potential, in the thin^' sold. The judgment of the Court below in favor of the defendant was right, and should be affirmed. BRETT V. CAin I;K. District Court of tiik rs'iTHD Statks, 1875. (2 Lowe} I. A'iH.) Bill in equity by the assignee in bankruptcy of one Osborne N. Sargent, against a mortgagee^ of the stock of stationery and other similar goods. It appeannl that Sargent bought out the stock in trade of the defendant Carter, as carried on by him at a certain place, in Xovember, 1871, and on the same day he gave back a mortgage to secure the payment of the ])urchase money by install- ments, represented by promissory notes extending over a jieriod of f'lir years. The mortgage conveyed thi' stock "and any other "tds which may from time to time, during tlie existence of thi? mortgage, be purchased by the grantor and ])ut into said store to replace any part of said stock which may have been disposed of." .\mong the covenants was one, that, if the stock should be dimi' iii-^lu'd "faster than said sum hereby secured is jtaid. said grant<>r to furnish further security for said sum, whenever re(|uired by :d grantee." Twct of the notes were didv paid, but one thai «ame due in N'o- luber, 1875, was not paid in full, and tlie defendant deinande year. This mortgage was given nbo\it o weeks bc^fore the petition in bankruj)tcy was filed, and the '•ory of the bill was that it was a |)referenee. The complainant-* '"^"•nrfl'5 fts'ked leave to amend, and allege the fir-t mortgage to (58 CONVEYANCE. [CHAP. 1. be void, on the ground that the mortgagor was tacitly permitted to sell the goods in the ordinary course of his trade. The defendant insisted that both mortgages were valid. Lowell, J. The Court of Appeals of Xew York decided, by a bench which was equally divided in opinion, that a mortgage of chattels which permits the mortgagor to continue in possession and to sell the goods in the ordinary course of business, is void on its face, as mere matter of law {Griswold v. Sheldon, 4 Comstock, 581). This decision has had a remarkable following, and its doc- trine appears to have become the settled law of New York, Ohio; and Illinois. It is not the law of England, Maine, Massachusetts, Michigan, or Iowa. In several States it has not been passed upon. But as this new doctrine, or, rather, revival of an old one, has been said by Mr. Justice Davis, of the Supreme Court, to be so general and just that it may be presumed to be the law of Indiana, in the absence of express and unambiguous decisions of the courts of that State to the contrary, and as I venture to doubt both the gen- erality and the justice of the doctrine, it becomes me, with all tin* respect I feel for that opinion, to state my reasons for not acceding to it. If the rule, whichever way it may be, were a settled rule of property in Massachusetts, inquiry into its history or justice would be unnecessary ; but altliough I have no doubt my decision will ac- cord with the law of J\lassachusetts, I have not found a case in this State in which the decisions in New York were reviewed, and it is possibly still a question for discussion. I had supposed it to be well settled, after much debate and con- flict of opinion, certainly, but substantially settled, that when a vendor or mortgagor was permitted to retain the possession and control of his goods and act as apparent owner, the question whether this was a fraud or not was one of fact for the jury, excepting under a pccidiar clause of the bankrupt law of England. It is so pronounced by Mr. May, in his valuable treatise on Voluniarif and Fraudulent Conveyances, p. 126, and by the cases he cites, and by the learned editors, both English and American, of Smith's Leading Cases, notes to Tu-yne's Case, Vol. I., p. 1, &c. By the law of England, as I understand it, there are no constructive or- artificial frauds, or, if the term is preferred, frauds in law, re- maining, excepting, first, such as are expressly made so by statute ; as, for instance, wlien a bankrupt retains the order and disposition of goods, as apparent owner, with the consent of the true owner. We have not adoj)ted this ])art of the bankrupt law, as was somewhat emphatically said in a late case in the Supreme Court, Savjyer v. Turpin, dl^JJ. S. (1 Otto) 114, 121; or, second. Where the "act is necessarily a fraud on creditors, as where an insolvent person gives away a part of his estate for no valuable consideration, or the whole .sKr. 11.1 UKKTT r. (AllTKlC. 69 f ii to one antecedent civditnr. These, to be sure, an- ('xainjdc-. I)iit very IVw otluTs loiild l)c addiu-rd, and I understand the triu- law both liere and in I\n;,dand to havi- Ix't-n, until latt-ly, that a «i>nveyance for valual)le present consideration is never >i fraud in law on the faee of the deed, and, if fraud is alle;^ed to exist, it iniHt be proved as a fae( ; and that was the law even before re;;istration was recpiired for tln^ benefit of persons dealing with the iiinrt- Il is very straiii^e that after niir Leffislaturcs have met the dif- lieulty in Twyne's Case, by rcipiiring rejrist ration, which pives n<»; only constructive, but in most eases actual lattice of mort;:a;:e>, i\d when many of them have jtrovided that fraud shall be a (pies- nn of fact for the jury, the decisions which I have cited, and !her.s following them, should have reverted to the harsher doc- trine whicli had already ^^rown obsolete before the laws ])rovided any notice at all, or any rule of evidenci' about fraud. It is ])lain that such a doctrine virtually ])revents a trader from iiiortfiaging his stock at any time for any useful purpose, for if he cannot sell in the ordinary course of trade, or only as the trustee and ajient of the mortpl.ixee, be inij^ht as well fjive jmssession to the morted, it is much more dillicult for me to M-e how creditors can be defrauded in such a case, when they are told in the deeil itself that the debtor has no credit and no property (hat he can call his own, than that the mortpi.iree is most outrajreoure was none, but to the payment of a certain deltt bv •rtain installments. \o offer is made to prove that any one was '"ceived. or even was i':ni>rant of the mort,<;ap\ but I am asked (o lid fraud in law when I know, and it is adinitt«>d. there was ni>ne 70 CONVEYANCE. [CIIAP. I. in fact. Besides cases already cited, see Briggs v. Parhman. 2 Met. 2oS; Jones v. Iluggeford, 3 id. 515; Barnard v. Eaton, 2 Cush. 294; Cohh v. Farr, 16 Gray, 597; Mitchell v. ^Vinslolo, 2 Story, G30; Ahhott v. Goodwin, 20 Maine, 408. The second point in this case is no less interesting than the first. By the mortgage, the stock that shall be put into the shop by the mortgagor is included in the conveyance. It is undoubtedly the hiw of courts of equity, as cases presently to be cited will show, that after acquired chattels definitely pointed out, as, for instance, l)y reference to the ship, mill, or place into which they are to be l)rought, may be lawfully assigned as security. The common law recognizes such transfers of land by way of estoppel, and of chat- tels when they are the produce of land or of chattels already owned by the transferrer, but not of future chattels sinpUciter, unless there be some novus actus interveniens after the chattels are ac- quired; that is to say, either some new transfer, or possession taken under the old. It may be cause of regret that the law should be different in the courts of common law and equity, but this is of no importance in bankruptcy, because it has been the law for a great while that an assignee in bankruptcy takes only the beneficial interest of the bankrupt; and the courts of law have admitted equitable defences, such as equitable liens, &c., to be set up in such cases, years before they had power by statute or usage to admit equitable pleas in ordinary controversies ; and it was every day's practice to find these courts passing upon equitable titles in behalf of a defendant, which they professed to know nothing about, and certainly coidd not deal with, if relied on by a plaintiff. Such was and is the law, and a very just law. as far as it goes. But granting the rule in equity to be that after-acquired chat- tels may be mortgaged, the point that has given me most difficulty is whether such is the law of Massachusetts. I suppose that the Federal courts, in all matters of title to property, whether real or personal, when there is no question of commercial or maritime or general law, and none of the conflict of laws, are as much bound in equity as at common law by the jurisjirudonce of tlie State in which they sit. Or, in other words, I understand that the thirty- fourth section of the judiciary act, making the laws of the State the rule in actions at common law, is declaratory only, and that on both sides of this Court I am bound to follow the law of ]\Iass- achusetts in the local questions, and the general law in general ([uestions. Now, the only decision I can find in equity in this State upon this snbjcet oertainly decides very distinctly that even in equity a mortgage of after-acquired cliattcls is invalid {Moodji v. Wright, 13 Met. 17). In that case the Court refused to follow the then re- SM'. II. J HUKTT C. (AHTKII. TI cent dcei.sion of Storv. J., in Mil'lnll v. H'i^.s/oh', 2' Story, r»:{(). and relied largely on tin- (litingui.shed jud^'c Baron rarke, who said, in Mo 3nr, ; Phillips V. Winsluw. IS B. Mon. 431; Sillers v. Lester. IS Miss. 513 ; Pirrce v. Mil. R. R. Co.. 2 I Wis. 551. Considering the decision of Judge Story in this cinuit, and the reasons given by tlie Court of Massachusetts for not following it. and the entire consistency of all (he recent decisions with .Tuilge Story's views, and the disa|)pearance of Baron Parke's di<-(um. I am not prepared to say, that if the suj)reme judicial court wen* now asked to review their decision in Moodif v. Wrii/ht. it is at all rtain they would not reverse it, and under the circum I do not feel bound to hold (hat that case furnishes a settled rule of property which I must fnllnw. So far from that, I believe that the law of Massachusetts in e(|ui(y is that a mortgage of after-acquired chattels is valid. I am of the opinion that the mortgage of 1874 created a valid 7-> CONVEYANCE. [CIIAP. I. lien in behalf of the defendant upon the stock of goods in the shop at the time of the bankruptcy, and that the mortgage of 1875 does not vitiate this lien. The fixtures, however, which were not men- tioned in the first mortgage, cannot be held by the second, because that was given after the bankrupt had become insolvent, to the knowledge of the defendant. ^ Decree accordinghj. KRIBBS V. ALFORD, Court of Appeals of Xew York, 1890. (120 .Y. r. 519.) Appeal from judgment of the General Term of the Supreme Court in the fifth judicial department, entered upon an order made the first Tuesday of June, 1887, which affirmed a judgment in favor of plaintiff entered upon the report of a referee. The nature of the action and the facts are sufficiently stated in the opinion. Parker, J. On the loth day of May, 188.0, one Johnson, then being the owner in fee of certain lands, executed and delivered to Thomas Argue an instrument in writing (which for convenience will hereafter be termed a lease), which conferred upon the latter the exclusive right to produce oil and gas from said land for a period of twelve 3rears. For that purpose it permitted him to go upon the land and make necessary erections; but as to any other use Johnson reserved the possession and right of enjoyment. It gave to Argue the right to remove any and all tools, boilers, en- gines and machinery; also the casing to the wells and drive-pipe, if Johnson should refuse to pay a fair price therefor. Pursuant to the terms of the lease Argue and his assignees placed upon the property engines, boilers and other machinery necessary to carry on the operations for which the lease provided, and in view of the intent of the parties as manifested by the terms of the lease and otherwise, these articles retained their character of ))ersonalty after annexation {Potter v. Cromwell, 40 N. Y. 287; Murdoch v. Gifford, 18 id. 28; Iloi/le v. P. £ M. R. B. Co., 51 id. 314, 324; McRea v. C. N. Banl', GQ id. 489-495). In October, 1880, Argue assigned his interest in the lease to Al- bert Garrett and Adam Prentice. Thereafter Adam Prentice, to ' Stharfcthurn v. liishop, .3.') la. 00 ( 1872) . aerord. This is the prevailiiifr view. The contrary opinion, wliidi formerly prevailed in Illinois {Hunt V. litiUock. 2:5 111. .•J20 flSOO]: J'almrr v. Forbes, id. 301) seems to have boon ilissipatcd. Borden v. Croal:, 1.31 III. G8 (1889). SEC. II.] KIMIU5S /•. Ai.roiti). 73 secure the payment of $950.50, executed and delivered to tlic plain- (ilT ;i inort^'a^'c on hi.>^ undivided inten'st in llic lease and vipon all " liis intt'ie.-^l in the oil \vell.< now (here(»n and to be by him jthieed 1 hereon, with all his interest in tlu! structures, fi.xtures. e((uij)nients jind appurtenances now on said lease or hereafter to be placed thereon." On the 10th of January, ISSj, a copy of tlie inort<(agc was Hied in the Town Clerk's ollice, and thereafter it was duly refiled. Subseerty after the giving of the mortgage are embraced within it. True, the appellant contends that his title to the chattels is not burdened with the ])lainti(T's mortgage, because, as he alleges, Alford and Curtis purcha.sed in good faith and without notice; but this claim is not well founded, for while a search, which failed to disclose the existence of a mort- gage, was timely made in the Town Clerk's otlice, the referee has found upon suflicient evidence to support it, that the mortgage was filed as a chattel mortgage in the proper Town Clerk's oflice, and within thirty days of the expiration of the year thereafter it was refiled with the statement re(piired by statute. Alford and Curtis are, therefore, chargeable with constructive notice, and the lien of the plaintiff is not affected by their failure to find the mortgage. In some jurisdictions validity is denied to a contract in so far as it purports to embrace property to be acquired after date. The reason assigned for this holding is tersely stated in Perkins (sec. ♦lo) : '' It is a common learning in the law that a man cannot grant or charge that which he hath not." In others it is held to be in- valid in law and yet operative in i'rly thereafter to be acquired is ineffectual as a grant to pass the legal title. A court of equity, in giving effect to siu-h a jjrovision, does not put it.self in ooiifliet with that princi|)le. It does not hold that a conveyance of that which does not exist oj)erates as a present transfer in equity, any more than it does in law. Hut it constru«>s the instrument as operating by way of pnscni contrail to give a lien, which, as be- tween the parties, takes effect anil attaches to the sultjeet of it as poon as it comes into the ownership of the party. Such we diHMu the rule to be in equity in this State {Mcl'nfjiri/ v. Wootliti. (1,'i 74 CONVEYANCE. [CHAr. I. N. Y. 459; Wisncr v. Ociuapaugh, Tl ((/. 113; Coats v. Donnell, 94 id 168-177). As between the mortgagor, or his assignee, and the mortgagee, therefore, the chattel mortgage operated to create a lien in equity as to the chattels purchased and placed upon the property by the mortgagor subsequent to its date. This lien the trial court rightly enforced by its judgment. But it went further and declared, in effect, that the lien attached to the personalty placed upon the property by the assignees of the mortgagor as well. This, we think, was error. The assignees did not contract that the machinery to be placed upon the property by them should be subject to the pro- visions of the mortgage. They did not assume or agree to pay the mortgage or carry out its provisions. Indeed, the assignment con- tained no condition or covenant whatsoever, and the assignees did not even know of the existence of the mortgage. Their acceptance of the lease bound them to fulfill the covenants running with the land (113 Penn St. 83; Spencers Case, 1 Smith's L. C. 145). But it did not, in addition, burden them with the obligation to make good the personal covenants given by the lessee to third par- ties as security for an indebtedness, because they had constructive notice of the existence of the mortgage the lien of plaintiff can be enforced, and the defendants deprived of the machinery on the premises at the time of the purchase by them of the lease. But the lien provided for by the instrument could in any event only extend to property thereafter acquired by the mortgagor. It could not attach to chattels to which the mortgagor has not acquired either title or possession. Indeed, it does not, by its terms, purport to embrace any other after-acquired property than that placed thereon ])y the mortgagor. It follows, from the views expressed, that the judgment should be reversed and a new trial granted, with costs of this court to the appellant, unless, within thirty days, the plaintiff stipulate to modify the judgment by excepting therefrom the articles placed on the property after the assignment to Alford and Curtis, and described in Schedule D., in which event the judgment as modified is affirmed, with costs to the appellant. All concur except Bradley and Haight, JJ., not sitting. Judgment accordingly. BKc. U.J kociii:sii:k mist. cm. /•. u.vsky. 7."> TiiK K()(iii:s'i'i;i: insriLuxc co. v. haskv. CoLKT OF Ai'Ii:ai.s of Nkw Vohk, Is'.tJ. (1 i-j \. )'. :.■;(>.) ApjH-al fmiu tirdrr of tlir (iuinTiil Tirm of tin- Su|tit'mc' Court ill the iifth jiulic-ial di-partiiR-nt, madt' October 4. iSifJ, whicli re- versed a jud^'inent in favor of defendant, entered \\\)nn a verdiel directed bv the court, and granted a new trial. In February, 1800, the plaintifT recovered a jud;,'inent against one Lovcll for $1 17.41. In April, IHIK). Lovdl, being the ie.^.^ec of certain farm lands, in order to secure one Page as an accommo- dation indorser and for the repayment of money borrowed from him, e.vecuted and delivered to him a chattel mortgage; which covered " the grass now growing upon the premises leased, etc. ; al.so all the corn, potatoes, oats and beans, which are now sown f>r planted, or which arc hereafter sown or planted during the ne.xt year, etc." At the time, but a small ])art of the land had been planted with potatoes, and the greater part of the planting of pota- toes, and all that of the beans, was done in the following month. On July 5th an execution was issued upon j)laintifr's judgment, and the sheriff levied upon the growing crops and advertised their sale in August; at which sale jdaintifT juirchased them. After the levy by the sheritT, Page, the chattel mortgagee, on .July ir)th fore- closed under his mortgage, gave notice and sold the growing crops to the defendant. Defendant took possession of the property so ])urchased and this action was i^rought to recover its possession. The trial judge, being moved l)y each of the ])arties for a verdict in his favor, directed it for the plaintiff as to the beans and for the defendant as to the potatoes and ordered the exception taken to that direction to be heard, in the first instance, at the Oeneral Term. That court sustained the plaintiff's ext-epfion to the ruling of the trial judge and ordered a new trial; but allowed an appeal to (his court, on the ground that a (piestion of law was involved which ought to be reviewed. (Jh.vy. J. I think this case does not, in principle, differ from any other case, where a chattel mortgage has bon j»roj)erty in exjM'cfaney and which has no potential existem-e at the time of its execution. The fact that the subject of the mortgage is a crop to be planted and raised in tiie future upon land does not afTect the determination of this (piestion jjpon estal)Iishe not been passed upon in this court ; but there are e\pn'«isinns of opin- 76 CONVEYANCE. [t IIAP. I. ion, in several cases of a kindred nature, in the reports of this court and of other courts in this State, wliich leave us in no doubt as to the doctrine which should govern. The proposition that a mort- gage upon chattels having no actual, nor potential, existence, can operate to cliarge them with a lien, when they come into existence, as against an attaching, or an execution creditor, has frequently been discountenanced and repudiated. Grantham v. Ilaivleij, Ho- bart, 133, is the general source of autliority for the proposition that one may grant what he has only potentially, and there is no good reason for doubting that that which has a potential, or possible existence, like the spontaneous product of the earth, or the in- crease of that which is in existence, may properly be the subject of sale, or of mortgage. The right to it, when it comes into exist- ence, is regarded as a present vested right. That which is, how- ever, the annual product of labor and of the cultivation of the earth cannot be said to have either an actual, or a potential exist- ence before a planting. This action being one at law. the inquiry is limited to ascertaining the strictly legal rights of two contending creditors to the property of their debtor, Powell, in the crops which he had raised. It is unlike some of the cases, which have arisen between the lessor of land and his lessee. In such a case, a different principle might operate to create and support the lien of the landlord upon the crops, as they come into existence upon the land. The title to the land being in him. an agreement between him and the lessee for a lien upon the crops to be raised, to secure the payment of the rent, Avould operate and be given legal effect, as a reservation, at the time, of the title to the product of the land. That was the case of Andreiv v. Neivcomh, 33 N. Y. 417, where the owner of land agreed with another that he might cultivate it at a certain rent ; the crop to remain the property of the landlord, until the tenant should give him security for the rent. Judge Denio repudiated the idea that the arrangement could bo called a conditional sale of the flax; because the subject was not in existence. He held that the idea of a pledge or of a sale had no application and that the effect of the contract was to give to the landlord the original title to the crop. His remarks upon the subsequent vesting of the title to crops, when they come into being, have reference to such an arrangement between landlord and tenant and not to the case of a mortgage, or conditional sale to some third person of crops yet to. l)e planted. IMr. Thomas, in his work on Chattel Mortgages, upon the subject of mortgaging a crop not yet planted, says (§ 149) "the weigbt of authority inclines to the view that the lien is an equitable one and differs, in some respects, from the charge created by a mortgage of property in existence at the date of the agree- sKf. n.] i;()cm:sTi:K nisr. co. v. uasky. 77 iiiiiit ; "' and, a^ain, In- .-ay> ** tlu' aiillitirilics an' mainly in ilic circct that such a niort^^a^Xr conveys no tilh- or interest as a;rain-t attaching', or juil^Miicnl crciliiors of the niort;,'a;,'()r." AI)OUt this t|uestion of mort^agin^ personal |)r()|)erty, to he sul»sc»|uently ac- • [uirecl, nuieh has hcen written in the hooks, which I dccin unneces- sary to resume here at any great length. It results from a n-view of the autiiorities that a mortgage cannot he given future etr«rved: " I strongly incline to the opinion that a chattel mortgage can only operate on property in actual existence at the time of its execution; that it cannot be given on the future products of real estate; and that if given one day, or one week, before the product of the land comes into existence, it is as inoperative as if the chattel mortgage had been given on a crop of grass or grain, one. two. or three years previous to its production." In a subse([ucnt case, the same learned judge considered the nature of a mortgage relating to property not then in existence and its effect as to creditors of the mortgagor. In Otis v. ,Sj7/, 8 Rarb. 102, tlie i)laintiff claimed under a chattel mortgage, which, after describing the property mortgaged, contained the following clause: "All scythes manufactured out of the said iron and steel and all scythes, iron, steel and coal which may be purchased in lieu of the property aforesaid." Subsequently, the property was taken under exec-utions issued on judgments and the action was brought for its taking and detention. Paige, J., refers to his opinion in Hank of Lansingburgh v. Cranj. that a chattel mortgage could only operate on pro|)erty in actual existence at the time of its execution. He elaborately discusses the question of whether such a nmrtgage was a lien Uj)on the |)ro|)erty when acquired, as against the creditor-? of the mortgagor, and reviews very many authorities in l*'ngland and some in this country. 11 is conclusions were advcTse to the proposition, lie held that, as to subseipu-ntly acquired propiTty, the mortgage could only be regarded as a niere contract to give a further mortgage \ipon such pn»perty and that no specific lien wa«* created thereby. He says, " 1 have eotJie to the c<»nelusion, as the re- sult of all the authorities, that if the mortgage in this case did Yg COXVEYANCE. [CHAP. I. iunount to a contract to execute a further mortgage on subsequently I iK-quired property, it was good as an executory contract only and did not constitute a lien on the articles of the kind mentioned therein when subsequently purchased." In Gardner v. McEwen, 19 X. Y. 123, the chattel mortgage to the plaintiff, upon prop- erty in the store, " or which might thereafter be purchased and put into store," was held inoperative to convey the title to the after- acquired property, as against the defendant, who purchased it at a sale under execution upon a judgment against the mortgagor. McCaffrey v. ^Voodin, 65 X. Y. 459. was an action in trover. Plaintiff was lessee and defendant was agent for the lessor. The. former covenanted in the lease that the latter should have " a lien as security for the payment of the rent "' on all the personal prop- ertv, etc.,' which should be put upon the premises, " and such lien to be enforced, on the non-payment of the rent, by the taking and the sale of such property in the same manner as in cases of chattel mortgages on default thereof." By virtue of this provision in the i lease, the defendant took the farm produce. The decision upheld | the right of the landlord to do so ; holding that as the crops camo into existence they vested in the landlord. It is to be noted that the court considered the case as one to be governed by equitable principles, observing that "the matter comes up solely between the parties, there being no intervening rights of creditors." Re- ferring to Gardner v. McEwen (supra), it was remarked that that " is a case between the mortgagee and creditors and was affected Ity our act concerning filing chattel mortgages." Treating the question as one for the application of equitable principles, it was held that the lessor was entitled to set up her equitable rights, as a defense to the plaintiff's (the lessee's) action of trover. In the same case. Gray, C, observed that, if the relation of mortgagor and mortgagee liad been created between the parties, " it was inopera- tive upon any property which at the time of its execution was not actually, or potentially, either possessed or owned by McCaffrey." Tn Cressey v. Sahre, 17 Hun, 120, where the opinion was delivered bv Boardman, J., and was concurred in by Justices Learned and Bockes, a chattel mortgage upon potatoes (among other articles of property), which were not yet planted, was held inoperative. The distinction was there mentioned between a case like McCaffrey v. \Yo()din, where the question of title was between the parties to the; contract and one where it arose between the mortgagee and a third person. In Coats v. Donnell, 94 N". Y. 1G8, Andrews, J., observed that " a contract for a lien on property not in esse may be effectual in equity to give a lien as l)ptween the parties, when the property cftmes into existence and wbere tliere are no intervening rights of creditors or third persons." Kribbs v. Alford, 120 N. Y. 519, t^Kf. 11.] KOCIIIlsrr.l! DJST. CO. r. ICASEY. 79 nrognizi's tlir invalidity al law of a . halt. -I rl;,'agr of property thereafter to l)e aeiiuireil, l)iit liol that as lu'tweeii the partie.s their eontraet \voi;l.l he lrue(l in eipiily a.< creating an equitabh* lien, which couhl he eiifitreeil. The iilea of a elialtd niort-a.-re i- that of a conveyance of per- nal jiroiM-rly to se.iire the (ichl of the mortgagor; whicli, being ...nilitional at the time, lieiomc^ ahMilute if. at a fixed time, the pmpertv is not redeemed, ami the statute makes it valid, as against creditors of the mortgagor, only when filed as directed. The stat- ute provides for the liling as a suhstitute for "an immediate de- livery," or '* an actual aixl continiud change of possession of the things mortgagi'd." Siuh jjrovisions seem to me to exclude the idea of a chattel mortgage upon non-existent things; or that sueli an instrument could operate to defeat the li<'n of an attaching, or an execution creditor upon subsequently ac(iuired propiTty. Re- garding the chattel mortgage in ([uestion as a mere executory agree- ment to give a lien when the property eame into existence, some further act was necessary in order to make it an actual and effec- tual lien as against creditors. But there was no further act by the parties to the instrument to create such an actual lien and the levy of the execution upon the croj)? operated to transfer their posses- sion from the owner to that of the sherifT. As against his posses- sion the equities of the mortgagee are unavailing for any purpose. Bi'tween the two creditors it is a question of who had gained th.j legal right to have the crops in satisfaction of his claim and the equitable right of the mortgagee to them, as against his debtor, was defeated by the seizure at the instance of the judgment creditor. We are satisfied as to the correctness of the conclusion reached by the General Term below, that there should have been a direction of a verdict for the plaint i(T f(»r the potatoes and beans, obtained from the planting done after the execution and delivery of the mortgage. The order apjjealed from should be atVirmed and, un.hr the stipulation, judgment ab.-oluto should be ordcnd for the plaintilT, with costs in all the courts.' All concur, except Karl. .1.. not voting. Onhrrd nrrordiiujhi. ' Hutt V. i:ilill. 1!1 Wall. :.44 (187:n ; ir/...7. » \. /).<•/..». «;« I..\va. 721 ISStl). contra. Mut src Comslnrk v. Srnhs, 7 Wis. l.V.) (IS-IH). denyinj; . ir<-it to ii iii(irt},'aj;o of ii crop nuulo nfter phinting. go CONVEYANCE. [CUAP. I. PIERCE V. EMERY. Supreme Judicial Court of New Hampshire, 1856. (32 N. II. 48-i.) Bill in Equity. The following facts appear from the state- ments of the bill.i The Portsmouth and Concord Railroad, a corporation established under the laws of New Hampshire, made to the complainants, Joshua W. Pierce, Alfred W. Haven, Josiah G. Hadley and to Alexander Ladd, deceased, Avhose executrix, Maria T. Ladd, is the remaining plaintiff, sundry mortgages, dated respectively February 12, 1850, July 6, 1850, March 10, 1851, May 29, 1851, August 19, 1851, and March 3, 1852, and also made sundry other mortgages to Joshua W. Pierce and Alfred W. Haven, two of the complain- ants, dated respectively June 26, 1852, July 13, 1852, August 16, 1852, October 15, 1852, November 16, 1852, December 26, 1852, February 12, 1853, June 27, 185-1, September 23, 1854, and April 12, 1855. The mortgages were of personal property, and the bill set forth a description of it as contained in the different mortgages, and specified the debts and liabilities secured by each. By the first two mortgages, made prior to August 20, 1850, besides specific articles named in the mortgages, all the personal property of the railroad was mortgaged ; and by the subsequent mortgages the fur- niture of the road, locomotives, cars, fencing stuff, fuel, and other personal property, were mortgaged from time to time, in some cases to secure debts that accrued before August 20, 1850, and in others^ debts which accrued after that date; but none of the mortgages were given on the sale of property to the road for security of the purchase money. The mortgage of June 26, 1852, conveyed all the right, title and interest of the railroad to the railroad iron imported in the ship General Berry, then Ix'longing to the road, subject to the lien of the United States for duties, being aljout 591 tons, to secure a note for $10,000, dated April 26, 1852.' ... . The several mortgages under which the plaintiffs claim remain in whole or in part unsatisfied. All the property described in the mortgages made after August 20, 1850, was purchased by and came to the possession of the road subsequently to that date; and all the property named in the mortgages running to Pierce and Haven, ' Tliis sliitoiiioTit of f;»cts lias been abbreviated. SK<-. II. 1 I'IKKCi: r. KMKKY. 81 with the cxi't'pt ion of the iron, \va> paiil for with money U-nt to lii.- road l)V tlu' parties nanuMl in those niort^'a;,'es, as is stated therein. In all these niorlj^ap'S it is stated tiiat they were piven for the se- curity of the jjartics named in tlu'in res|)(rtivoly. All these niort- papes were duly executed and recorded in Portsmouth, which was hy law estahlished as the |)lace of husiness for the road. . . . On the i;5th of July, IH.JO, the Legislature of this State pas>ed an act entitled '* An act to aid the construction of the rorlsmoutli ;ind Concord Railroad," authorizinfj the road to issue bonds to the amount of $;5r)0,()()0, payable, with inten'st, in not less than ten. nor more than twenty years; the act to take efTect when the st<>.k- holders should accept and adopt it. . . . On the 3d of Aunt and security of whoever then or tluTcafter might become the lawful holders of haid l)onds, or any of them, and conveys to the trustees, in the name of the Portsmouth and Coiuord Railroad, "the railroad of said corporation, together with all its rights, powers, franchises ami l)rivileges," in the towns in which it was laid out, "with all the lands, buildings and fixtures thereto belonging, or which might thereafter thereto bi-long, with all the rights, franchises, powers and privileges now belonging to and held, or which may hereafter be- long to. or be held, by said corpfiralion : - tive engines, passeng(>r, baggage, dirt, freight and hand cars, aned. 32 COXVEYANCE. [CHAP. I. on breach of the condition, to sell " the said railroad," and to make all necessary conveyances, " passing all the property, real, personal and mixed, rights, powers, franchises and privileges of this corpo- ration," to the purchaser or purchasers. On the same 20th of August the directors issued bonds to the amount of $350,000, from which the road realized $289,535, and no more. At that time the road owed about $158,700, and have since expended in constructing and furnishing the road at least $573,000, and of the debts then owing more than $100,000 have been paid. The condition of the mortgage to the trustees having been broken, the present trustees, Emery, Tullock and White, at the request of certain bond-holders, according to the terms of the mortgage, on the 14th day of May, 1855, applied to the directors to surrender to them all the mortgaged premises; and the directors by deed of surrender, dated May 31,1855, surrendered and transferred to them all the property, rights, powers, franchises and privileges named in the deed of mortgage, to hold according to the terms and conditions thereof. The trustees have taken possession of the road, and under their mortgage claim the property mortgaged to the complainants ; and the property has been delivered into the hands of the trustees, under an agreement that it should be used in operating the road, and a compensation paid for it. The stockholders have voted that it is inexpedient to redeem the road and its property from the mortgage to the trustees, and under the provisions of the mortgage the trustees will be bound to sell, in about eight months from the 31st of May, 1855, and they threaten to include in their sale the property mortgaged to the complainants. The original trustees, when they took their mortgage, had notice of the prior mortgages, and also many persons who afterwards be- came purchasers and holders of the bonds. The present trustees and the Portsmouth and Concord Eailroad are the parties defendant to the bill. The bill prays that the trustees may be decreed to pay the com- plainants the debt secured by their mortgage, before they sell the property mortgaged to the complainants, and bo enjoined not to sell until they pay; or, if allowed to proceed with the sale, may be decreed to pay out of the proceeds the debts secured by the complainants' mortgage, for a foreclosure and for general relief. Perley, C. J.^ Corporations, as a general rule, have power to sell their property, real and personal, and to mortgage it for the ' Portions of the opinion have been omitted. ^^^. , II.] nr.ncE r. kmkky. S'\ -iturity of tlieir dihts (Com. Dig., Corporation, F, 18; Jidrnj v Mifcluinl.'i' h\rrli(nitjr Co.. 1 Sand. Cli. l*H() ; DrsjHilrh Line nf J' and corjiorate rii:lits, nor perhaps the track and riijht of way which they take ami hold for the necessary use of their road. But they may contract debts; may purchase on credit; ancl we -see nothing in the nature of their busini'ss, or in their rehu tion to the pul)lic, which should prevent them from making ;i \alid mortgage of th-^ir personal property, not afTi.xed to the road, I hough used in the operation of it. Instead of disabling the roaU from performing its public duty, a mortgage might assist in doing it, in the same way tliat otiier corporations or indiv' lual-; are aided in carrying on their business by mortgages of thelf property. The two mortgages made to the complainants before the mort- L:age to the trustees for the bond-holders, we think are valid to hold the personal proj)erty specifically described in them for the security of so much of the del)ts as remain unjiaid. The bill does not stace liow much of those debts arc still due. Rut the complainants have no right in the road by virtue of those mortgages; th(\v must as- ^ert their security by taking the property away, as in the case o* a mortgage by an individual. A dilferent and more ditlicult question arises as to the claim <>f the complainants under mortgages made after the 20th of August. 1850, the date of the mortgage to the trustt'cs for the bond- holders. The ground taken by the bond-holders is that the act of the Ix'gislature authoriz«'d a mortgage, not only of the pro|)erty which at the time belonged to the road, but of all the fninchi.ses and cor- porate rights of the road, and the road its«'lf; that the trustees under such a mortgage would take, as security for the bonds, the railroad and all its franchi.ses and rights, as one entire thing, and tiiat. as incident to this mortgage of the road and its franchiw. all the property, real and jiersonal, which juight at any time afterward-; IwH'ome vested in the road, would be covered bv the mortgage, and held by the trustees, stibject to the right in the dire«'tors. until breach of the condition, of managing the road for the benefit of all 84 COXVEYAXCE. [CHAP. I, concerned, and of selling sueli of the ])roperty from time to time as might be convenient in the course of the business, provided they substituted other property of equal value; that when the truster's should make a sale under their mortgage, all the property, and all the franchises and corporate rights of the road would pass to the purchasers, subject in their hands to the public liabilities and duties of the corporation; that the mortgage deed in this case exhausts the powers conferred by the act, and covers the road and its fran- chises, and the accruing property, as an accession to the thing mort- gaged and as part and parcel of it; that consequently the lien of the mortgage to the trustees attached upon property subsequently acquired immediately upon its vesting in the road, and the claim of the complainants must be postponed to the mortgage made for se- curity of the bond-holders. Whereas, the complainants maintain that the act confers no power to make such a mortgage, and that the mortgage to the trustees does not cover property of the road cubsequently acquired. We take it to be a general rule of the common law that nothing can be mortgaged that is not in existence, and does not at the time of the mortgage belong to the mortgagor (Tapfield v. Ilillman. 4 M. & G. 240^ Lunn v. Thurston, 1 M., G. & S. 383; ^yinslow v. Merchants' Ins. Co., 4 Met. 306; Jones v. Richardson, 10 Met. 4S8 ; Moody V. Wright, 13 Met. 17). This rule, that a mortgage cannot cover future acquisitions, would seem to have been established on the technical ground that a mort- gage is a sale upon condition, and by the common law there could be no sale of a thing not in esse, and not at the time the property of the seller. By the civil law a mortgage may cover the future property of the mortgagor (Domat., part 1, book 3, tit. 1, § 1, articles 5 and 7). And in some jurisdictions where the maxims of the common law prevail, mortgages have been sustained covering the future and shifting stock of a trading or manufacturing establishment; as in the case of Holly v. Brown, 14 Conn. 255. So in Abbott v. Good- win, 20 Maine, 408, a mortgage of a stock in trade and of the sub- stituted goods was held to be valid. And such a mortgage w'as siis- tained against an assignee in bankruptcy in Mitchell v. Winslotr. 2 Story, 030. In these cases, not merely the existing property, but also the business and establishment appear to have been regarded as the subjects of the mortgage; and the mortgagor, while he re- mained in possession, was looked upon In the light of an agent for the mortgagee, so far as his interest was concerned, with an implied authority to buy and sell, and manage generally, according to the usual course of the business. Even where the strict rule against the mortgaging of subsequently SKI . 11.1 PIERCK V. KMERY. 85 ;i((|iiinMl |ir<>iHitv i> cnt'orccd, if the iiiort<:;i<,'«' imrport to cover such |in)|H'rty. iind tlic iii(iit^'a«,'<'c' take possession, with assent of the iiiort^M;,'or, hi'fore another title attaches, he will hold from tinie to I'MK', not as niort«,'a<^ee, hut as pawnee, nmltr the eontraet eon- taiiu'd in the inort^^a^'e {lioirhi/ v. liirr, 11 Met. :]:\:\). And in niort^'af,'es (d" real estate it is a familiar ndi- that Itiiildin^is. and other thing's annexed to land after the mi»rt;:a.L:e, are rejjarded as accessions to the oriy;inal suhjeet of the mort;:a;:e, and c(»vered hy it (Pettingill v. Evans, 5 N. II. 54). There is, therefore, no intrinsic ditlieully in a inortpifje which should cover the future and shiftin;^ stock and property of a trading' r manufacturin«,^ estaldishmenl, or of a corpoiation. Hut hy the ummon law. accordin<,f (o tjie weij^Iit of authority in other juri.sdie- tions, and as we understand the rule to be in this State, no mort- ;:a«ie can he made to cover any personal property, except specific articles helonj^in^' to the niort«2:a<;or at th(> time of the mort^'af,'e: nd, unaided hy the special act of the Lefjislature, the railroad in lis case would have no power to make a mortgage that should have iie effect contendeil for liy the hondholders. The question whether •le trustees can hold sul)st'(|uenlly acquin^l property a^'ainst the aim of the complainants, will, therefore, dejteiul on the cim- -I ruction of that act and of the mortgafje deed made und«'r it. Did liie act authorize the road to make a mortfra (Com. hig.. Franchise, F. 1.; .\ngell it .\mes on Corp ^> : Tf"' K'n'n v. London, Skinner, :n<>. WW). \ cor|)oralion. being itself a franchise, consists and is made up "f its rights and franchises; and when all its franchises are gone, l>y surrender, by forfeiture judicially ascertained. I)y limitation of the grant, or in any other way, tin* corp(»ration has no longer any practical existence. If the franchise or franchises are of a natiire to continue after they are hxt by the corporation, they may be re- I'ranted to another corporation, or to other individiials ; but tho !ornier corporation is substantially dissolved (2 Kent's Com. 305, 86 COXVEYAN-CE. [CHAP. I, and note a, 308 and 309 ; The King v. Pasmore, 3 T. R. 100 ; Com. V. Hancock Bridge, 2 Gray, 59, GO). The grant of a corporation is a contract between the State grant- ing it and the grantees. It is peculiarly and emphatically so in the ca>c of railroad corporations, which are created npon public considerations, and clothed with extensive and extraordinary pow- ers, for the purpose of enabling them to accomplish the public object contemplated in the grant. The members and stockholders have private rights; but the corporations are also bound to the discharge of their public duties, and cannot, without the aid of special legislation, disable themselves from performing their duty to the public by alienating or transferring their corporate rights and franchises. They may sell or mortgage their personal prop- erty, but they cannot sell or mortgage with it the right to manage and control the road, nor any other corporate right or franchise (The King v. The Severn & w\je R. W. Co., 2 B. & Aid. 646 ; Reg. v. The Eastern Counties R. IF., 10 Adol. & Ellis, 531 ; Reg. v. South Wales R. W. Co., 14 Ad. & Ellis (N. S.) 902; Clark v. Washington. 12 Wheaton, 46, 54; Winchester & Lexington Turnpike R. Co. v. Vimont, 5 B. Monroe, 1 ; Arthur v. The Commercial ' in the mortgage which they give in hehalf of the road, is to hi- .lisjmsed of in the same way for the satisfaction of the mortgage deht, whether it he the property or the rights and franchises of th.- corporation. The power to mortgage the rights and franchises, as well as the property of the corporation, is plainly and necessarily implied from these provisions of the act. The act, therefore, docs not limit the power of mortgaging to real and personal property on hand at the time, hut gives author- ity to mortgage the rights and franchises of the corporation, whi<'h could not he (lone without the aid of the act. And it cannot he maintained that the authority to mortgage real and personal prop- erty given in one part of the act, was intended to he exclusive of all further power, when the further power of mortgaging the right -^ and franchises of the corporation is clearly given hy necessary im- ])lication in another part of the same section. . . . The directors then had jmwer under the act to name in their mortgage, and to convey in mortgage to trustees, all the properly, and all the rights, franchises, powers and privileges of the corpora tion. If thev made such a mortgage it would convey to the mori gagees all the right ami power which the corjjoration hail to acquire aTid hold proper! v. for the power to ac(juire and liold property i* one of the rights ami franchises of the corporation. That right would 1m' conveyed and transferred from the road to the trust*^'- hy th(> mortgage deed, in the same way that the proj>erty was eon veyed and transferred. s\d)jeet to the condition of the mortgairc: gg ■ CONVEYAlSrCE. [CIIAP. I. and the subsequently acquired property would pass under the mort- gage as incident to the right of acquiring and holding it, which would be vested in the trustees by the mortgage. The purchasers under the deed of the trustees " acquire all the rights, franchises, powers and privileges which said corporation possessed, and the use of said railroad, with all its property and rights of property, for the same purposes and to the same extent that said corporation could use the same, if said deeds had not been made, subject to the same liabilities as to the use of said railroad tliat said corporation would be under if said deed had not been made." All this the purchasers take through a sale authorized to enforce the mortgage security; and we cannot understand that iinything different from this, or less than this, was authorized to be * mortgaged and covered by the mortgage for the security of the mortgage debts. It is contrary to all the received notions of a mortgage that anything should be sold under it to pay the debts secured, that was not mortgaged and covered by it before the sale. It would seem to be the plain intention of the act to preserve the corporate rights and franchises, and maintain the corporate liabilities in the hands of the purchasers at the trustees' sale. All till' rights and franchises of the corporation, and the use of the road, are transferred to them l)y the deed of the trustees, and they hold tlu' corporate rights and franchises, subject to the same liabilities as to the use of the road by which the corporation was bound before the sale. They have all the property and all the rights and fran- chises, and are likewise bound to perform all the public duties of the corporation. It is not easy to see how the original corpora- tion, in the hands of the former corporators, could, after such a "sale, have any practical or even legal and theoretical existence. They could hold no property ; they could maintain no action, nor elect any corporate officer; these powers are all rights and fran- chises of the corporation, created and granted by the act of incor- poration, and are all transferred and conveyed by the deed of the trustees to the purchasers under their sale. In some cases, after the franchises of a corporation are lost by forfeiture, the corpora- tion is still held to exist in contemplation of law, so far as to bo capal)le of being revived by a regrant from the government. But here the franchises would not be forfeited to the State, but trans- ferred to the purchasers ; and the State could not revive tlie old corporation \)\ a regrant of the franchises, which had become vested in tlie purchasers. The sale would in substance transfer the road and the corporation to the purchasers. There may be a difficulty, which it is not necessary to anticipate, in saying how the purchasers shall exercise some of these rights. There is no provision in the act for their doing it through the sEr. n.] piKKci: /•- i:mi:i{v. 89 uwicliinrrv of lln' nlil ( orpinat ii>ii. 'I'licy inay. pcrliai)-, Ik- n-^'anlc"! MHiK'what in tlic lij^lit of new ^'laiitcrs of the old framliiscs. If, then, till' piircliascrs iiinlrr (lie t nislccs' sale fake what was 4»ri;^iiially inortfjafji'il, ami lale;,Mslatiire intended to fjrant the power of inortpi;;in.«; all the ])roperty and all the ri;:hts and franchises of the corporation, including the right to property suhscquently ac- articular powers in difTerent parts of the act, from which the argument is drawn, that nothing more than is there expressed was intended to be granted elsewhere. For instance, in one clause authority is given to mortgage all or part of tiie real or personal property of the road, lint it is rpiite plain from other ]>rovisions that this was not intended to be the limit of the authority conferred. The pro- visions for the sale and transfer to the purchasers under the mort- gage of all the rights and franchises are practically inconsistent with such a narrowed construction of the act. The material and substantial provisions of the act cannot be carried into effect with- out construing it to give the power of mortgaging the road, and all its rights and franchises, as an entire thing, and subsef|uently acquired property, as an incident to the general subject of tlio mortgage, and an accession to it. The general design and object of the act favor the same con- .-i ruction. The corporation already had power under the gj'neral law to mortgage their property then in pos.«;ession, and for that ])urpose had no need of sj)ecial legislation. The act must havo intended to enlarge that jiower, and authorize the road to make a mortgage substantially different from such as are allowed at com- mon law; and that intention would not be answered if the act should be so construed as to limit the power of mortgaging to prop- erty then owned by the road. The act is entitled " .\n art to aid in the construction of the ]'ortwed on the security of the mortgage was to go into the roail. to assist in tlu" enterprise and undertaking. The statements of the bill show that at the time when the mortgage to the trustt>es was nuide, all tin/ p<»rsonal Jtroperty of the road had been already mortgaged to these com- j>lainanls for the security of other debts. There is nothing in tho 9^ COXVEYANCE. [CIIAP. I. cafe which furnishes any ground to infer that the road had then ary unincumbered property capable of being mortgaged. If so, and the mortgage to the trustees could attach on nothing but property then belonging to the road, all that the bond-holders would have under their mortgage for security of their demands would bo a right in equity to redeem property of the road already mort- gaged for other debts. This, we think, is not the security upon which the bondholders supposed they were lending their money, nor the security which the Legislature intended to give them by the act. The general design must have been to give those who advanced money to complete the road on credit of the mortgage specially authorized by the act, a substantial and available security, ai^d a preference over other subsequent creditors. But if all subsequently acquired property might be mortgaged tr secure other debts, new and old, and those mortgages were up- held against the bond-holders, money might be obtained on such security to carry on the road, to pay interest on the bonds, or even to pay dividends, and when possession should be taken for the bond-holders, perhaps at the end of ten or twenty years, they might have little for their security but the franchise and road-bed ; for much of the iron and other materials since affixed to the road arc covered in terms by the complainants' mortgages, and claimed under them. If other creditors of the road had stood on such terms with the directors and managers as would enable them to obtain mortgages of the newly acquired property, as it fell from time to time into the hands of the corporation, the bond-holders, instead of having a preference, would have been the last creditors likely to realize anything from their security, in case the road should turn out to bo insolvent. The object of the act being to give the bond-holders a substantial and available security for their money, and a preference over other creditors not previously secured, can only be answered by so con- struing the law as to give the bond-holders security upon the road itself, as the general subject matter of their mortgage, and upon the changing and shifting property of the road as part and parcel, by accession, of the thing mortgaged. The question is certainly not free from difficulty; but 'whether Ave look to the particular provisions, or follow what we must un- derstand to have been the general object and design of the law, wo are on the whole brought to the conclusion that it authorized the directors to mortgage, not only the property then belonging to the road, l)ut all the franchises and rights of the corporation, and, in substance, the road and corporation itself. That if the director.-^ made such a mortgage, as incident to the franchise and corporate rights mortgaged, subsequently acquired property, immediately SKO. II.] riEIKi: r. KMKKY. 91 iij)on its vesting' in the corporation, wtniM, ii> an incif the mortgage security. The right to take and hold j»roperty being one of the franchises mortgaged, the corporation would have no jmwer to take or hold properly, e.\ce|)t hy virtue of that franchi?"- and under the mortgage* hy which the franchise was covered. We are of oj)inion, then, that the act authorized the corporation to mortgage the whole road as an entire thing, with all its corporate rights and franchises, and incidentally, and hy way of accession, all tiie subsequently accjuired ])roperly of the road. l)i<1 the din-"-- tors in fact make such a mortgage? . . . Taking the whole deed together the intention is very ajjpanni to mortgage, not merely proj)erty then belonging to the road, hut the road itself and all its franchises, as one entire thing, and, as an incident and accession, all property of the corjmration afterward- acquired. And such we think was the legal operation of the deed under the act. . . . The demurrer must be overruled, as it is taken to the whole hill, and the comjilainants are entitled to part of the relief for which they pray. The demurrer may. howev(>r, he amended so as to apply to part only of the bill, and the defendants answer to the residue.^ ^Phillips V. Winsloic, 18 B. Mon. (Ky.) 4.31 (1857), accord. See aN.. Dinsmorc v. Ravine d Misn. It. R. Co., 12 Wis. «14n. (J.'jll (18(50) ; Farmrrs' Loan rf Trufit Co. v. Fisher, 17 Wis. 114 (18(>3), and Pierce v. .Vihcauke,: d St. Paul R. R. Co., 24 Wis. 551 (18(;9). In IloHc V. Freeman, 14 Gray, 5(i(! (18(10), tlio Supn-mc .Tmlicial Court of Massaclmsctts sustained a niortfjago of the road and property of a rail- road " and all additions made tlicroto by addinti\e-<, cars, and otiier tilings," on the ground of an express le<:islativc ratification tliercof. "This legislative act ohviates the sec-oneen fatal to this action if no lej^islative authority had intervened, ratifying and confirininj^ this particular niort;;a;ie. l?ut the statute did (hus initi- vene, confirming the mor(};a;^r, and thus jjivinp ctTcrt to all parts of it. includinj; the j)rovision as to after ncerson^ Iiavimj husiness relati(Uis with the Vermont and Ma-^ai-husctts Railroad Com- pany." — Per Dewey, .T. The matter is now rej^ulated hy j;eiicnil >lalu(e in Massiuhus»-((s (Mji««. r»ih. Sta(., 1SS2. Ch. 112. 5 72). So in -ev.-ral o(her S(a(es (Conn. (J-ii. S(a(.. ISS.S. 5 :t.-,72; Minn. Ccn. Stat.. 1S!»4, § 272 IK 93 COXVEYAXCE. [ciIAP. I :Mori{ILl v. Xoyes, 56 Mc. 458 (1863). The question wliethet a mortgage of personal proj^erty not in existence, or not owned at the time by the mortgager, can be made available by the mort- gagee, as a lien upon property afterward acquired, has been dis- cussed in many recent cases, with some apparent difference of opinion. Some of the courts have denied that any difference exists, and have attempted to reconcile the cases on the ground that such a mortgage, though void at law, is valid in equity. But this is a loose use of language, that tends more to confuse than to reconcile. If such a mortgage is absolutely void, for want of any subject mat- ter to support it, then it should be so held in equity, as well as at law. But, if not thus void, to what extent, and in what sense, is it valid? It is only by conceding its validity, that it is pertinent to inquire whether the remedy is in equity, or by a suit at law. In other cases the reasoning is syllogistic and summ-ary. "Qui lion liabct, ille non dat." A mortgage is a grant. Therefore a mortgage of what one does not own, or of what is not in esse, is void. Bui a mortgage is a grant, to lx> defeated upon a condition. This makes it merely the creation of a lien, with certain rights to secure and enforce it. A lien may be created without a grant. And sometimes a contract intended as a grant, but ineffectual as such, will be upheld in equity as a lien. So that the syllogism is by no means certain to dispose of the question. As a general proposition it may be said, that a mortgage of such goods as may be in a store on a future day — or of such furniture as may be in a house — or of such machinery as may be in a mill — or of such stock as may be on a farm — when no particular prop- erty is referred to, will not convey any title to, or create any lien upon, such property subsequently acquired, which can be upheld or enforced in a suit at law {Head v. Goodwin, 37 Maine, 181; Bar- nard V. Eaton, 2 Cush. 294; Codman v. Freeman, 3 Cush. 306; Otis V. Sill, 8 Barb. 102; Gardner v. McEwen, 19 X. Y. [5 Smith], 123; Tapfield v. Ilillman, 46 Eng. C. L. 243; Luim v. Thornton, 50 Eng. C. L. 379; Gale v. Bnrnell, 53 Eng. C. L. 850). In Con- necticut, a mortgage of a shifting stock of goods in a store, was held to create the same lien upon goods subsequently purchased as upon those owned at the time {Holly v. Brown, 14 Conn. 255). A similar decision was made in this State, in the case of Head v. Goodwin, 37 Maine, 181. But that case was questioned in Jones V. Richardson, 10 Met. 481; and it was substantially overruled in Pratt V. Chase, 40 Maine, 269. The question is therefore no longer an open one in this Court. It should be noticed, however, that in nearly all the cases cited, BEC. ll.J MOliHU.L r. No\i:s. 03 (he mortgages woro cxcocilingly iiulcfiniti'. Sonn- <>( iIhih (I<- HtrilK'd no j)iir(i(ular ])n)|)('rly which ci-uM Ix' idcnf iticd ; hut th\u\\ projurly -.[< thr mort- gagors might purchase, if thov should purchase any. They wm.' void for uncertainty, if for no other reason ( Winsloiv v. Mrr- chants' Inn. Co., 1 Met. ;m\). K.xccpl the ease of Oils v. >'///. 8 l^arh. 10"^', they prohnhly would not have heen upheld in e<|uity, any more than at law (M(>'j.j; MuihIh v. WrUjhl, 13 Met. 17). We can understand these eases better by referring to another class in which conveyances of property, not in existence at the time, have heen ujiheld, either at law or in equity. And we think it will be seen that sales or mortgages of such property have been sustained when withiu the following rules: 1. The contract must relate to some particular property de- scribed therein, which, though not in existence, must be reasonably certain to come into existence, so that the minds of the parties may be in agreement as to what it is to be, and, if the sale is alxsolute, what, with reasonable certainty, taking the ordinary contingencies into consideration, is the present value? 'i. The vendor or mortgagor must have a present, actual interest in it, or concerning it. As is said in illustrating Kide It. of Bacon's ^laxims, " the law doth not allow of grants, except ther.' Ik' the foundation of an interest in the grantor." There must be something in prcscnli. of which the thing ('/( fiiluro is to be the ])roduct, or with which it is to be connected, as necessary for its use, or as incident to it, constituting a tangible, existing basis for the contract. The ai)idication of these ])rinciples to the multifarious atTairs of a business peo])le, may sometimes be dillicult. And in the vari- ous enterprises that are likely to be undertaken in a country dis- tinguished for its manufactures, and its domestic and foreign com- merce, new applications of them from time to time may be re- «|uired. \\\i{ the illustrations to be found in the decided cases will l>e sullicient for our present ])urpose. Thus, one may sell all the wool which shall grow for a term of years on sheep owned by him at the time; but not the wool to l>o grown on so many sheep, if he does not own them ((Jranllunn \. Ilawlci/. llobart. \.V^ ; Sniilli v. Alkins, 18 Verm. l«:i ). So he mav sell the grass, or any crop that does not require annual renewal, that shall grow upon his farm for a term of years (Jmcls v. >'»/u7//. 1 Coms. 00; Bank of Lnn.tingburg v. Cranj. 1 Barb. -M'.'; Millininn v. Xchrr, t?0 Barb. 37). If one contracts for the construction of a carriage, or a ve>sel, for himself, and pays therefor, he acquires no title until it is com- 94 CONVEYANCE. [CHAP. i. l)letc'(l and delivered (Mudow v. Mangles, 2 Taunt. 318; Comfort V. Kierstcd, 20 Barb. 472). But if he hiiijs a chattel in process of construction, and it is delivered to him, though afterward to be finished, the title passes, and the additions made to it for the pur- l)Osc of completing it become his property from the time when they arc attached to it. The only reason why the conveyance of a vessel on the stocks was not upheld as a mortgage, in Bonseij v. Amee, 8 rick. 236, was because there was no delivery, and the registry law had not then been enacted, which renders a delivery unnecessary (Call V. Gray_, 37 N". H. 428). A mortgage of unfinished chattels gives the mortgagee a good title to them when finished {Harding v. Cohurn, 13 Met. 33 ; J ends v. Goffe, 1 R. I. 511 ; Perry v. Pet- tingill 33 N". H. 433). So the owner of a ship may assign the freight of a voyage which has been commenced. In re ship Ware, 8 Price, 269; Douglas v. Eussel 1 M. & K. (7 Eng. Ch.) 488. Or he may sell the oil and cargo to be brought home from a whaling voyage then being prose- cuted (Langton v. Horion, 1 Hare, 549; Fletcher v. Morey, 2 Story, 555). And a laborer, employed by another, may assign his wages afterwards to bo earned ; but not unless they are to be earned under an existing contract {Miilhall v. Quinn, 1 Gray, 105; Tiviss V. Cheever, 2 Allen, 40; Lannan v. Smith, 7 Gray, 150). In the case at bar, the subject matter of the contract was suffi- ciently definite and certain; its subsequent existence was reason- ably sure ; and the mortgagers had an existing interest in, and title to, the other property then mortgaged of which this was to be an essential part, necessary for its use, to be added to it for the pur- ])Ose of finishing it. It is entirely unlike the case of a changing stock of goods. The mortgagers had a charter for a railroad, with all the neces- sary franchises and rights for its construction, equipment, and operation. The mortgagee had previously contracted to construct and equip it for the company ; and the work had been commenced. Tie was to be paid partly in the bonds of the company, which would sell in the market. Thereupon they mortgaged to him, and in trust for the holders of tlie bonds, their franchise, road, rights of way, materials, ])uildings, completed or in process of construction, "in- cluding all cars, engines and furniture, that have been or may be purchased for or by said coin])any,'" to secure tlie contract "for the construction and ('(|ui))iiiciit of s:iid railroad." and to secure the payment of the l)oii(ls to bo issued to the Tuortgagee. to him, "or 1o his assigns, wlio shall become the holders of said bonds." A large part of I he miincrous railroads in this country have b(>en constructed by tho aid of mortgages to individuals or to trus- tees. Many of these mortgages, perliaps most of 1he7n. embrace. SK^ ,, •) Moititii.i, V. noyp:s. 95 >I)C'cifically, engines and cars, to be subsequently ae^iuireil. As Iht'v are made to secure bonds not to be due for many years, and (he rolliu",' stock is perisbable, unless sucli future acciuisitions can 1k' nu»rt^'a;,'cd, as incident to, and essential to tbc use of, tlic rail- road itself, the security is lialile to be K^t'sitly diminished. The question is one of great importance in respect to the interests in- volved in its determination. Nor is it a new one. It has been considered by several courts of the highest respectability; and such mortgages have l)een sustained, not only as to existing prop- erty, but as to that subsequently acquired {Pierre v. Emery. 33 N. IL 484 ; Seymour v. C. £ N. F. Railroad Co.,2ry Barb. 286 ; Trust Co. V. Ileuilricksnn, 25 Barb. 484; Coe v. Hart di- nl, fi Am. Law UVg. 'ii:\ J'ennock v. Coe. '23 Howard, 117; Phillips v. Winsloir, 18 B. Monroe, 531). In nearly all these cases the question is discussed with much researeli and force of reasoning. And, in the absence of contrary decisions, they constitute a weight of authority not to be disre- garded, unless it can be clearly shown that they are erroneous. In some of them, the companies were specially empowered by legislative acts to mortgage their property and franchises. In the ease of Howe v. Freeman, 14 Gray, 5(5(;, such a mortgage was up- held on the subsequent confirming statute, with an intimation that otherwise it would have failed. But the general question was not lonsidered by the Court. The power of a corporation, without any legislative act, to mortgage its franchises with other property, to secure its lial)ilities. has never been questioned in this State, though such mortgages have been common for many years, and rights under them have been determined in this Court. The weight of authority in this country is in favor of the doctrine that the power to mortgage is incident to the rights granted by the Act of incor- ]>oration. . . . In the case of Trust Company v. Ilendrirkson it was held that, as between mortgagors and mortgagees, the engines and cars were fi.Ttures, so that, without any exjjress grant, they would have be- come the jirojXTty of tlie mortgagees by being attached to the rail- road. If they were fixtures, that result would follow, although they were not in existence when the mortgage was given. That they have some of the qualities of fixtures cannot be denied. They are fitt<'d to the gauge of (he road, and are adapted to (he particular n-;e upon it. In the modern cases, whether an article is a fixture is determined more by such (•onsideratition. 96 CONVEYANCE. [ClIAP. I. • But, if the engines and cars are not fixtures, tliey are so con- nected with tlie railroad, and so indispensable to its operation, that there is a clear distinction between them and other kinds of per- sonal property. They may well be held to be exceptions to the general rule that property not in esse cannot be conveyed. We do not mean to intimate that rolling stock to be subsequently ac- quired could be mortgaged without the railroad. But when the railroad itself is mortgaged, with the franchise, the rolling stock to be acquired for the purpose of completing or repairing it is so appurtenant to it, that the company have a present, existing inter- est in it, sufficient to uphold the grant of both together — the one as incident to the other. Their title to the railroad is " the foun- dation of an interest " in the cars and engines to be acquired for its use. " If the rolling stock on the road should be removed," says, McLean, J., in the case of Coe v. Ilart, " it would defeat the liens of creditors to many millions of dollars, and put an end to the construction, if not to the maintenance of railroads." In the case of Ludlow V. Ilurd, 6 Am. L. Reg. 493, Storer, J., remarks : " It is very clear that we must regard it (the rolling stock), as appur- tenant to a railroad; it is necessary for the working of it that all this species of property should become a part of the road itself. It is essential to its use ; and if denied, it is destructive to the purpose for which it was built." And in the case of PhiUips v. ^V^nslow, before cited, the Court say that, in order to render the mortgage of the railroad effectual, " it is necessary that it should embrace all such future acquisitions of the company as are proper accessions to the thing pledged, and essential to its enjoyment." That a mortgage of a railroad and the franchises of the com- pany, with all the rolling stock then owned and to be afterwards acquired and placed on the road, will create a valid lien upon cars and engines subsequently purchased, there would seem to be no longer any doubt (Redfield on Railways, § 235, notes 21 to 24; Pierce's Am. Railroad Law, 531; Am. Law. Reg., Jidy, 1863, 527). The decisions sustaining such mortgages are not understood to be in conflict with those in which other mortgages of such property have not been upheld. The general rule, that property not in esse cannot be conveyed, is not abrogated. Nor will such mortgages be upheld in equity, any more than at law, unless they are within some of the exceptions to the rule. But, if a mortgage is within any of the exceptions it will be sustained, and the parties will be entitled to appropriate remedies. What remedies will be open to them must depend upon the cir- cumstances of each case. In Holroyd v. Marshall, 9 Jur. N. S. 213, 8KC. II.] ri^ATT r. N. Y. Jt SKA nKACIl ItAII.WAY CO. 97 recently decick'il liy tlie House of Lortls, a registered mortgage of inacliinery in a mill, to^'etliiT with all that should afterward Ijo placed therein in addition t(», (jr in suh.stitution for that wiiich was tliere at the time, was held to have created a valid lien upon the j)ortion afterwards purchased, from the time when it wa.'* brought within the terms of the grant. And the rights of the mort- gagee were sustained in equity, on the ground that the mortgagor, as soon as he purchased the additional machinery and j)Ut il into the mill, held it in trust for the mortgagee. Whether we should uphold such a mortgage, is a question upon which it is unnecessary to express any oi)inion. The case seems to be in conflict with that of Moody V. ]Vri(jht, 13 Met. 17. But in those cases in which a mortgage of such property is valid, there would seem to be no doubt that it can be enforced in equity as a case of trust. . . . Upon the whole case, we are of the opinion that the mortgiige to Myers created a valid lien upon the engines and cars as they were purchased and placed upon (he road for the purpose of equipjjing it; and that the holders of the bonds secured by that mortgage will be entitled, if they claim it, to have the trust enforced, not only against the railroad, but against the rolling stock subsequently accjuircd.' riaindlf's rwnsuil. Appleton, C. J., Kent, Walt4 \. Y. ,{14 (1S7.1), and Williamson v. .Vrir Jer*rv f^outhrni R. R. Co., 20 N. .1. K.j. .ni (1878). 7 98 CONVEYANCE. [CHAF I. This action was brought for the purpose of foreclosing a mort- gage executed by the New York & Sea Beach Railway Company. On January 11, 1896, the plaintiffs in this action procured an order iippointing a receiver of said company, and of all the property then owned by it. Subsequently a judgment of foreclosure was en- tered by which the receivership was continued and a sale directed of all the property in the receiver's hands. Thereupon the appel- lant, who is a judgment creditor of the New York & Sea Beach "Railway Company, instituted this proceeding for the purpose of having the order appointing the receiver and the judgment of foreclosure and sale so modified as to affect only such property as the mortgagor had when the mortgage was executed. Hatch, J. The validity of the mortgage is not controverted. But it is claimed that under it no lien was acquired upon the per- sonal property purchased subsequent to its execution, as against the petitioner therein. That the lien should attach to after-ac- quired property is within the express terms of the mortgage, and it is not disputed that such is its effect as between the parties thereto. By the provisions of the statute (Laws 1850, c. 140, § 28, subd. 10), authority was conferred to mortgage the corporate property and franchises for the purpose of completing, furnishing or operating the railroad. And this authority has been continued in the same language under the revision of the railroad law (Laws 1892, c. 67G, § 4, subd. 10). The statute contemplates that it may be necessary to borrow money for the purpose of the physical creation of the road and putting it in operation. It is quite evident that in the accomplishment of this purpose property would be created and ac- quired that had no actual or potential existence at the time when the loan was made and the mortgage given. It is the usual course of procedure in the construction of a railroad that money is raised l)y mortgage on its property, and that the structure is built and operated to a large extent by means of the loans thus obtained, and much of the property is created and acquired after the loan is made. The statute makes no distinction between property necessary for the completion and furnishing of the road and that which is essen- tial to its operation. By the terms of the law, therefore, it was contemplated that, for the money thus obtained the property ac- quired should be pledged as the security for its repayment, and this cannot be accomplished without holding that the lien of the mort- gage attaches to such property as shall be necessary for that pur- pose, whether it is in existence at the time when the mortgage is given or is subsequently acquired and whether such property be such as is denominated real or personal. So it was early held that such a mortgage created in equity a lien upon property subse- quently acquired superior to the lien of a subsequent incumbrance MfA'. II. J I'l.ATT C. N. V. A SKA IlI'VC II I! A 11. WAY CO. 99 liv mortgaj^i' or jiul^nu'iit {Sfi/rnuur v. Cananda'njua tf- Xintjunt Falls n. U. Co., '^T) Harl). 2H1; lifiijamin v. El mini, Jcffrrsoii & i'amimlaifjita li. Ji. Co., 19 id. 4 IT; ,s7rj(Hs v. Uu/.son, t Al)l). Ct. App. Dec, 302). In those cases the question arose respecting licn.s xipon sul)soquently aniuired real properly. But the discussion fchows tliat tlie court considered the rule apjdieable as well to per- gonal as to ri-al pr()i)erty. Such has been the uniform rule appliecl in the Federal courts {Mitchell v. Winslow, 2 Story, G30; Central Trust Co. V. Kneeland, 138 U. S. 419). The diiriculties which liave arisen relate not so much to the rec- iijrnition of the mort^'a^'c as a lien, ft)r the doctrine of the above- <'itod cases has never been questioned, but rather to the steps neces- sary to be taken to evidence the lien. The first debate arose over the question whether the rolling stock and equipment of the road retained its character as personal property, and if so, was it requis- ite that the mortgage should be filed as a mortgage of chattels. The Supreme Court divided upon the question, and decisions were rendered both ways. The Court of Appeals, in Hoyle v. Phiilshurg it- Montreal R. R. Co., 54 IST. Y. 314, settled the question by holding that it was personal property, and that the mortgage covering it must be filed as a mortgage of chattels, as prescribed by the act of 1833, or the same would be void as against the general creditors of the corporation. To meet this conclusion, the Legislature, in 18G8. passed an act (Laws of 1808, c. 770). providing that it shall not be necessary to file such mortgage, as a mortgage of chattels when it covers real and personal property and is recorded as a mortgage of real estate in each county in or through which the railroad nins. By this act the status of such ]>roperty. so far as it relates to liens by way of mortgage is made jiractically subject to the same rules and is placed upon the same footing as real ]>rop- erty. The business carried on by railroads, the great extent of territory which they cover, and the fact that the rolling stock is at all times widely distributed, not only throughout the State through which its lines mainly run, but also throughout the dilTereiit States ry large amounts, upon the faith of railroad j>roperty and the practical ditliculty, if not imjjossiltility, of a railroad being able to realize upon its property in this manntr. if the technical rules respecting liens u|)on jiersonal pnqierty should obtain, evi- dently created an int(>nt in the mind of the Legislature to make puch property subject to the same rules, so far as prai-ticalile. as apply to liens upon real ))roperty. It is quite evident that if it #bould be held necessary to constantly revise such n mortpnge. in 100 CONVEYANCE. [chap. I. prdcr to cover what lias been, it may be, purchased by the inone}- advanced or to supply operating needs and replenish what is de- stroyed, it would render such security so doubtful and precarious as not only to impair, but to practically destroy its value. Wo can see no reason for drawing a distinction in this regard b&tween real and personal property. On the contrary, as the authority for the mortgage of both is derived from the same source, and the same reasons exist why both should be available and answerable as se- curity, we think it more in harmony with the legislative intent to- subject it to the same rules {N. Y. Security Co. v. Saratoga Gas- Co., 88 Hun, 569). This view does not bring us in conflict with B. D. Co. V. Rasey, 142 N. Y, 570. That case proceeded from the- well-settled legal rule that a mortgage of chattels, having no actual or potential existence when the mortgage was given, is void as to intervening creditors. For reasons already stated that rule has no application to a mortgage of this character. It follows that the order appealed from should be aflfirmed.^ Order affirmed. TAILBY v. THE OFFICIAL RECEIVER. House of Lords^ 1888. (L. B. 13 App. Cas. 523.) Appeal from a decision of the Court of Appeal.^ By a bill of sale made the 13th of May, 1879, H. G. Izon, de- scribed as a packing case manufacturer of 87 Parade, Birmingham, assigned to Tyrell for valuable consideration (inter alia) " all and singular the stock-in-trade, fixtures, shop and office furniture, tools, machinery, implements and effects now being or which during con- tinuance of this security may be in upon or about the premises of the said mortgagor situate at 87 Parade aforesaid or any othei place or places at which during the continuance of this security he may carry on business. . . . And also all the book debts due and owing or which may during the continuance of this security become due and owing to the said mortgagor, which fixtures, stock- in-trade, machinery, furniture, chattels, goods, effects and debts are for the most part and as near as may be mentioned in the re- spective schedules hereunder written." ' .Vflirmcd by tlio Court of Appeals, on opinion below, 153 N. Y. 670 ( 1897 ), » 18 Q. B. D. 2o.—Rep. sK< . II.] TAii.iiY r. Tin: oriMciAi. i:i:(i:ivi:i:. l executors assi^Mietl lo Tailby. (he present appellaiU. certain l)()()k (lel)t> (speeilied in a -ehednlc) owing to I/.on. and among tlicm ii debt of about I'll ubieh had become due to him from Wilson Brothers & Co. since the bill of sale, and due notice of this assignment was thereupon given to Wilson Brothers & Co. In I>eccml)er Izon became bankrupt. In January, 188."), and :iMer the adjudication in bankruptcy Wilson Brothers & Co. paid Taill)y the debt above-mentioned. The oHicial receiver in l/on's bankruptcy afterward sued Tailby in the County Court of Warwiekshire for the amount of the debt, as money had and re- ve.l. The county court judge gave judgment for the jtlaiiitiir on the ground that the assignment of future book debts generallv, with- out any delimitation as to time, i)lacc, or amount, was too vague to be suj)j)orti'd. The (^leen's Bench Division (Hawkins and Matthew. JJ.) re- \ersed this decision and entered judgment for the defendant. ^ That judgment was reversed by the Court of Appeal (T.ord Ksher. M. H., Lindley and Lojies, L.,1.1.) who restored the judgment for the i)laintifr.- Against this judgment Tailby appealed. LoHD M.vcx.VGHTi-x.-"' The claim of tlie purchaser was rested on Well-known princij)les. It has long been settled that future prop- erty, ])ossibilities and expectancies are assignable in equity for value. The mode or form of assignment is absolutely immaterial })rovided the intention of the parties is clear. To elTectuate the intention an assignment for value, in terms ])resent and imme- diate, has always been ri>garded in c(iuity as a contract biiuling on the conscience of the assignor and .so binding the subject-matter of the contract when it comes into existence, if it is of such a nature and so described as to be capable of being ascertained and Entitled, riic jjosition of the purchaser was assailed on one point, and one point oidy. It was not disputed that Tyrrell gave valuable <'onsideration for the bill of sale, or that Tyrrell's executors were within their rights in .selling whatever was comprisi-d in the secur- ity. It was not denied that the debt j)urehas«'d was a book debt which became due and owing to Izon during the continuance of the Mvurity. nor was any question raised as to the j«unicieney of the •'Mice which the purchaser gave to Messrs. Wilson BrotluTs & Co. 17 Q. n. n. HA.— If,,,. '18 Q. n. n. 2:..— /?«/). Portions of the opinion arc oinittcti. Tlio opinions of tlu" ImtA Chan- ilor ( Hcr.schcll ) and of TA)nls Watson and Fitzporald. I,..T.T.. aro aNo omitted. 102 CONVEYANCE. [CU.vr. 1. The contention of the learned counsel for the respondent was^ tlib They asserted as a proposition of law that an assignment of fuii; : book debts not limited to any specified business is too vague to lur., any effect. Starting from that proposition they asked your Lord ships to come to the conclusion that the assignment of book deblcs in tJie present case was void from the beginning as including in its terms book debts which could not be made the subject of valid a-^- f^ignment. I do not stop to consider whether that is a necessary or legitimate conclusion. It is a startling result certainly, and 1 shiU have a word to say about it by-and-by. At present I am merely inquiring whether the original proposition is sound. In the lead- ing judgment in the Court of Appeal it is said that the doctrin'. which covers the proposition is well established, because " in every one of the cases in point that were cited its existence has been m sumed." The principle of the doctrine, however, is not stated ; tlu doctrine itself is not defined; the cases which are supposed to be in point are not reviewed or even named. But the high authority of the learned judges who have adopted this view makes it neces sary to examine the matter closely. The learned counsel for th; respondent gave your Lordships every assistance that ingenuity ant industry could supply; and the result of their labors may fairly b( summed up as follows : The origin of the doctrine, modern thougl it be, is lost in obscurity. Before Ilolroyd v. Marshall 10 H. L. C 191, no support for it can be found. Possibly it may be evolvcc from Ilolroyd v. Marshall Lopes, L. J., seems to think so. I assumed a definite form in Belding v. Read, 3 H. & C. 955. H was recognized by Fry, J., in In re Count D'Epineuil, 20 Ch. D 758, and it received the stamp of authority from what was said o implied by two of the learned judges who decided Clements Matthews, 11 Q. B. D. 808. No other authority or semblance o; authority was produced. My Lords, I have read Ilolroyd v. Mar shall many times, and I can discover no trace of the doctrine there Belding v. Bead, as Bowen, L. J., points out, was founded upon misapprehension of Lord Westbury's judgment in Ilolroyd v. Mar shall. In In re Count D'Epineuil, the learned judge, as he stated in In re Clarice, 30 Ch. D. 318, thought himself bound by Belding v. Read, and simply followed the decision in that case. As for the order made in In re Count D'Epineuil, it seems to me to have been only too favorable to the claimant. I much doubt whether a mem- orandum like that on which the claimant relied could create a specific lien of any sort or kind. Finally, Cotton, L. J., has hin\- self disclaimed the hidden meaning attributed to his judgment in Clements v. Matthews. So much for authority. What foundation is there for the doc- trine apart from authority? The learned counsel for the respon- REc, n.] TAii.HY r. Tin: okficiai, kkckivkh. 103 (It'nt dill not pivti'ml to bo wisor tliau tin* (.'niirt of A])|»(m1. Tlu-y. too, neither defined the doctrine the aid of wliich they invoked, nor stated anv jirineiple on whieli it eouhl he suiiposod to rest. Thcv contented themselves with enik-avorinj,' to maintain the propo- tiition that an assipiment hy a trader of future hook (h-hts not eon- 'ined to a specified business is too vague to be eireetual. \Vh\ -houhl this be so? If future book debts be assigned, the subject- matter of assignment is eapal)lc of Ix'ing identified as and when the hook debts come into existence, whether tlie descrijjtion be restrieti-d to a particuhir business or not. Indeed the restriction may nnd-r the task of identification all the more diflicult. An energetic tradesman naturally develops and extends his business. One busi- ness runs into another, and the line of demarcation is often indis- tinct and undefined. The linendraper of to-day in the course of a few years may come to be the proprietor of an estal)lishment pro- viding evervthing that man wants, or woman either, from the cradle to the grave. In such a case I can easily conceive that ditlicult questions might arise if the hook debts assigned were limited to a particular business. It was admitted by the learned counsel for the respondent, that a trader mav assign his future book debts in a specified i)usines>. Why should the line be drawn there? Between men of full age and competent understanding ought there to be any limit to the freedom of contract but that imjjosed by positive law or dictated by considerations of morality or public policy? The limit pro- posed is purely arbitrary, and I think meaningless ami unreason- able. The ruie laid down by the Court of Appeal would not help to identify or ascertain the subject-matter of the contract in any case. It might have the opposite cfTect. It would be no benefit to the assignor's general creditors. It might prevent a man from raising monev on the credit of his expectations in his existing busi- ness — on that which is admitted to be capable of assignment — in consequence of the obvious risk that some alteration in the char- acter of the business might impair or defeat the security. Under these circumstances I think your Lordships will come to the conclusion that the ])roposition on which the respondent relics ns the foundation of his case cannot be sui)i)ortcd on prineii)lc. and tliat the authorities on which it was supposed to rest may be traced to a decision of the Court of Kxchequcr which it.self is founded on an errcMieous view of the j)rinoen misunderstood. To understand Lord Westhury's jtidgment 104 CONVEYANCE. [CHAP. I. aright, I think it is necessary to bear in mind the state of the law at the time, and the point to which his Lordship was addressing liimself. Holroyd v. Marshall hiid down no new law, nor did it extend the principles of equity in the slightest degree. Long be- fore Holroyd v. Marshall was determined it was well settled that an assignment of future property for value operates in equity by way of agreement, binding the conscience of the assignor, and so binding the property from the moment when the contract becomes capable of being performed, on the principle that equity considers as done that which ought to be done, and in accordance with the maxim which Lord Tliurlow said he took to be universal, " that whenever persons agree concerning any particular subject, that, in a Court of Equity, as against the party himself, and any claiming under him, voluntarily or with notice, raises a trust " (Legard v. Hodges, 1 Ves. Junr. 478). It had also been determined by the highest tribunals in the country, short of this House — by Lord Lyndhurst as Lord Chancellor in England, and by Sir Edward Sugden as Lord Chancellor in Ireland — that an agreement bind- ing property for valuable consideration had precedence over the claim of a judgment creditor. Some confusion, however, has recently been introduced by a decision of a most eminent judge^ who was naturally less familiar with the doctrines of equity than with the principles of common law. In that state of things, in Holroyd v. Marshall, in a contest between an equitable assignee and an execution creditor, Stuart, V. C, decided in favor of the equitable assignee. His decision was reversed by Lord Camp- bell, L. C, in a judgment which seemed to strike at the root of all equitable titles. Lord Campbell did not hold that the equit- able assignee obtained no interest in the property the subject of the contract when it came into existence. He held that the equitable assignee did obtain an interest in equity. But at the same time he held that the interest was of such a fugitive char- acter, so shadowy, and so precarious, that it could not stand against the legal "title of the execution creditor, without the help of some now act to give it substance and strength. It was to this view, I think, that Lord Westbury addressed himself; and by way of shewing how real and substantial were equitable interests spring- ing from agreements based on valuable consideration, he referred to tlie doctrines of specific performance, illustrating his argument by examples. One of the examples, perhaps, requires some quali- fication. That, however, docs not affect the argument. The argu- ment is clear and convincing; but it must not be wrested from its purpose. It is difficult to suppose that Lord Westbury intended to lay down as a rule to guide or perplex the Court, that considera- tions applicable to cases of specific performance, properly so-called, 8KC. II.] TAILHV r. TMK OlTK lAl, I! i:i KIVKH. !(».'» wluTo the contract is executory, are to In- applied to every case of equitable assi«jninent dealing with future property. Lord Sclbornf has, I think, done good service in jjointing out that confusion is sometimes caused by transfi'rring such considerations to questions which arise as to the propriety of the Court re([uiring some- thing or other to be done in specie (Wolverhampton nutl WnlsnU liailuay Compnivj v. London and North Wcxtern Railway Com- panji. JjiWY. Iicji. in V.(]. 1.'1'3). His Lordship observes that there is sonu^ fallacy and ambiguity in the way in which in cases of that kind those words ''specific performance," are very frecpiently used. Greater confusion still. I think, would be caused by trans- ferring considerations applical)le to suits for specific porform- anci^ — involving, as they do. some of the nicest distinctions and most dillieult (piostions that come before the Court — to cases of equitable assignment or specific lien where nothing remains to be done in order to define the rights of the parties, but the Court is merely asked to protect rights completely defined as between the parties to the contract, or to give effect to such rights either by granting an injunction or by appointing a receiver, or by ad- judicating on questions between rival claimants. The truth is that cases of equitable assignment or specific lien, where the consideration has passed, depend on the real meaning* of the agreement between the parties. The diiliculty, generally speaking, is to ascertain the true scope and effect of the agreement. When that is ascertained you have only to apply the principle that equity considers that done which ought to be done if that principle is applicable under the circumstances of the case. The doctrines relating to specific performance do not, I think, afford a test or a measure of the rights created. There are cases where the rights of the parties may be worked out by means of specific performance, though no s])ecific lien is effected by the agreement itself. More fre(|ucntly a specific lien is effected though no case of specific per- formance is contemjdated. . . . In the result, therefore, and for the reasons I have given. I am of o))inion tiiat the case of the respondent entirely fails. Th<' original jirojmsition is not, T think, well founded. If it were sound the conclusion attempted to be drawn from it could not. as it seems to me, be maintained. I have, therefore, no hesitation in concurring in the motion which has been proposed.' '" It is npcos^nry fn-t in ((tn^idcr tlio prin(ii>los on wliidi an a-*si)jnmpnt of proporty not »'\i-tiiin i»t tin' linio is niaih' ofroctual. Tlio principlo i-* that such an assij^nnicnt. as rofrards llio non-pxistin^ propnty. amounts to » rontract for value, wliidi a Comt of Kipiity will spccitlrally |>orform. Thut was laid down by Lord NNc-stbuiy in Uulrvyd v. Marnhull, and 106 CONVEYANCE. [CIIAI-. I^ Order appealed from reversed; order of the Queen's Benchi Division restored; the respondent to pay to the appellant his costsl in the Court of Appeal and the costs of the appeal in this House; cause remitted to the Queen's Bench Division. FERGUSON V. WILSON. Supreme Court of Michigan, Dec, 1899. (80 N. W. Rep. lOOfi.) Error to Circuit Court. Action by James F. Ferguson, as administrator of the estate of Charles Ferguson, against Henry W. Wilson. Judgment for plaintiff and defendant appeals. Affirmed The suit was brought in trover to recover the value of certain personal property. 2} Plaintiff's claim to the property in controversy arises: (1) Under a certain chattel mortgage given by one George Wiggins to Charles Ferguson, plaintiff's intestate, on November 1, 1893, the consideration mentioned being $150, and conveying one bay horse, one gray horse, one binder, one mower, five yearlings, and one calf, (2) Under a chattel mortgage given by Wiggins to Charles Fer guson, October 27, 1893, and filed in the town clerk's office, Novem- ber 6, 1893, covering all the crops and stock raised on the farm let by Ferguson to Wiggins on that day, and also all the stock, sheep, cattle, hogs, horses, tools, and machinery that might be used or kep< on said farm. This chattel mortgage is contained in a lease giver by Ferguson to Wiggins for the farm, and to secure the reni I should not have gone back to this were it not that there seems to b« a misunderstanding as to the application of the doctrine of specific perform ance in these cases. The ordinary application of the doctrine of specific performance is to compel a vendor or purchaser to complete a contrac for sale or purchase, a contract which is wholly executory. Where suci a contract relates to goods the Court will not in general decree specific performance. Why is this? Because the Court considers that in genera damages are a suflicient remedy, and the proper remedy for the breach o a contract to sell or purchase goods, but that does not apply to a bread of a contract relating to land. In the present case the contract is no wholly executory. The mortgagee has performed his part of it by advanc ing his money on the faith of it, and the principle that damages are sufficient remedy does not apply." — Per Cotton, L. J., in In re Clarki Coomhe v. Carter, 36 Ch. D. 348' (1887). ' Only so much of the opinion is given as relates to the point unde consideration. stc. II.] FEIUJl'SON' c. WILSON'. 107 tlaTi'of. (.?) I'ndcr a hill of sale of all llu- properly doscribcd in the two niort^M^'es above nu'iilioiu'd, given by Wifrgins to ('barbs Ferguson. an>• nssij;nnu>nt. ha.** Inrn lirld to .liinr. IM 1 ; iiihl oil llif Sih of iK-ccmlHT follow in;,' llic coiniiiirfsion i"Ur(l. riu' iK'lilion jtraved a sale of t\w in<)rtga<,a'(.l pivmisi'S, ami thai, after ajiitlyiii^' tHOO in li(iuidation of llic ck'bt, the ri'sidiii' might Ik' j)rovetl ; with tlii' iisnal dirt'ctions. Tlu- single jmint heforc the rourt was, whetiu-r or not the petitioners were entitled to tack on the second £400 debt to their mortgage security. The ju'tition came on to be heard before tlie long vacation, when the Chaiuvllor, having expressed himself adverse to the prayer, it was requested that it might stand over, and was this day re- :'rgued. FoiibhuKiur. in support of the ])etition. coiiiparcd this to the cases of part performance of agreement to ])ur(hase; and, contend- ing that the advance of the £100. in this instance, was such an act of part performance by the testator, referred to Clinan v. Cooke, 1 Sell. & I.ef. 2'^, before Lord Kedesdale, and the case cited in note, p. 40, to the report of that case, for the rule that, where the whole sum contracted for is paid, that is such a part jierfonnance by the vendee as to take the case out of the statute ; hut not, where "uly a part. That, in the case of an equitable mortgage, the deposit oj)erates as a lien by reason of the implied agreement. Moiitaiju, on the same side, referred to the case Ex parte Laiujs- lun, 17 Ves. 227; 1 Rose, 2{\, as deciding the present, on the ground that an equitable mortgage by deposit of title-deeds must lie held to cover subsequent advances, on evidence that they were nuule upon that security. If the deed had been delivered up. and returned at the time of making the subsequent advance, this would ave been clearly an equitable mortgage. Hart for the assignees. The Loku Ciiaxcellou [Eldox]. There is an evident distini- tion between the cases of loan and jnirchase : and withmit expressing any opinion on the (luestion, whether in the former ease, jiaymenl f the whole, or of part of the purchase money, is, or is not, a part performance to take it out of the statute, it is enough to say that the advaiue of money uj)on a contract for loan affords, of mressity, :o evidence of any intention hut that of creating the relation of "iebtor and cr alitor. The doctrine of equitable mortgage by dei)osit of title-deeds has 'cen too long established to be now disj)uted ; but it may be said hat it ought never to have been estal»Iished. I am still more dis- ^atisfled with the ])rinciple upon which I have acted of extending the original doctrine so as to make the deposit a security for sub- M>q\ient advances. At all events, that doctrine is not to bo further < idarged. Tn the present case, the legal estate has l)0<^n assigned by way of mortgage. The mortgagee is not entitled to say, '* I 116 CONVEYANCE. [CHAP, I. hold this conveyance as a deposit," because the contract under which he holds it is a contract for conveyance only, and not for deposit. The subsequent memorandum in writing creates nothing more than a debt by simple contract, and cannot be added to by parol. The cases on this subject have gone too far already ; and I would be understood as saying that I will not add to their authority, wherever the circumstances are such as to warrant me in making a distinction.^ The iietition dismissed ivith liberty to file a hill. STODDARD v. HAET. Court of Appeals of New York, 1861. (23 N. Y. 556.) Appeal from Supreme Court. The action was to restrain the foreclosure by advertisement, and to compel the cancellation of a mortgage held by the appellant against one Spicer. The trial was before a referee, who found these facts: On the 4th of March, 1852, Spicer procured from the defendant, on the security of the bond and mortgage in question, an advance of $200 on lumber to be thereafter furnished. The mortgage was recorded on the 8th of March, 1852. The original condition of the bond and mortgage was for the payment of $200 and interest on the 15th of June, 1852. At the time the $200 was advanced, it was agreed between the parties that if Spicer should want more money, the defendant would advance it, and for the purpose of securing it, the amount of such further advance should be inserted in the bond, with the parol agreement that the mortgage should be considered as security for what was thus inserted. Accordingly, within ten days after the mortgage was given, Spicer applied for and obtained from the defendant a further advance of $180, inserting at the same time in the bond a further condition for the payment of that amount, with interest, on the 1st of June, 1852. The mortgage, which had been in the meantime recorded, was conditioned for the payment of $200 and interest, with the additional clause: " According to the condition of a certain bond obligatory bearing even date herewith." On the 12th of July following, Spicer was indebted to the je- spondent, Stoddard, in the sum of $500, for rent due and to be- come due, and with full and specific information from Spicer of M, . 111.] STODDAItl) C. HART. IK ^W till' foro-^'oin^' facts, StoiUlanl took a siil^siTjuent mortgafre on tlio premises for the amount of his debt; and afterwards, in Janii- jirv, 1853, lie obtained from Sj)ieer a deed of the property, wliieh was received in satisfaction of his mortgage. On the '2')[\\. of Fel)ruarv, IS'):?, the defendant coiimieiieed a fi'reelosnre hy advi-rtisement, ehiiming the amount due to he $'.\H(), ;ih interest. Tlie plaintiff, on the 1st of ^Mardi, tendered as the . I mount due, the sum of $"-300, with interest and costs, and de- iiiandi'd a satisfaction piece, whicli the defendant refused. The referee decith'd that the dt'Tendaiit had no lien on the premises e\eept for the $".'»)0 and interest, and that the mortgage should he luelled on payment of that amount, with costs. The judgment entered uj)on the referee's report was aflirnied on a|)peal at general term in the Eighth District, and the defendant appealed to this court. John K. Porter for the appellant. I'J. Prshinc SmUh for the respondent. CoMsTOCK^ Ch. J. In a loose and general sen>e the equity of this -e is on the side of the defendant, because he made tiie subsequent Ivance of $180, it being agreed that this, as well as the original Mini of ^200, should be considered as secured by the mortgage. The question, however, is, whether the rules of hiw will give that •^'Ct to the transaction. It will be convenient first to determine tlu- legal construction and effect of the mortgage, \inaidcd by the parol facts, but read in tonnection with the bond to which it is collateral. On the part of llu' defendant it is contended that the two instruments, consti- tuting, as they do, a single security, are to be read as one; and, therefore, that the new advance, lieing written in the condition of the bond, is it to be deemed actually incorporated in the condi- tion of the mortgage also, so as to render the latter a legal security for both the sums in question. This ])roposition does not require, nor does it admit, any aid from the understanding of the parties derived from the extrinsic evidence. If it be a sound one, it is universally sound; so that, if a bond be given for $2000 actually loaned, and a mortgage collateral thereto be given for $1000, the latter is always to be read and const rue(l as a security for the larger sum. The instrument being legally perfect, there is no occa- >ion to reform it. or to involv<' the doctrine of equitable lien, of sju'cific jierformance. or any kindred doctrine of equity. I think this jiroposition cannot be maintained. A bond and tiiortgage are two instruments, although one may be collateral to the other. The one is a personal obligation for the debt ; the other creates a lien upon land for the security of that debt, and it may well be for a portion of the debt instead of the whole. If the 118 CONVEYANCE. [CIIAI'. I. personal obligation expresses two sums, and the collateral instru- ment expresses only one of them, I see no reason why each should not be construed according to its own terms. So, if the condition of a bond be for a larger, and that of the mortgage be for a smaller sum, the obvious effect of both the instruments is that the maker binds himself generally for the whole debt, while he specially pledges the mortgaged land for only a given part of it. In this case the written condition of the bond is to pay the $200, and the further sum of $180; while that of the mortgage is only to pay the $200. Each instrument is perfect, and each admits of a plain construction and effect according to its owm language. If we do not look outside of them, there is no ambiguity. A debt was cre- ated, consisting of two sums. The land was mortgaged for one of those sums only. In the next place, if the doctrine were admitted that a mortgage passes the freehold or legal estate in lands, it would probably fol- low that a parol agreement that the security should stand for a new advance would be good against the mortgagor or any one claiming under him not having the rights of bona fide purchasers. The title being conveyed by the instrument, the equities of the parties might be adjusted or modified by any new agreement with- out a writing. But it is entirely settled with us that such is not the nature or effect of a mortgage. With us a mortgage is a lien or security only, and not in any sense a title (Kortright v. Cady, 21 N. Y. 3-43, and cases cited). This ground of sustaining the defendant's lien for the additional advance, therefore, cannot be maintained. The defendant has no title to the land in question; and we have already seen that he has no legal mortgage for a greater sum than $200. At the commencement of this suit the defendant was proceed- ing to foreclose his mortgage, by advertising to sell the premises under the power of sale contained in the instrument; and he claimed in his notice both the sums of money in question. The plaintiff, before instituting the suit, tendered the sum of $200 se- cured by the mortgage, according to its terms, with the interest,, and the costs which had accrued. From what has been said, it follows that this tender extinguished the lien and the power of sale, and that a sale afterwards made under the power would be a nullity {Kortright v. Cady, supra). Of course, we now speak of the lien as a legal one, expressed in the mortgage, and having no other existence. It is claimed, however, that the defendant acquired some equi- table lien or right to charge the new advance upon the land, and that, although such a lien or right cannot be enforced in the man- ner attempted, because tliere is no legal power of sale to enforce it. SKC. III.] ST(M>l)Aia) r. IIAKT. 11^ yi't, as the plaintiiT asks the intfrfiTciKc of a court of oquity. h.- must do all that (•quity n'(|uires as the condition of relief; in olh.r words, he must oiler to i)ay the whole debt in specie to the plain- tiff. The ar<;unient may be sound if the defendant did aecjuire any such equitable title or rij^ht ; and this is the ne.\t subject of in(|uiry. In En^'land it has lonj,' been held that a deposit of title deeds by a debtor with his creditor is evidence of a valid agreement to give a mortgage, which agreement is enforced by treating the transaction as an e(|uitable mortgage. It has always been admit- ted by English jurists that this doctrine contravenes the statute (»f frauds, although it has become well .settled in the jurisprudence of that country (1 Kent. Com. 151). It is confined there to the precise case of a deposit of title deeds. A mere parol agreement to make a mortgage, or to deposit deeds, does not create an etjuila- ble lien. In this State the doctrine is almost unknown, because we have no practice of creating liens in this manner. Equity, how- ever, here as well as there, does sometimes specifically enforce parol agreements wliich are within the statute of frauds; and I see no reason to doubt that such an agreement to make a mortgag.- may be enforced when money or value has been parted with on tin- faith of it, and the circumstances are such as to render it inequita- ble to refuse the relief. But, in the present case, the precise dilli- culty is in the absence of any such agreenu'ut. The defendant had loaned $v^00, and held a mortgage for that amount. He then ad- vanced another sum : but there was no agreement to make another mortgage, or to change, in any respect, the terms of the one already made. The additional sum was inserted in the bond, with an understanding thereby that the mortgage should be '"considered ' as a security for that sum also. The instrument, as it was maut it is not alleged that, under a mistake even of the law, this agreement was sujjposed to be of any binding force or effect. On the whole, I am of opinion that the defendant's lien, whether viewed at law or equity, was only for the original sum of .$".'<>n, and. consecpiently. that the judgment of the court below is rijiht. Davies and Mason, J J., dissented; Iloyi. .T., did not sit in the ise. Judgment affirmed.^ BOGERT V. BLISS AND KOHl'.RT. Court of Appeals of Xew York, IS'JC. (MS A', r. 10 1.) Appeal from order of the General Term of the Court of Common Pleas for the city and county of Xew York, made June 3, 180.5, which reversed an order of Special Term contirming the rej)ort "f a referee in proceedings for the distribution of surplus moneys rising from the sale of mortgaged premises in an action of forc- « losure, modified and confirmecl as modified said report, by finding that the e(piities of the claimant Bliss were superior to tho.se of the claimant Robert; that the lim of the deed or mortgage to the ' laimant Bliss was superior to any claim of the claimant Koljort, lid that the defendant Bliss was entitled to payment out of the -ur|ilus moneys, the balance, if any, to be paid to the defendant I»iilM'rt. 'Where llic rxlen^ion of tlir inort^'it^'r st-turitv i-* in writing', sco Butts \. Hinughton. 72 Ala. 204 (1882). 123 CONVEYANCE. [CHAP, I. The factg, so far as material, are stated in tlie opinion. . . . Andrews, Ch. J. The controversy relates to the disposition of surplus moneys arising on a foreclosure of a mortgage. One Robert claims a prior lien thereon as assignee of a mortgage made by the defendant Striker to one Weil, dated May 15, 1891, payable June 18, 1891, for $1000, recorded May 18, 1891. The mortgage; was paid at maturity by Striker, the mortgagor and owner of the equity of redemption, to Weil, the mortgagee, who on the same day executed and delivered to Striker a satisfaction of the mortgage, together with the bond, but the mortgage was then in the register's, office and for that reason was not delivered to Striker. The mort- gage was paid in usual course, and at the time of the payment there was, so far as appears, no intention on the part of Striker, and no understanding between him and the mortgagee, that the mortgage should be kept alive. Subsequently, on July 2d, 1891, Striker applied to Robert (a partner of Weil) for a loan of $1000, on the security of this extinguished mortgage, and the loan was made. Striker deliverii^ fe Robert at the time the bond and the satisfac- tion, and stating that Weil would assign the mortgage to him. The assignment was subsequently made, but not as we infer until after the mortgage executed to Bliss, the other claimant of the sur- plus. The Bliss mortgage was executed by Striker to Bliss x\ugust 28th, 1891, and covered the same premises embraced in the Weil mortgage, and was given to secure a loan of $1500 made by Bliss to Striker, but in form was an absolute deed, and was recorded Xovember 11th, 1891. Bliss when he took his mortgage made no search of the title and had constructive notice only of the Weil mortgage. The question is whether Robert or Bliss is entitled tO' the surplus moneys. We think the conclusion of the General Terra that Bliss is entitled to them is correct. The Weil mortgage was extinguished by payment before Striker applied to Robert for a loan, and Robert had notice that the mort- gage had been paid by Striker. Striker delivered to him the satis- faction executed by Weil, and there is no pretence that it did not represent the actual fact that Striker had paid the mortgage. What Striker undertook to do was to re-issue the mortgage and the ])ond to secure another loan equal to the amount of the mortgage. Robert assented to this proposition and made the loan on the faith of tlie proposed security. But there was no Avriting and no actual assignment of the mortgage until after Bliss had taken his mort- gage. All that Robert had until the assignment was made was the possession of the bond and the satisfaction of the mortgage and the verbal agreement of Striker that the mortgage should be as- signed. In this State a mortgage is a lien simply, and the general prin- 6KC. HI.] nocKHT r. HLISS. 123 t'iplo is well settk'd that (»ii jiaymeiit the lien is ipso facto di.->- iharged and the mortgage extinguished. There are many cases where, for purj)oses connected with the protection of the title or the enforcement of equities, what is in form a payment of a mortgage, will he treated as a ]»urchase, so as to ])reserve rights which might be jeoparded if the transaction was treated as a payment. But we know of no princijde which permits a mortgagor who has paid his mortgage and taken a satisfaction, there being at the time no equitable reason for keejjing it afoot, subsequently to resuscitate and re-issue it as security for a new loan or transaction and es- pecially where the rights of third parties are in question. It would make no difference in our view whether the re-issue of the mort- gage was before or after new rights and interests had intervened. Wc do not speak of the position of a subsequent grantee or mort- gagee having actual notice of the re-issue of a satislied mortgage before he takes his mortgage or deed. It is possible that the cir- cumstances of the re-issue may be such as to furnish ground for a court of equity to intervene and compel the execution of a now mortgage, to accomplish the real jiurpose of the parties, and notice «>f such circumstances to the subsequent grantee or mortgagee might, perhaps, under special conditions, subject his right to the. prior equity. But the contention that a person having at the time notice that a mortgage had been paid by the mortgagor in usual cour.. I. Tn llio present case, not only had the mortgage been paid before Eobert made his loan, but he knew the fact from incontestable evidence. If he had received an actnal assignment before Bliss liad taken his mortgage, he would not, we think, have been entitled to preference. Upon the facts actually existing he had merely an agreement for an assignment, which at most created an equity en- forceable by equitable action, and meanwhile Bliss had obtained a •legal mortgage, having no notice of the agreement. Bliss had con- structive notice of the mortgage to Weil. His mortgage was sub- ject to that incuml)rance unlc-s the mortgage had been paid. But he did not take subject to an arrangement between Striker and Eobert to revive the mortgage, the lien of which had been extin- guished by payment. The case of Mead v. Yorl-, 6 N. Y. 449, is a direct authority upon the question here presented. It was there held that a mortgage after being once ]iaid by the mortgagor can- not be kept alive by a parol agreement as security for a new liability incurred for the mortgagor as against the latter's subsequent judg- ment creditors. (See, also, Cameron v. Irwin, 5 Hill, 272; Jones on Mortgages, § 943 and cases cited.) ... We find no case wliicli sustains the claim that a mortgage paid by the mortgagor, not intended to be kept alive at the time of the payment, can be thereafter re-issued by him to secure another loan, made by a party cognizant of the fact, so as to give it validity as against a subsequent purchaser or mortgagee.^ The order of the General Term should be affirmed. All concur, except A^ann, J., not sitting. Order affirmed. CHASE v. PECK. Court of Appeals of New York, 18G0. (21 N. Y. 581.) Appeal from the Supreme Court. Ejectment for one hundred acres of land in Otsego County. The plaintiff made title under a sheriff's sale, made June 12th. 1849, upon execution on a judgment against Alonzo Aylesworth, which became a lien on the land in question on the 31st of May, 1848. On the trial it was proved that Alonzo Ayleswortli acquired title to the land by deed, from Isaac ITowland and Sarah his wife, dated August 11, i843. On that day ' On revival of extinct mortgage bv writing, see Peckham v. Haddock, 3(1 ]1I. .30 (1804). .i.( . III.) ciiAsi: r. I'Kt'K. I'i'i iIkv, Ix'ing vi'iy a^'itl pcixtiis, t onvcyrtl tlic land ('• A\l«'-\vurili (who was their graiulsini) fm- tin- nominal consideration of one dnlhir. Notliin;; was j)aitl in la«t, l»iit contemporaneously with the exeeution of the deed. Aylesworth ^Mve l)aek a writin;,' not under seal, hy whieh he eertided lliat " the said Ah)n/.o hereby pled^res the entire use of the faiin. lhi< (hiy conveyed to him. for ihi- sii|i|»ort of said Isaac and Saraii. ami a;4rees to furnish all necessary sup- j)()rt — such as victuals, clotliin;;, medical aid. and all other neees- sary comforts of life — for both the said I.-aac and Sarah; and a^'rees aiul hinds himself to treat them kindly and wait ii|»on ihrm attentively and in a careful numner, during their natural lives anuji- port Mrs. llowland and his inability to ju-rform it. The plainlilt claimed that the roconvcyanee was in fraud of creditors, and there was evidence warranting the jury in finding that an actual fraudu- lent intention to keep the i)roperly from the reach of creditors was a leading motive for the rec-onveyance. Mrs. llowland lived upon the proceeds of the farm, a fair rent for which was shown to be some $G0 per annum, until she sold it in 1S1!» M a grantor of the defendant ; neither Aylesworth, nor any person in his behalf pay- ing anything, or rendering any service toward her maintenance. She died after the commencement of this suit and before the trial. I'he jury found a verdict for the plaintilT, and the judgment there- !i was atlirmed at general term in the si.xtli district. The de- lendanl appealed to this court, where the ca- 126 CONVEYAN^CE. [CHAn i. fesses, in the first place, to pledge the entire use of the farm Jor tliat purpose; and it is added that, if its produce shall he insufficient for the object, the entire fee shall be appropriated to accomplish it. It was, probably, intended that the transaction should operate, to a certain extent, as a gift ; but this was only so far as the value of the property conveyed should exceed the value of the return which was to be made for it. As respected the latter, the arrangement ■was a contract, which imposed a certain duty upon the grantee, to be performed for the benefit of the grantors, and which, moreover, attempted to create a lien upon the subject of the conveyance, to secure the performance of the duty undertaken by the grantee. The intention of the parties is plain ; but the question to be con- sidered is, in what legal or equitable light the arrangement is to be regarded by the court. In our opinion, the instrument signed by Aylesworth is to be considered as creating an equitable incum- brance in the nature of a mortgage. By the law of England, as administered in the Court of Chan- cery, an equitable mortgage may be created by any writing from which the intention to create it may be shown ; or it may be effected by a simple deposit of title deeds without writing. It will also bo allowed in favor of a vendor, for unpaid purchase money, or of a purchaser who has advanced his money on the faith of a contract for a conveyance (Miller on Equitable Mortgages, pp. 1, 3, 218, and cases cited). The courts of equity in this State have adopted the general doc- trines of the English Chancery upon this subject, as upon many others. The cases of a mortgage created by a writing not sufficient to convey the premises, or by a deposit of title deeds, have not been frequent with us; but the doctrine has been applied in a few in- stances, and I do n'ot find any judgment or dictum by which it has ever been questioned. In Jacl-son v. Dunlap, 1 John. Ca. 114, a vendor of land had executed and acknowledged a conveyance to the vendee, but a part of the purchase money had not been paid, and it was then agreed that the grantor should retain the deed until the balance should be actually paid. It was equivocal upon the testimony whether the deed had been delivered so as to pass the title or not. If it had not been, the question wo are considering Avould not arise; but Kent, Ch. J., considered the delivery com- plete, and that the deed was then retained by the grantor by way of security, till payment. This, he said, was the creation of an equitable lien in the grantee. The other judges seem to have been of opinion that the title did not pass. In Jacl-son v. Parl-hnrsf, 4 Wend. 300, it was held l)y the court. Judge Sutherland giving the opinion, that the pledge or deposit of a deed with the grantor, by ■way of security, would give him a lien in the nature of a mortgage; KKO. III.) CIIASK r. PECK. 127 liut tho case bcin^' at law, it was liekl that sucli a title could not Ix; K't up against tiio legal estate. In The matter of Ilowe and wife, I Paige, 12^), the English doctrine, that an agreement for a mort- gage is in e(iuity a sju'cifii- lien on the land, was asserted and ap- jilicd by Chancellor Walworth. The cases in which a lien for the jjurchase money has been estab- lished, where the title had passed to the purchaser, are more numer- ous {Garson v. Grear, 1 J. C. H. 308; Warner v. Van Ahtyne, 3 Paige, 5i;}; Arnold v. J'airick. G Paige, 310; Ilallock v. iport lier during her life, the next inquiry i.'*, whether the jilaintilT, by recovering a judgment against him and imnhasing the i)remises on the execution, is in a better situation than he would have been were .she, or her representatives, now as- serting a claim against him to subject the premi.ses to the payment of a compensation for the jjrovision which he had failed to make. I'jton this point, the cases already referred to for another purpose, and many others, are entirely decisive. It will be stilVieient to men- tion the ease /// llir mailer of Hone, and that of Arnold v. Pal rick. whieh are full to this purpose. In the last case, the (Hpiitable lien f"»r the balance of the purchase money was establislu'd against a judgment creditor who had sold the laiul on execution, antl had himself becctme the punba-^er. The chancellor said the plaintiff in the juilgmenl w:i>; not mlitli'd In claim j)r<»tection as a bona fidf urchaser. even if lie hml no notice of the facts establishing the < <|uital)le lien ; '* for," be jidded. *' be bid in the property on his own judgnu-nt for an antecedent deiit. paying no new consideration. 128 COXVEYAXCE [CHAP. I. He, therefore, took the legal title under the sheriff's sale, subject to the equitable lien for the unpaid purchase mono3^" Considering the rights of the parties to be such as have been mentioned, and the fact being that the defendant is in possession under Sarah Rowland, the remaining c|uestion is, whether the plaintiff can maintain ejectment on his legal title against a party clothed with her equitable interest. It is well settled, that a mort- gagee in possession, the mortgage being forfeited by non-payment, can defend himself in a possessory action brought by the mort- gagor, though, if he, were out of possession, he could not now main- tain ejectment against the latter {Phyfe v. Eilej/. 15 Wend. 848). But this, I think, is not so, except in the case of a technical mort- gage, convoying, subject to the condition, a legal title to the prem- ises {Marks v. Pell, Jackson v. Parkhurst, supra). If the present were, therefore, an action of ejectment, prosecuted under the for- mer -practice, in which nothing but legal principles could be taken into consideration, then, as the deed from Aylesworth to Mrs. How- land has been found to be fraudulent, I think the defendant could not resist the plaintiff's title. But, since the blending of legal and equitable remedies, a different rule must be applied. The defen- dant can defeat the action upon equitable principles ; and if, uj)on the application of these principles, the plaintiff ought not to l)e put into possession of the premises, he cannot recover in the action. ^It has beeen shown that the premises were, in effect, mortgaged to Howland and his wife to secure the performance of Aylesworth \s agreement to support them and the survivor of them during life, and that the plaintiff has taken the place of Aylesworth. When he obtained title by the execution of the sheriff's deed, Aylesworth had been in default in the performance of his agreement for nearly three years. Mrs. Howland and her grantees, it is true, had been in possession, and had enjoyed the use of the premises, but no account has been taken to show how far the income derived from that source would go in fulfilment of the agreement. This action is not brought for a redemption, and is not adapted to that kind of relief. It would be manifestly inequitable to let the plaintiff into possession until he shall procure an account to be taken, and shall pay or tender the amount which shall be found in arrear upon the above mentioned agreement, executed by Ayles- worth, for the support of Mrs. Howland up to the time of her death. The judgment of the Supreme Court must be reversed; and, as we cannot certainly say what case the plaintiff may make, now that the legal princij)les which govern the action have been deter- mined, tliere must be a new trial, with costs to abide the event. If the main features of the case cannot be clian'i-ed, \ho onlv romeiiit for redemption, upon tin.' j)rineiples which have been mentioned.' All the judges eoneurrinen months before. This appeal was argued at the January term, 1875, and a n- argument ordered at the October term following. (JiLHERT. J. We concur fully with the referee in his conclusions of fact and of law. One of the first ])rinciples of ecpiity is that it looks upon things agreed to be done, as actually perfornu'd. .\ct- ing upon this principle, courts of equity in England and in this country have held that an agreement based upon a valuable con- sideration to give a mortgage, will be treated in equity as a mort- gage. That doctrine has been acted upon so fretjuently and for 80 long a period of time that it may justly be regarded as forming a part of the law of the land (Story E(|. Jur., § T).");^ ; fiussel v. Ifiis- spI, 1 Hro. C. C. '2i\9, and notes to that case in 1 Lead. Cases Kq. .'ill ; Head v. Simons, 2 Desauss. r)5t? ; ]r<7.s7/ v. Cshrr. 2 Hill Kq. KIT; Dow V. Ker, 1 Spen. K(|. Ill; Bank v. Carpenter, 7 Ohio, ?1 : hi re Howe, 1 Paige. 12.5; Chase v. Peel-, 21 N. Y. 581 ; Willard K<|., Potter's ed. Ill, rt sr(j). If, then'fore. the agre<>ment of ])•- cember, 1871, had l)ccn made directly with the defendants, Ida and Carrie, there can be no question that it would have given them a specific equitable lien upon the land in controversy, which woubl have been ]>rior and paramount lo the title of the jilaintitT and t«> 'Hall V. //.///. :.() Conn. 104 (1S82). 130 CONVEYANCE. Lt : the general liens of the judgment creditors whom he represents. Having been made ivith their guardian while they were infants, it inured to their benefit and was well executed by the mortgage to them. Conceding that while the agreement remained executory it was within the statute of frauds, and so not enforcible for the reason that it was not in writing, yet, when the promisor actually executed the agreement by the delivery of a formal mortgage, all objection to its validity, on that ground, was removed, and the agreement became as effectual for all purposes as if it had been reduced to writing originally {Siemon v. Schurk, 29 N. Y. 598; Dodge v. Wellman, 1 Abb., Ct. App. Dec. 512; In re Howe, supra; White V. Carpenter, 2 Paige, 217; Arnold v. Patrick, G id. 310). Under our statute a parol agreement in respect to lands cannot be avoided in equity because it is not in writing, where there has been a part performance of it (Freeman v. Freeman, 43 N. Y. 34). A fortiori, it cannot where it has been fully executed. The plain- tiff is not a bona fide purchaser, but stands in the shoes of the bankrupt. He cannot, therefore, assert any better right than the bankrupt himself. The execution of the mortgage gave the de- fendants a lien, which took effect, by relation, as against the bank- rupt and purchasers from him with notice, at the time the agree- ment to give it was made. The plaintiff, not being a bona fide purchaser, took the transfer to him subject to 'that lien. That iK'ing so, no question of fraud or of a preference in violation of the provisions of the bankrupt act has arisen, and the evidence precludes any inference of other kinds of fraud. It is unnecessary to review the cases cited on behalf of the appellants, for none of them seem to us to conflict with the foregoing views. The plaintiff is not in a position to raise the objection that the agreement to discharge the old mortgage and to receive the new owe in lieu of it was invalid because the guardian violated his duty and transcended his power in making such an agreement. Such a transaction is not absolutely void, but is voidable only, at the elec- tion of the infants on coming of age. It being obviously for the benefit of the infants that the lien shall be established and upheld, we will give effect to the intendment that their ratification will be forthcoming at the proper time and to the rule that no one but Ihomselvcs can disavow the authority of their guardian to make the agreement (Co. Lit., 2 b: 2 Kent Com. 23G; Keane v. Boycott, 2 H. Bl. 511; U. S. v. Bainbridge, 1 Mason, 82). The plaintiff lias no claim to be tlie eliampion or protector of the infants and ( an acquire no rights by assuming that character. i'lomc objections to the admission of evidence were taken by the plaintiff. We think thoy were properly overruled. The judgment should be affirmed, with costs, to be paid out of fcl., . 111. J AIIHIIM) /. ODIOUNK. 131 llu- i'>tiitt' nf tilt- l)iml\niiit, il' lliat is sullieii'iit ; othiTwisc by tin; jiliiintitr iKTsoniilly. Smith, J., concurrt'd. Miillin, 1'. .J., roiicuiTcd sok'ly on tlie- gi»)Uii shown 4111 I he trial tiwit the defeiuhmts were not at tlie time of receiving the mortpige aware of the insolveney of tlie mortgagor, and that (he mortgage, as to tliem, was in fraud nf tlie hankrupt law. J iidijni'iit affirmed, irifh costs. AiiREXD V. Odioune, 118 Mass. 2G1 (1875). Gray, C. J. Tlu* phiintitr principally relies upon the doctrine of tiie Englisii courts of chancery that the vendor of real estate by an absolute deed has a lien thereon for tlie unj>aid jturclia.'^e money, without j)roof of any agreement of the parties to tliat effect. The earliest case wiiich contains a full discussion of the doctrine, I IK- source from which it is derived, and the reasons and authorities by which it is supjjorted, is MackrefJi v. ^>i/mniuns, 15 Ves. 329, ilecidcd by Lord Kldon in ISOS. If, as the learned chancellor thought, *' the doctrine is i)robably derived from the civil law as to goods," it is somewhat remarkable that it was never applied in England except to real estate (Adams on Va{. 127). The only grounds u|K)n which it has been rested are natural equity; a sup- posed intention of the ])artics; and a trust arising out of the un- conscientiousness of the vendee's holding the land without paying the price. It was forcibly argued by counsel in Blnckbunie v. Grajsun, 1 Co.\ Ch. f)(), 100; cs-. r. 1 Bro. Ch. 420, and not answered by the <'0urt, " As to the general question of the lien, it is called a natural lien; but it certainly is not so with respect to personalty, which, if once delivered, it is conr-lusive, though concealed from all nuin- kind ; and there seems as much imtural ('(piity in the i-ase of j)er- >onalty as realty." The presumption of an inti-ntion nf the parties 1ms been well dis- pnM'd of by Chief Justice (Jii)son: "The implication that there is an intention to reserve a lien for the jiurehase money, in all cases in which the parties do not by express acts eviiuc a contrary inten- tion, is in almost every case inconsistent with the truth of the fait, and in all instances, without exception, in contradiction of the vxpress terms of the contract, which purport to Ik' a conveyance of evervthing that can pass" (Kniiffrlt v. Jinwer, 7 S. & \\. «W, 76. 77)". The theorv that a trust arises out of the unconseientiousness of 132 COXVEYAXCE. [cilAP. I. the purchaser would construe the nou-perfornianee of every prom-- ise, made in consideration of a conveyance of property to the prom- isor, into a breach of trust ; and would attach the trust, not merely to the purchase money which he agreed to pay, but to the land Avhich he never agreed to hold for the benefit of the supposed cestui que trust. The earliest cases upon this subject in England were decided long since the settlement of Massachusetts; and in all those decided before our Eevolution (except Bond v. Kent, 2 Vern. 281, in which the purchaser secured part of the purchase money by mortgage and gave a note payable on demand for the rest, and it was held that the amount of the note was not a charge upon the land; and Gib- bons V. Baddall 2 Eq. Cas. Ab. 683, note, which is very briefly stated, without indicating when or by whom it was decided, in a volume called by Lord Eldon a " book of no very high character ;'" Dufficld v. Ehves, 1 Bligh. X. R. 497, 539), either the conveyance- was retained in the custody of the vendor as security for the pay- ment of the purchase money, as in Chapman v. Tanner, 1 Vern. 267 ; Pollexfen v. Moore, 3 Atk. 272 ; Fawell v. Ileelis, Ambl. 724, 726; Coppin v. Coppin, Sel. Cas. in Ch. 28; S. C. 2 P. Wms. 291;. or the statements of the general doctrine were oh iter dicta, as in Harrison v. Southcote, 2 Ves. Sen. 389, 393 ; WaR-er v. Presivicl; ib. 622; Burgess v. Wheate, 1 W. Bl. 123, 150; S. C. 1 Eden, 177, 211. Lord Eldon himself, in Machreth v. Si/mmons, said: "It has always struck me, considering this subject, that it would have been better at once to have held that the lien should exist in no case, and the seller should suffer for the consequences of his want of caution ;. or to have laid down the rule the other way so distinctly that a purchaser might be able to know, without the judgment of a court, in what cases it would, and in what it would not, exist" (15 Tes. 340). But he felt himself obliged to declare, as the result of all the authorities, that it was clear that different judges would have- determined the same case differently; that if some of the cases, that had been determined, had come before himself, he should not have been satisfied that the conclusion was right ; and that it was "'' obvious that a vendor taking a security, unless by evidence, mani- fest intention or declaration plain he shows his purpose, cannot know the situation in which he stands, without the judgment of a court how far that security does contain the evidence, manifest intention or declaration plain upon that point " (15 Ves. 342). So Mr. Justice Story, in Oilman v. Brown, 1 Mason, 191, 221,, 222, upon a review of the English cases, concluded that the right of the vendor was not " an equitable estate in the land itself, al- though sometimes that appellation is loosely applied to it ;" but " a stc. III.] aiii(i;m» /. i;m:. 133 ri^lit wliiili lia> no rxisli-iuf, imlil it is cstaljlishod Ity llic (Icorc-c «if ai court in tlu' particular casi", and is then made subservient to all •'.■ other equities between the parties, aiul enforced in its own . uliar manner and ujmn its own peculiar principles." Tlie most plausible foundation of the I']n<,dish doctrin*' wouM Ml to be that justice reijuired that the vendor should be enabled, some form of judicial j)rocess, to charge the land in the hands < 1 the vendee as security for the unpaid purchase money. And the restriction of the doctrine to real estate su<,'<^ests the inference that the Court of Chancery was induced to interpose by the con- sideration that by the law of England real i-state could neither be ached on mesne process, nor, i'.\cej)t in certain cases or to a limited extent, taken in execution for debt {'I VA. Com. U'.o. \i\] ; ■J Kent. Com. l-.Mli ed.. 1-.\S, 1-J!»). But by an act of Parliament, passed in 173'2, lands and other real • late within the I^nglish colonies were made char (■(|uity. anv iiKHf lliaii lln- cniiuiinii law, should intcrpurie lo di-riMi tliein. It inav bo doubtoJ whrllRT, uj)()n llu' easi- stated in the bill, the jdaintilT would In- held entitled to the lii-n which he asserts in those courts whieli reeo^niize the existence of a vendor's lien for unpaid i)urchase 7noney ( 1 Perry on Trusts, i; 235 ). But as we are clearly of opinion that no such lien exists in this Commonwealth in any case without agreement in writing:, we do not propose to entangle ourselves in the reliivnieiits and embarrassments which arc inseparable from its judicial consideration and allirnuince. PERKY V. BOARD OF MISSIONS. Court of Aitkals of New Yohk, 188G. (102 iV. y. dO.) Appeal from judgment of the General Term of tlie Supreme Court, in the third judicial department, entered upon an order made February 4, 1884, which atlirmed a judgment in favor of plaintiff, entered npon the report of a referee. This action was brought to liave a lien declared in the nalun" of a mortgage upon certain premises, the title to which is in the defendant, for moneys advanced by plaintiff to pay for rej»airs ami improvements u])on said premises. The material facts are stated in the opinion. E. Countrijinan for appellant. Hamilton Harris for respondent. D.w'FORTii. J. F^pon trial ])efore a referee the plaintilT has l)een •Icclared entitled to a lien in the nature of a mortgage upon ci-r- tain premises on Elk Street, in the city of Ali)any, for a Imlancc due lum for advances made for improvements and repairs thereon and for interest on an existing mortgage, amounting to the sum of $K!77.:^s, besides costs, and in case the same is not paiion of certain testimony, but it is not now contende\ plaintilF in payment therefor. On the 2()[\\ of Oetoher, 1870, in aeeordance with the above direetions, the trustees of the Episcopal fund of tho ilioeese of Albany eonvi-yed the premises to defendant in trust as a residence for the bishop of All)any, and on the same day, at a re;,nilar meetinj,' of the board, the following resolution was jtassed : " licsohed. That this board do, in accordance with the direc- tion <»f the convention, hereby accept the conveyance of the said ])remises, to l)e held in trust for the uses and purposes above men- tioni'd, and further that the president of this board, the Kt. Kev. William Croswell Doanc, S.T.D., Bishop of Albany, be and is luTcby authorized in its name and behalf to execute and alfix the corporate seal of this board to a bond and mortgage upon the said premises for a loan not to exceed $s:)00, with interest, the proceeds of whicli shall be ajiplied to the ])ayment of the said existing mortgage of $5000 thereon, and the said expenses of the said repairs and im- jirovements," and in pursuance of said resolution on December 3U. 1870, defendant, by its president aforesaid, executed and delivered to one Earl L. Stimson a bond with a mortgage upon the premises aforesaid for the sum of $8500, which sum was loaned and ad- vanced to it by said Stimson, and was by it paid over to plaintiff, who i)aid out of the same the mortgage of $5(100, and the interest thereon, then unj)aid, amounting in all to the sum of $5t.^",.'0.47, and the same was cancelled of record, and the balance of said sum was credited and applied hy plaintilT in his account for the ad- vances made by him as aforesaid toward the purchase j)rice of said l)remises. the expenses incident to the same, and for said improve- ments and repairs. Other facts are found which re(|uire no si)ecial mention, but which show that the amount for which a lien was declared was justly due for advanci-s made under the circumstances above stated. It is objected by the a|>|)ellant that the plaintilT is not, by reason of any of these facts, entitled to an e(piitab!e lien upon the prem- ises for the benefit of which they were made. W'v are of a diilerent opinion. The principle ujmn which a court holds that a vendor whi> \\n< not been paid is entitled to a lien on the land sold is that it would be contrary to natural justice to allow a purcha.ser to retain an estate which he has not paid for. and it .seems very clear that there is a like natural npiity in f-.wnr of the j)laintilT. It is true he did not sell the estate, but he added to it, and by his expenditures ujmn It fitted it for the j)urpos,. f,,r which it was int(Mul»>d. .\ lien for 138 CONVEYANCE. [CHAi-. ^. the price of an estate sold exists without any special agreement and by virtue of a doctrine merely of a court of equity. Here there is a special agreement and also a case to which the doctrine ap- plies : First. The special agreement. It may be found in the resolu- tion of the convention of 1870, by which the defendant was re- quired in substance to provide by bond and mortgage " for the payment of the sum advanced for the repairs and fitting up of the Episcopal residence" — the one in question. The learned counsel for the appellant seeks to limit this expression by the rules of grammar, and confine the security to the sum then or already ad- vanced, to the exclusion of all advances subsequent thereto. We do not think, however, that the framers of the resolution selected the word for the purpose of marking either present or future time, but to denote a fact which might include various transactions re- quiring the expenditure of money by some person other than them- selves, the whole, by whomsoever or whenever made, constituting " the sum advanced," in rendering the place fit and suitable as a residence for the bishop of the diocese. The resolution in question was in writing ; it was entered in the journal of the convention, and the defendant was bound to conform to it (C. 13, Laws of 1870, supra) . Second. The plaintiff's case is within the general doctrine of equity, which gives a right equivalent to a lien, when in no other way the rights of parties can be secured. The advances were directly for the benefit of the real estate; they were approved by the convention by whose directions the title was conveyed to the defendant, but neither the convention nor the defendant have in- curred any corporate liability, and while it may be said that the advances were made on the promise of, or in the just and natural expectation that, a mortgage would be given, it is also true that they were made on the credit of the property, for the improvement of which they were expended. The repairs and improvements were permanently beneficial to it, made in good faith, with the knowledge and approbation of the parties interested, and accepted by them, not as a gratuity, but as services for which compensation should be given. The plaintiff's right to remuneration is clear, and unless the remedy sought for in this action is given, there will be a total failure of justice. It would seem to follow that no error was committed by the referee in directing a sale of the property, and the application of the proceeds to the payment of the plaintiff's claim. But the learned counsel for the appellant argues that as the defendant's relation to the property is that of trustee, such enforcement of the lien would destroy the trust, and so defeat the very object of the nvx: ill.] T::rrT /•. mcnson'. i:5!t coil vrya nee tliiough which they dtrivc lilh'. The trii>l was f.>r th'* habitation and use of the bisliop of the diocese; it was accepted with notice that tlie improvements were necessary to fit the build- ings for oicuj)atioii, and had been be^fiin under proper authorilv. It was the duty of the defi-ndaiit to allow tlieni to l)e finished, and it will be no viohition of the coiiditit>ns u])on which the ])remi.--c.s arc held, to subject them to a char|,'e for the co>t of the n-pairs through which alone the ])urposcs of the trust were a( Infore him. and that the judgment appealed from should be alTirmed.* All concur. Jiidijinenf affirmed. TKFFT v. MIXSOX. Court of Ai'pe.vls of Xew Yokk. 1875. (57 .V. }'. i)7.) This was an action to restrain defendants, loan commissioners for Washington County, from foreclosing a mortgage exccuteil ii> them by Martin B. Perkins and wife. On the ISth day of January, ISIS. Cainaliel Perkins purcha>ed of Cortland Ilowland certain lands in Washington Count v. whi.li Were conveyed to him by warranty «! 1 recorded March 7. 18 IS. 'Compare Iiri,,hl v. It>n/,l, 1 St.iry. 47S (lS4n, in wlii. h im|.n.vom.'iili made J)y h hmifi fid,- |)tii(linser of land wliose tide uroved ilefei-tive with allowed as " a lien and rliurp' on the estate." — I'rr Storv. .?.. 2 Storv. I'lOS. 140 CONVEYANCE. [CIIAP. I. in the clerk's office in said county. Gamaliel Perkins, immediately i after his purchase, let his son, Martin B. Perkins, into possession of the premises, who forged a deed of the land from his father to himself and placed it upon record in the clerk's office of said countjj May 27, 1850. On the 1st day of Octoher, 1850, Martin B. and his wife executed a mortgage upon said land to the loan commis- sioners of said county, to secure the sum of $1000 loaned to him. This mortgage contained covenants that Martin B. and his wife Avere lawfully seised of a good, sure, perfect, absolute and inde- feasible estate of inheritance in the premises, and that they were free and clear of and from all former and other gifts, grants, bar- gains, sales, liens, etc., and this mortgage was, on the day of its (late, duly recorded in the book kept by the loan commissioners, as required by law. On the 23d of January, 18G0, a deed of said lands, bearing date April 1, 1853, was recorded in the county clerk's office, which purported to be executed by Martin B. and wife to his father. On the 16th day of December, 1859, Gamaliel Perkins conveyed said land to Martin B., by deed recorded Janu- ary 14, 1860. Until this conveyance from his father Martin B. had no title to the land, although he remained in possession of the game from 1848. On the 31st of Januar}-, 1867, Martin B., being still in possession of the lands, conveyed them to the plaintiff, who paid full value for the same without any actual notice of the mort- gage to the loan commissioners. The deed to tlie plaintiff was re- corded February 9, 1867. The court below decided that plaintiff was not entitled to the re- lief sought, and directed a dismissal of the complaint. Judgment was perfected accordingly. Earl, C. The plaintiff claims that the mortgage to the loai commissioners has no validity as against him, and that his deed has ])riority over it under the laws in reference to the registry of deeds and mortgages. It is a principle of law, not now open to doubt that ordinarily, if one who has no title to lands, nevertheless makes a deed of conveyance, with warranty, and afterward himself pur chases and receives the title, the same will vest immediately in hi grantee who holds his deed with warranty as against such grantoi In- estoppel. In such case the estojipel is held to bind the land, anc to create an estate and interest in it. The grantor in such case being at the same time the warrantor of the title which he has assumed the right to convey, will not, in a court of justice, b( heard to set up a title in himself against his own prior grant; h< will not be heard to say that he had not the title at the date of th( conveyance, or that it did not pass to his grantee in virtue of his deed {Worl- r. Wellanjl. 13 X. IT. 389; Kimhall v. Bhisdi'll 5 H, 533; Somes v. Skinner, 3 Pick. 52; The Banl- of Utica v. ^fer BM-. III.] TEFIT r. MINSON'. Ill t:irnill, :\ r»;uli. Cll. .^-^S, :<(i; ; Jinl,y„ii \. li\ilJ, \ .T(.liii ('as. SI, Uti; While V. Pattrn, ".M Pick. :Vl\\ Pike v. (,V//r»». I".* Maiiu-, l.«<;5). And Ihe dortriiio, as will be scru l»y llu'se autiioritic-:, is ('(lually veil sc'ttlt'J lliat the csloppcl hiiul.s not only llu.' parti<'s, Imt all ])rivic'.s in estate, ])rivies in blood and ])rivies in law, and in sueli case tbc title is treated as bavin^ been ])reviously vested in tin- grantor, and us baving passed immediately upon llu,' execution of his deed, by way of csto])pel. In tbis case Martin B. Perkins con- veyed tbe lands to tbc loan commissioners, by mortgage witb war- ranty of title, and tbereby became estopped from disj)uting tbat, at tbe date of tbe mortgage, be bad tbe title and conveyed it, and tbis esto])pel applied cfjually to tbe ])laintifT to wbom In.' made a subsciiuent conveyance, by deed, after be obtained tbe title from bis fatber, and wbo tbus claimed to be bis privy in estate, 'i'lie i)I;;intifr was estop|)ed from denying tbat bis grantor, Martin B. Perkins, had tbc title to tbe land at the date of tbe mortgage, and he must, therefore, for every i)urpose as against tbe plaintiff, be treated as baving tbe title to tbe land at tbat date. I, therefore, can see no dilTiculty in this casc,-growing out of the law us to the registry of conveyances. Martin B. Perkins, having title, made the mortgage which was duly recorded. lie then con- veyed to bis fatber and tbe deed was recorded. His fatber tbcii conveyed to him and the deed was recorded. He then conveyed to the plaint ilF and bis deed was recorded. Thus the title and record of the mortgage were prior to the title and record of the deed to plaintilT, and tbe priority claimed by ])laintifT cannot be allowed. Assuming it to be the rule that the record of a conveyance mail'' by one having no title, is, ordinarily a nullity, and constructive no- tice to no one, the plaintiff cannot avail himself of this rub-, as he is cstoj)ped from denying that tbe mortgagor bad tbe title at tbe date of tbe mortgage. Tbe case of 117/ /7t' v. PdUrn, supra, is en- tirely analogcms to tbis. In tbat case the ])laintifF derived bis title from a mortgage, made to him by one Thayer, containing cove- nants of seisin, warranty, etc., and recorded February 1!», is:? I. At tbe time of the execution of tbis mortgage the title wjis not in Thayer, but in one Perry, his father-in-law. Perry afterward, by deed recorded August 2, IS.'M, conveyed tbe land in fee simpb- to Thayer, who conveyed tbe land by mortgage to the defendant, n-- corded the same day. The counsel for the defendant used tbe fame arguments in a great measur(> wbidi have been urged upon our attention by tbe counsel for tbe pbiintifT in tbis case, botii as to the title and the registry of tbe mortgages, and yel the court held in a very able opinion tbat the j)laintiff bad tbe prior and 1- (- tor title. 14:2 COXYFA'AXCE. [CHAP. I. I am, therefore, of opinion that the judgment should be affirmed, ^vith costs. For affirmance. Earl, Gray and Johnson, CC. For reversal, Lett, Ch. C, and Reynolds, C.^ Judgment affirmed. VANDIVEER v. STICKNEY. Supreme Court of Alabama, 1883. (75 Ala. 225.) Appeal from Montgomery Circuit Court. Tried before Hon. James E. Cobb. This was a statutory real action in the nature of ejectment brought by William P. Vandi- veer against Henry G. Stickney and Mary E. Stickney ; was com- menced on 17th May, 1880; and, as to that portion of the land actually in controversy, to which a disclaimer filed by the defend- ants did not apply, the cause was tried on issues joined on the pleas of not guilty and the statute of limitations of ten years, the trial resulting in a verdict and judgment for the defendants. The evidence introduced on behalf of the plaintiff tended to show that " the property sued for was the property of R. B. Owens at his death; that the said Owens died intestate, in the year 1862, leaving as his only heirs-at-law his children, William, Edwin, and Emma Owens, and Mrs. Stickney, the defendant ; that said Emma died in March, 1869, unmarried, and without children;" that oi 16th June, 1870, said Edwin and William Owens executed to the plaintiff a mortgage on an undivided two-thirds interest in the land described in the complaint, to secure money then loaned to them by the plaintiff; and that said debt had not been fully paid. The evidence introduced on behalf of Mrs. Stickney tended to show that her sister Emma, at the time of her death, was about sixteen years of age ; that prior to her death she expressed a desir< that Mrs. Stickney should have her interest in her father's estate on account of her care of her and on account of the money she hac spent for her; that within a few days after the death of the sai( Emma, Edwin and William Owens and Mrs. Stickney "met and discussed the matter between them, and it was agreed between llicm that Mrs. Stickney should have said Emma's interest in sai( property;" that this agreement was verbal; that from the time oi * The dissenting opinion of Reynolds, C, is omitted. M.«-. IM.J \ani>i\i;i;k /•. mu km;v. 143 ,uy luTsi'lf, or Iht lni>I)iin(l, as truste*-, or li-nants, cliiiiniii;,' tlio I'ntire jjioiktIv as lur own in <;(>o(l faith, ((inlinnously, openly, notoriously and advi rsdy ;" that she has continued " in such posscs- ^;ion of the same hy herself, hushand or tenants, and was in such adverse possession at the time of the execution of said mortgage to llif plaintiff, she, at that time, and ever afterward, claiming tlu; haid property as her own. in good faith, oj)enly. notoriously and adversely to her hrothers ami all the world;" that on 21st Fehru- ary, 18T0, the said Kdwin executed a deed, conveying to Mrs. Stickney his undivided interest in saiil property, which deed was duly recorded ; that the said William " had conveyed to Mrs. Stick- ney his undivided one-fourth interest in his father's estate, of which he was pos.sessed, hefore his sister Emma's death, and that the deed <-onveying said interest was duly executed, prior to the death of his sister, l*]nnna, and upon a valuahle consitleration ; that the only right to said William's one-tM'elfth interest in said real estate, accpiired through his said sister, Emma, claimed hy ilrs. Stickney, was under and through said verhal agreement, and the adverse ]K)ssession thereof as aforesaid;" and that after said v(>rl)al agree- ment, neither the said William nor the said Edwin ever asserted any right, title, claim or interest in or to the share of the said Ijnnia in said projicrty. I'laintilT then introduced evidence tending to show that Edwin and William Owen.s were in possession of said stahles and stable lot (a part of the property in controversy) in the spring of 1870. and at the time of the execution of said mortgage; and there was also evidence introduced hy defendants, tending to show that the t:aid William and Edwin Owens, while in pos.session as aforesaid, at the time of the execution of said mortgage, were there as the tenants and employees of the defendants, Stickney and wife, and in no other capacity. The said plaintiff also tcstifk'd that he had no knowledge of th(> claim or title of >rrs. Stickney to the interest of her said hrother William in said Emma's one-fourth of said projx^rty described in said mortgage. The foregoing was the substance of the evidence introduced on the trial bi'aring on tlu? questions decided by the court. The plain- tiff reserved numerous exceptions to charges given and refused, which the opinion docs not render necessary to set out. Those charges arc here n.ssigned as err;ession of lands by a doneo, under a more parol gift, accompanied with a claim of right, is an adverse 144 COXVEYAXCE. [CIIAP. I. holding as against the donor, and will he protected hy the statute of limitations, thus maturing into a good title hy the lapse of ten years. The fact is immaterial that such a parol gift of lands con- veys no title, and only operates as a mere tenancy at will, capahle of revocation or disaiiirmance by the donor at any time before the bar of the statute is complete. It is evidence of- the beginning of an adverse possession by the donee, which can be repelled only by showing a subsequent recognition of the superiority of the title of the donor. The essence of adverse possession is the quo animo or intention with which the possession is taken and held by a de- fendant. It is in the settled language of the l)ooks, the intention which "guides the entry, and fixes its character" (Angell on Lim., § 386; Ewing v. Burnet, 11 Peters [U. S.] 41). Even where the technical relation of landlord and tenant exists, and despite the settled rule that a tenant will not be permitted to dispute the title of his landlord, there is no principle of law or of public })o]icy which forbids a tenant from holding adversely to the landlord, so. as to acquire title of the demised premises under the operation of^ the statute of limitations. But in all such cases, the presumption in the first instance is, that the tenant's possession is permissive and in subordination to the title of the landlord, and there must be clear and positive proof of a disclaimer or renunciation of the su- perior title, brought home to the knowledge of the landlord with unquestionable certainty (Angell on Lim., § 444; 2 Brick. Dig., p. 200, §§ 101, 102). The evidence tended to show that the defendants held adverse possession of the lands in suit for more than ten years prior to the commencement of the action. The undivided interest of Emma. Owen, which on her death descended in part to her two brothers,, William and Edwin, was released by parol to their other sister, Mrs. Stickney, who is one of the defendants. Her adverse pos- session commenced at this time, which was about the middle of March, 18G9, and is shown to have continued, without any subse- quent recognition of the title of her donors, until the commence- ment of this suit, in May, 1880. The mortgage executed by the two brothers to Yandiveer, the plaintiff, in June, 1870, did not change the adverse nature of ]\rrs. Stilrknoy's possession, nor oper-. ate in an}^ manner to stop the running of the statute. This mortgage, moreover, is shown to have been executed by. the mortgagors during the period of Mrs. Stickney's occupancy and adverse holding, the hostile character of which was not only known to them, but, in its inception, was expressly authorized by^ their parol release of the deceased sister's interest in the mort- gaged lands. The mortgage was therefore void. as tending to pro- mote champerty and maintenance by traffic in litigated titles. The i^ti-. HI.] vani)i\i;i;k r. sik knky. 145 ■ k- of law iviuKrin;,' luiivcvaiucs of himls void, ulu-ii Iii'M atl- isfly, is, in part, one of imhlie policy, (U-signi-d to " throw olj- : lack's in the way of asserting doubtful rij,dits to the prejudice of oceuj)ants {Clai/ v. Wifutt, J. J. Marsh, 583; Bernstein v. Humes, CO Ala. 582). "It seems," says ("hancellor Kent, "to !»• the ;.,^.n- cral sense and usa<,'e of mankiml, that the transfer of real property chould not be valid, unless the grantor hath the capacity as well as the intention to deliver possession " ( I Kent. 448). To avoid a conveyance on this ground, it is not re(iuisite that .vuch adverse possession should be asserted under any color of title, but only under claim of right. But it must be actual as distin- guished from constructive possession (Bernstein v. /fumes, Tl Ala. 200; Eurehi Co. v. Edwards, ib. 248). Xor is it re(piired that the mortgagee, or other jjurchaser should have actual notice of such adverse holding, in order to vitiate the conveyance. Tlie constructive notice implied from possession is sudicient (Bernstein V. Humes, supra). Xor, yet again, does a knowledge by one in actual possession, claiming title, that his title is defective, avail to destroy its adverse character. The test is the actual claim, and not the bona fides of it, in all cases, at least, where the possession is actual and not merely constructive (Smith v. Roberts, G2 Ala. 83; Ates- undcr V. Wheeler, G9 Ala. 332; Gordon. Rankin £■ Co. v. Tueedi/. T4 Ala. 232). These principles are all ])ertinent to the present case, and were recognized in the rulings of the court. The doctrine settled in this State is, that the possession of ihe tenant is the possession of the landlord, and notice of the former is notice of the latter. The reason is, as observed in a former decision, that an in(|uiry of the occupant will be likely to lead to a knowledge of the fact that he is a mere tenant, holding, not in his own right, but in the right of another who is his landlord (Brunson v. Brooks, G8 Ala. 248; ri(jue v. Arvndale, 71 Ala. !M ; Wade (m Notice, ^i< 284-28(; ; Burt v. Casseti/, 12 Ala. 734). It was immaterial, therefore, that the mortgagors were in llie temporary occui>ancy of a portion of the property sued for at the time of the execution of the mortgage, in the year 1870, provided they entered after the commencement of ^^rs. Stickney's advcr.-e posses.«;ion, and as mere tenants, fully recognizing the superiority of her title as owner and landlord, runhasers from tenants are «< fully precluded as the tenants themselves from le -theme an per cent, which was »'xtremelv fair, considering the interest of nxuiey kept up long aftt-r at •'• p.r time after the first day of July, ]7!H), \inl(ss Robert Alexander sliall pay to the said William Lyles, on or Ix'fore that day, the sum of £700 with interest from the said 20th day of March, 1788. And if the said Robert Alexander shall pay the said William Tiyles on or before that day the said sun of £700 with interest, then to reconvey the same to the said Kolx-rt •Mexander. Robert Alexander further covenants that, in the event of a reconveyance to him, the said twenty acres sold absolutely shall 1k» laid off adjoininji the tract of land on which William Lyles then is iiia«ip nt tlip same timr, ronooniitnnt witli the prant, an it must he ixin- » .-ii)icrit)rii \ . in onlrr t()n ilic li-aniii;,' ol" c(jurts has Ihtii a;,'aiiisl tlic'in, and dnuljiful nisi's have ;,'«'iicrally ijecii diridcil to he mort- gages. But as a conditional sah*, if really intended, is valid, th • inquiry in every t-ase must )»••, whether the eontraet in the sj)eeini' cast' is a seeuritv for the n-pavment of monpy or an aetual in this case tlu' form of the (iced is not in itself conclusive eiiher \\;iy. The \v;iiit of a covenant to rej)ay the nu)ney is not comjjli-te evidence that a conditional saU* was intended, but is a circum- stance of no inconsidi'rahle importance. If the vendee must he restrained to his principal' and interest, that princi|)al and interest ought to bo secured. It is, therefore, a necessary ingredient in a mortgage that the mortgagee should have a remedy against the person of the debtor. If this renu-dy really exists, its not beijig reserved in terms will not affect the ease. But it must exist in order to justify a construction which overrules the express wgrds of the instrument. Its existence, in this ease, is certainly not to be collected from the deed. There is no acknowledgment of a pre- existing debt, nor any covenant for repayment. An action at law for the recovery of the moiu'y certainly could not have been sus- tiiined; and if, to a bill in chancery praying a sale of the premises, and a decree for so miuh money as might remain due, I^obert Alexander had answered that this was a sale and not a mortgage, red it at learoceed to examine tho.^e extrinsic cireiimstanees whii'h are (o •letermine whether it is to be construed a sale or a mortgage. It is certain that this deed was not given to secure a pre-existing 154 SECURITY. [chap. II. debt. The connection between the parties commenced with this transaction. The proof is also complete that there was no nego- tiation between the parties respecting a loan of money; no propo- sition ever made respecting a mortgage. The testimony on this siibject is from Mr. Lyles himself and from Mr. Charles Lee. There is some contrariety in their testimony, but they concur in this material point. Mr. Lyles represents Alexander as desirotis of selling the whole land absolutely, and himself as wishing to decline an absolute purchase of more than twenty acres. Mr. Lee states Lyles as having represented to him that Alexander was unwilling to sell more than twenty acres absolutely, and offered to sell the residue conditionally. There is not, however, a syllable in the cause, intimating a proposition to borrow money or to mortgage property. No expression is proved to have ever fallen from Robert Alexander before or after the transaction respecting a loan or a mortgage. He does not appear to have imagined that money was to be so obtained ; and when it became absolutely necessary to raise money, he seems to have considered the sale of property as his only resource. To this circumstance the Court attaches much im- portance. Had there been any treaty, any conversation respecting a loan or a mortgage, the deed might have been, with more reason, considered as a cover intended to veil a transaction differing in reality from the appearance it assumed. But there was no such conversation. The parties met and treated upon the ground of sale and not of mortgage. It is not entirely unworthy of notice that William Lyles was noi a lender of money, nor a man who was in the habit of placing his funds beyond his reach. This, however, has not been relied upon, because the evidence is admitted to be complete that Lyles did not intend to take a mortgage. But it is insisted that he intended to take a security for money, and to avoid the equity of redemption; an intention which a Court of Chancery will invariably defeat. His not being in the practice of lending money is certainly an ar- gument against his intending this transaction as a loan, and the evi- dence in the cause furnishes strong reason for the opinion that Robert Alexander himself did not so understand it. In this view of the case the proposition made to Lyles, being for a sale and not for a mortgage, is entitled to great consideration. There are other circumstances, too, which bear strongly upon this point. The case, in its own nature, furnishes intrinsic evidence of the improl)ability that the trustees would have conveyed to William Lyles without some communication with Robert Alexander. They certainly ought to have known from himself, and it was easy to procure the information, that the money had not been paid. If he had considered this deed as a mortgage he would naturally have M;c'. I.] CONWAY l'. ALKX ANDKU. 155 nsisti'd the conveyance, and it is prohyblo that the tnistcos wouiil have declined making' it. This jirobaltility is ver}' much strcn^th- eneinion •>f three judges, so strong as to overrule all the opposing testimony in the cause. 15G SECURITY. [CHAP. II. But ilic testimony on this point is too uncertain and conflicting to prevail against "the strong proof of intending a sale and pur- chase, which was stated. The sales made by Mr. Dick and Mr. Hajtshorne of lots for building, although of land more remote from the town of Alexandria than that sold to Lyles, may be more valnable as building lots, and may consequently sell at a much higher price than this ground would have commanded. The rela- tive value of property in the neighborhood of a town depends on so many other circumstances than mere distance, and is so different at different times, that these sales cannot be taken as a sure guide. That twenty acres, part of the tract, were sold absolutely for £5 per acre; that Lyles sold to Conway at a very small advance; that he liad previously offered the property to others unsuccessfully; that it was valued by several persons at a price not much above what he gave; that Robert -Alexander, although rich in other property, made no effort to relieve this, are facts which render the real value, at the time of sale, too doubtful to make the inadequacy of price a circumstance of sufficient weight to convert this deed into a mort- It is, therefore, the opinion of the Court that the decree of the Circuit Court is erroneous and ought to be reversed, and that the cause be remanded to that court with directions to dismiss the bill.^ Decree reversed. COYLR V. Davis, IIG U. S. 108 (1885). "The volume of proof taken on the issue thus raised is large, and the evidence is contra- dictory, as is common in such cases where, admittedly, a loan of some kind was at some time talked about. The conveyance to Davis, of the undivided one-third interest of Coyle, being to him, his heirs and assigns forever, with a covenant of warranty, and without a defeasance, either in the conveyance or in a collateral paper — the parol evidence that there was a debt, and that the deed was in- tended to secure it and to operate only as a mortgage, must be clear, iin('(|ui\ocal and convincing, or the presumption that the instru- ment is what it purports to be must prevail. This well-settled rule of equity jurisprudence was applied by this court in Howland v. Blnl-p. 97 T). S. 024, 02(5. The case stated in the bill heroin is not supported ])y the weight of evidence. On the contrary, it sustains Ilic allegations of the answer. Especially, the force of the letter of ' ]{obinfion V. C'ropscp. 2 Kdw. Ch. (N. Y.) 138 ( 18.3.'V) ; Rich v. Donne, .T. VI,. 125 (1S()2); Cornell v. Hall, 22 Mich. 377 (1871); Hanford v. JUrs.'^iny, 80 111. 188 (187.^)) ; RainhiJl v. Zanders, 87 N. Y. 578 (1882). taciory (•x|tlaiiati<>n. It woiilil st-rvc i\n useful puiposi- to discuss the Ifsti- iiiony at k'ii<,^tii. There is but oiu- point to which it is needful to refer. CJreat stress is hiid, in eases of this kind, on inade(jua<-y of consideration where theie is a i(»nsi(h'rabh' dispro|)ortion Ijetween the priee paid and the real value of the properly (Hiisscll v. Son- lliard, VI How. i;i;), MS). There is testimony on both sides, on the question of disjiroixtrtion, in this ease. Hut the pre|>otitleranei' is v«'ry lar;:e on the part of Davis, that the share of Coyh- in the property was sold for about its sale value, in view of its condition. There was a jjoorly built and poorly arran^ied buildinj,' on the prem- i>es, wliieh was ineapablc of actual partition; the law did not per- mit a partition by a sale in inritum. and Coyle's interest was a minority interest. The.se considerations made it difKcuIt of sale at a\l"— Per Blatchford, J. Rrs.sMLL V. .^orTII.VK'h. Si riu:.ME Court of the United States, ISol. {\-2 Ifoir. \:v.).) This was an appeal from the Circuit Court of tlie United States I- the Distriet of Kentucky, sitting as a court of ecjuity. It was a bill filed by Russell, the appellant, to redeem what he culled a mortgage, and the (piestion in the ease was whether it was a mortgage or conditional sale. Tin- facts are set forth in tlu' opin- ion of the court. U])on the trial the Circuit Court dismi^.-e(l ih.' ''•II, and Kussell appealed to this e(mrt. It was argued by Mr. I'mlrrirood and Mr. Mnrrhi-iul. with whom v.as Mr. Clni/. for the appellant, and by Mr. Xicholas for the ap- ))ellee. Mil. Justice Curtis delivered tlu' opinion (d" the court." This is a suit in e«piity to redeem a mortgage, brought lure by 'ippeal from the Circuit Court of the I'nited Siati-s for the l>istri<-t Kentucky. On the "J 1th day of Sepliinlter, js-j;, Hu.-.>ell, the eom|ilainani. tivcyed, by an absolute deed in fee-simple, to .lames Southard. ' ea>ed, whose brother and deviser, Daui"! IJ Siuihard. is tho rmtions ti tlic opinion, dcaliiij; villi fon'i;;n iiiii'^lion', Iium- Immmi omitted. 158 SECURITY. [CHAP. ,1. ]>rincipal party defendant in this bill, a farm, containing two hun- dred and sixteen acres, situated about two miles from the city of Louisville. At the time the deed was delivered, and as part of the same transaction, Southard gave to Russell a memorandum, the terms of which are as follows : " Gilbert C. Russell has sold and this day absolutely conveyed to James Southard, said Russell's farm near Louisville, and the tract of land belonging to said farm, containing two hundred and sixteen acres, and the possession thereof actually delivered on the following terms, for the sum of $4929. 8U cents, which has been paid and fully discharged by the said Southard as follows, viz., first two thousand dollars, money of the United States, paid in hand ; secondly, the transfer of a certain claim in suit in the Jeffer- son Circuit Court, Kentucky, in the name of James Southard against Samuel M. Brown and others, now amounting to the sum of $1558.87^ ; and thirdly, the transfer of another claim in the same court, in the name of Daniel R. Southard against James C. Johnston and others, now amounting to the sum of $1270.94, as by reference to the records for the more precise amounts will more fully appear. The said Gilbert C. Russell has taken, and doth hereby agree to receive from said Southard aforesaid, two claims against Brown, &c., and James C. Johnston, &e., as aforesaid, without recourse in any event whatever to the said James Southard, or his assignor, Daniel R. Southard, of the claim of said Johnston, &c., or either, and to take all risk of collection upon himself, and make the best of said claim he can. The said James Southard agrees to resell and convey to the said Russell the said farm and two hundred and sixteen acres of land, for the sum of forty-nine hundred and twenty-nine [dollars] 81^ cents, payable four months after the date hereof, with lawful interest thereon from this date. And the said Russell agrees, and binds himself, his heirs, &c., that if the said sum and interest be not paid to the said James Southard, or his assigns, at the expiration of four months from this date, that then this agreement shall be at an end, and null and void; and the wife of said Russell shall relinquish her dower within a reasonable time as per agreement of this date. This agreement of resale by ihe said James Southard to the said Russell, is conditional and Avithout a valuable consideration, and entirely dependent on the payment, on or before the expiration of four months from and after the date hereof, of tlie said sum of $4929. 8U, and interest thereon from this date as aforesaid. And this agreement is to be valid and obligatory only upon the said James Southard, upon the punctual payment thereof of the sum and interest as aforesaid, by the said Gilbert C. Russell. '' In witness whereof the j)arties aforesaid, luive hereunto set their sK . I.] UUSSEI.l. r. SOLTIIAHD. 169 liaiuls ami seals, at Louisville, Kentucky, on this *^lth day of Sep- (cnibor, 1827. "GlLBKUT C. RlSSELL, [SkaL.] "Jamks SoiTiiAui), [Seal.] " Witness present, signed in duplicate — J. V. Johnston." The first (iiiestion is whether this transaction was a mortgage, «rr a sale. . . . The deed and mcmoranduni certainly import a sale ; the ques- iion is, if their form and terms were not adopted to veil a transac- tion diiTi'ring in reality from the appearance it assumed? In examining this (piestion it is of great importance to inquire whether the consideration was adequate to induce a sale. When no fraud is practised, and no inequitable advantages taken of jiressing wants, owners of property do not sell it for a considera- tion manifestly inadecjuate, and, therefore, in the cases on tiiis subject great stress is justly laid upon the fact that what is alleged to have been the price bore no proportion to the value of the thing said to have been sold {Conway v. Alexander, 7 Cranch, 241 ; ]f„rris- V. Xbon. 1 How. 120; Vernon v. BciheU. 2 Eden, 110; "Idhani V. Ilalley, 2 J. J. Marsh. 114; Edrington v. Harper, ^. J. Marsh. 354). Fpon this important fact the evidence leaves the court in no ut what he says upon this point is mere conjecture, deduced by him from hearsay statements, and cannot be allowed to have any weight in a court of justice. There is some conflict in the evi- were not in tlie best condition, yet their state wa-* not such as to detract hirgely from the value of tlie property. The consideration for the alleged sale was $2(>i>. The <]jeneral character of this witness for truth and ver- acitv is attacked by the defendants, and sujiported by the plaintiff. His credibility finds support in the consistency of his statements with the prominent facts jtroveil in the case. This is all the proof touching' the ne^^otiations which led to the contract; but there is somi! evidence bearinj; directly on the real understandiufr of the parties. Doctor Johnston was the subscribing; witness to the writ- ten memorandum. lie testifies that "James Southard and (iilt)ert C. Russell, I think on the same of money on the farm, and his sid). the design of one of the j)artie.s to elotlie the transaction with tlu' fi>rnis of a sah', in order to cut ofT the riglit of redemption, it is not to he expected that the party wouhl, hy taking jx-rsonal Kvurity, etTectually defeat his own attenij)! to avoid the appearance <}{ a loan. It has been made a question, indeed, whether the absence of the iHTsonal liability of the grantor to rv\y.\y the money, l)e a conclusive t»-st to determine whether the conveyance was a mortgage. In Broun v. Deucy, 1 Sandf. Ch. 11. 57, the cases arc reviewed and the result arrived at, that it is not conclusive. It has also been main- tained that the proviso, or condition, if not restrained by word-; ^howing that the grantor had an oj)tion to pay or not, might con- ^ititute the grantee a creditor {Ancastcr v. Maifcr, 1 Rro. C. C. 404 ; '2 tJri'enl. Cruise, 82 n, 3). But we do not think it necessary to sit will'lie (Tilson v. Warwick Gas-Light Co., 4 B. & 0. 9G8 ; Vatrs V. Asfon, 4 Ad. & El. X. S. IS2; Burnett v. Li/nrh, .-, B. & C. :)S«»; Elder V. House, 15 Wend. 218). .. . The conclusion at which we have arrived on this part of the case ijs. that the transaction was, in substance, a loan of money upon the security of the farm, and being so. a court of equity is bound to look through the forms in which the contrivance of the lender has enveloped it, and declare the conveyance of the land to be a mortgage. . . . A decree is to be entered, reversing the decree of the court l)elow. with costs, declaring that the conveyance from Kussell, the com- plainant, to James Southard, was a mortgage, and that Kussell is «ntitled to redi'em the same, and remanding the cause to the C'ir- euit Court, with directions to proceed therein in conformity with the opinion of this court and as the principles of ecpiity shall re- tiuire.' MilUr V. Thomas, 14 III. 42.S (IS.-).'}); Hearse v. Ford, lUS 111. In il«83) ; Voa V. Eller, 109 Ind. 200 (1880). 164 SECURITY. [CIIAI'. ir;' MATTHEWS v. SHEEHAK Court of Appeals of New York, 1877. (69 N. Y. 585.) Appeal from judgment of the General Term of the Supreme Court in the third judicial department, affirming a judgment in- favor of plaintiff entered upon a verdict. This action was brought by plaintiff, as administratrix with the will annexed, of Dennis O'Keefe, deceased, to recover moneys alleged to have been collected by defendant upon a policy of insur- ance issued upon the life of said O'Keefe, and assigned by him to defendant as security for advances made by the latter. The facts appear sufficiently in the ojDinion. N. C. Moak for the appellant. Esel^ Coioen for the respondent. Earl, J. In December, 18G9, an arrangement was made between the plaintiff's testator, O'Keefe, and the defendant, whereby O'Keefe was to procure a policy of insurance on his life from the Phoenix Life Insurance Company, and assign it to the defendant, who was to pay the premiums and have the benefit of the policy, with the understanding that if at any time O'Keefe desired to redeem the policy, he could do so by paying the premiums ad- vanced by defendant, with the interest thereon. In pursuance of this arrangement, O'Keefe procured the company to issue a ])olicy on his life, which was immediately assigned to the defendant by an' assignment absolute in form, and he paid all the premiums to tlie- time of O'Keefe's death in 1874. Before that time O'Keefe. for the purpose of redeeming the policy, offered to pay the defendant the amount advanced by him for the premiums, and defendant re- fused to take the money. After the death of O'Keefe, the defend- ant received from the insurance company the amount insured, and retained the same, refusing, upon plaintiff's demand, to pay any portion thereof to her. This action was brought to recover tlu sum received by the defendant, less the amount for which he held the policy as security. Upon the trial, the facts above stated a] pearing, and there being no conflicting evidence, the court directed a verdict for the plaintiff. The verdict was ])roperly directed. Upon the undisputed evi- dence, O'Keefe had the option to treat the policy as a security for the premiums paid by tlie defendant, and to redeem the sam(\ While O'Keefe was not bound to redeem, or personally liable for the money advanced 1)y the defendant, there was sufficient consid- .,■.1.] M A iiiiKws (. siii;i:iiAN'. 165 .i.ilioii for tlif ill ran^^'imiil inatlc O'Kccfr siiliiiiilted to cxiiiii- iiialioii. jtrocurcd his lilV (o he iiisuri'd, ami as>i;,'iu'(l the )t<)licy to I'lo ik'feiulant in coiisicU-ration that the (Icftiuhiiit woiiM pay the ii'iniuin.s and ;,'ive him the option to rfd«'ciM. 'I'hc sul)-;tancc and iral ofTi'ct of tlu' transaction was to make the defendant a nmrl- iiri't- f>f thi' |)oliiy to st'enre him f<»r the premiums ])aid, and he -aid not claim an absolute title thiTcto, except upon O'Keefc'.s .ilurc to cMici^c his option to redeem. This was iut[ sim|)ly an _reement liv the defendant to sell to O'Keefe, upon j)aymcnt hy liim of the amount of the premiums advanced with interest, a nolicy absolutely beIoni,Mn^i,f t(t the defendant, an affreement void iidcr the statute of frauds, because there was no writin;; or part lyment. It was an afjreement that the defendant mi.uht take !:d hold the jKtliey as si'curity and the ri<,dit to redei-m attended the policy int(» the defendant's hands, and at all tinu-s airectecl his title. Such an a^nwuienl may be shown by jiarol. althou;,di the -signmcnt be absolute in fmiii (Ihnhjcs v. Tiir T. M. and Fire '/.v. f'o.. S X. Y. 410; DfsjninI v. W(ilhrid;/r. ]r, S. V. .'i: 1 ; //o/vi . KofoUds. l.i X. V. CO."); Ilojir v. Bdlcil. .")S \. Y. :5S(l ) . It matters not that O'Keefe did not absolutely jiromise to ]»ay the amount which defendant should advance for the premiums, 'i'o constitute a valid mort. \o giMieral rule I'on the subject can be laid down which will govern all cases, though it is said that the fact that there was no debt which 'uld be personally enforced is a strong, but not an absolutely con- oiling circunjstanc*', that the iransaction was not a mortgage, but a sale and a conditional resale, hi nil tloiihtful cases lied with the terms of the mortgage, still has h' ight of redc^mption; while in the case of a conditional snie, with- 166 SECURITY. [CHA.P. nJ out strict compliance, the rights of the conditional purchaser are forfeited (Longuet v. Scawen, 1 Yes. Sen. 402; Glover v. Payn,^ 19 Wend. 578; Conway's Exrs. v. Alexander, 7 Cranch, 218;! Edrington v. Harper, 3 J. J. Marshall, 354; Floyer v. LavinglonA 1 P. Wnis. 268; Chapman's Admin'x v. Turner, 1 Colls. K. 280; Wharf V. Howell, 5 Binney, 499). In Floyer v. Lavington, it is said: "As to the objection that there was no covenant for the payment of the principal or interest, that was not material; the same not being necessary for the making of a mortgage, nor yet necessary that the right should be mutual, viz. : for the mortgagee to compel the payment as well as for the mortgagor to compel a redemption; since such conveyance, as in the present case, though without any covenant or bond for the payment of the money, wouM yet be plainly a mortgage." In Brown v. Dewey, 1 Sandf. Ch. K. 56, it was held that " the absence of the personal liability of the grantor to repay the money is not a conclusive test in deciding whether the conveyance is absolute or is intended as a security." In Holmes v. Grant, 8 Paige, 243, 257, Denio, V. C, says: " It is not essential that the personal remedy against the mortgagor should be preserved. There is a debt quoad the redemption, but not in- respect to the personal remedy." In Flagg v. Mann, 14 Pick. 467, Putnam, J., says : " There was no collateral undertaking on the part of Luther (the grantor) to pay the money which Walker and Fisher (grantees) should advance in the five years; so there was no mutuality. And this fact, though not conclusive, is to be taken into consideration in ascertaining whether the transaction was a mortgage, or a sale with a contract for a repurchase upon strict terms. (See also Rice v. Rice, 4 Pick, 349.) In Kerr v. Gilmorc, G Watts, 405, Kennedy, J., says : " The want of a personal secur- ity for the repayment of the money has, taken in connection with other circumstances, been regardp*^ as tending to show that a de- feasible purchase and not a ^ tr" ge was intended, but this cir- cumstance alone has nevri '>een held sufficient to prevent a re- demption." Again, "that the mortgagee should have a remedy against the person of the mortgagor also, in order to make tho conveyance a mortgage, is more than I can assent to." ... In Horn V. Keteltas, supra, Allen, J. says that the circumstance that there was no agreement to pay the money secured is one entitled to considerable weight in determining whether a conveyance was intended as a mortgage, but that it is only one of the circum- stances to be considered, and not conclusive; and Ch. J. Marshall, in Conivay's Exrs. v. Alexander, 7 Cranch, 218, says: " "^hc want of a covenant to repay the money is not complete evidence that a conditional sale was intended, but is a circumstance of no incon- siderable importance." SKI. I.] ILAGO !•. MANN'. 1G7 It is clear, tlRTofon'. both upon jn-incipK' and authority, that the riroumstancr that O'Keefe was not j)ersonally oblifjated to pay to tlie defendant the amount of the j)renuunis which he should ad- Aanco is not absolutely controlliiij,' upon the question, whether there was a niort^M>:c, or a sale and a conditional resale. It is an important (.iriumstanci- in such cases and, in the conllict of evi- dence, not unfreipiently a controlling; "ne. There are many ca.scs, some of which are citi'd by the learned counsel for th" a))pellanl, in which it has been held to be not as matter of law conclusive, but as matter of fact decisive. If we should hold this to be a case of conditional resale, and that the consequence follows which lias been so learnedly argued on behalf of the defendant, that the agreement is void under tbe statute of frauds, the intention of tlu' parties would Ije defeated. This is, therefore, a case where the court should lean to hold the transaction to constitute a mortgage, thus giving Mhat was clearly intended, the right of redemption. There was nothing said about a repurchase or a resal(>, or a reassignment, but the right to redeem was e.\])ressly stipulated. The language used shows that the parties intended that the ]»olicy should be held as security for the premiums paid. Such a con- struction is at least as admissible as any other, and hence the court did not err in directing a verdict for the j)laintiff. I have treated the transaction as a mortgage, but it is unim- portant to determine whether it was a mortgage or a pledge, as the same course of reasoning would apply and the same conse- quences would follow, whether it was one or the other. The judg- ment must therefore be atVirmed. All concur. Judgment nfjinncd. Flagg v. Manx, '2 Sumrf.«4l- -'1837). On the 1 Ith of May. 1825, Luther Kichardson conveyed* certain premises in Lowell. wlii(>h were then subject to incumbrances in favor of Joshua Ben- nett and others, to his brother Prentiss Kichardson by a deed of (]uitelaim and upon a secret parol trust for the benefit of Luther. On the (1th of May. IS'^C, Luther Richardson and his wife and Prentiss Kichardson executed a deed of quitclaim of the premises to Walker and Fisher, for the consideration of $'.?000 (as stated in th(> deed), and on the same day Walker and Fisher exeeutcnl a bond for $10,000 to Luther Kichardson alone, which provides that the obligees shall reconvey the premises to Luther Kiehard.son wluii- ever, within five years fnun date, he shall repay them such sums of money as Ihey shall expend in discharging incumbrances ami making improv(>ments on the land. .\t the same time Walk, r .md 1()8 SECURITY. [CHAP. ,11. Fisher cxec-iited to Luther Kichardson a lease of a part of the ])ivmises for five years upon the annual rent of one cent during the term, unless the premises should ])e previously redeemed according to the provisions of the bond. A few days after this transaction, Walker and Fisher took from Bennett a quitclaim deed of all his right in the premises, and shortly thereafter they took assignments of several mortgages to which the property was subject, and thus l)ecame the exclusive owners of the premises, subject only to the right of redemption of Luther Eichardson under their bond to him, above referred to. The question was whether the conveyance by the Richardsons to Walker and Fisher, connected with the other papers and circum- stances, amounted to a mortgage or to a conditional sale of the ])remises.'' Story, J. (531.) Did, then, the transaction between the Rich- ardsons and Walker and Fisher create a mortgage in the premises? Some things are, to my mind, exceedingly clear. In the first place, the deed to Walker and Fisher, and the bond by them to Luther Richardson, are to be treated as part of one and the same transac- tion. They were, in my judgment, executed at the same time; and if not, at all events they were intended to be contemporaneous in their object and operation. Neither was to be of any force or valid- ity without the other. The bond must have the same precise effect and construction, as if it were inserted in the body of the deed. If, Ijy l)eing so inserted, a mortgage could be created, it was equally created by its being in a separate instrument. In the next place, no consideration whatsoever was paid by Walker and Fisher to Luther or Prentiss Richardson, on account of the deed, at the time of the execution of it, or has been at any time since. It is true, that there is the consideration of the thousand dollars stated in the deed; but it was purely nominal. No person pretends that that sum or any other sum was in fact paid, or intended to be paid. If this were the whole case, the deed would be merely voluntary; and the ques- tion of a conditional purchase could never arise; for to constitute a conditional purchase, there must be a sale for valuable consideration between the parties, with a right of repurchase. A mere gift would not raise the question; and, indeed, there is no pretence in the pres- ent case to say that any gift was intended. What, then, was the real consideration between the parties ? To uic it appears plain, that there was an agreement by Walker and 1^'islier, at the request and for the benefit of Luther Richardson, to ])ay off forthwitli the incumbrance of Bennett on the premises, and thereby to save the equiiy of redemption from being totally extin- ' The facts here stated are extracted from the elaborate report of the case, pp. 480-493. SEC. I.l ri.ACid C. MANN'. 1G9 ^juishod. Oil till' j)art nl' |{i(liiii(l>i)ii, there was an agreement to cniivey the jtreinises to Walker aiitl Kislier, to secure the jtayinent of tliis advance and .ill other advances made by them toward the extinguishment of the antecedent mortgages and all expenditures in improvements, with a right reserved to Kichardson of reconveyance ii|»nn his repayment thereof within five years. This was the basis of the ))apers actually executed; and the whole transaction would otherwise be without any just aim or object. Bennett's title to the premises would become in a few days ai)solute, unless he was re- \\u funds, ami that inability constituted the ground of the applici- lion to Walker and Fisher. It would liave been the idlest of forms, •and the most useless of contrivances, to shift the title from Pren- tiss Richardson to Walker and Fisher, if it was the design of all j)arties that it should ])erish in the space of twelve days, without jiny attemjit of redemption. The very nature of the transaction demonstrates to my n.iind, that the redemption of Bennett by Walker and Fisher was the sine qua non of the whole arrangement. 1 1' there could be the slightest doul)t upon this head from reading the testimony of Walker and Fisher, it would be entirely removed by the other evidence and by admitted facts. Bemis says that about the time the papers were finishing, Bennett passed in the street, and was called in; and Walker and Fisher requested Bemis to a>k Bennett to a]>j)oint a time when they should meet him at Bilh'rica and \r.\y him the money. lie did so and Bennett ap- pointed the time. And on the day so appointed. Walker and Fisher and Richardson and Bemis met at Billerica, and tht> money was paid by Walker and Fisher, and the deed was accord- ingly execut(>d to them by Bennett. This is as pregnant and conclu- sive a proof of the real nature of the transaction as can be desired. V])on this posture of the ca.se, what ground is there to say that there M-as a conditional .sale of the premises to Walker and Fisher? They j)aid nothing to Luther Richardson for any trans- fer of his right to them. They simply paid, at his re<|uest, a sub- sisting debt due rnuii liiiii to Bennett, and took a transfer from Bi-iniett of his interest in the i>remi.ses. Beyond this they paid notliing; and for it from a 'lew days to five years. It has been said, that tin- true test, whether the conveyance in 'biv; case was a mortgage or not. is to ascertain whether it was a nrity for the paynuMit of any money or not. I agree to that ; and 170 SECURITY. [CHAl-. JI. indeed, in all cases the true test, whether a mortgage or not, is to ascertain whether the conveyance is a security for the performance or non-performance of any act or thing. If the transaction resolvt' itself into a security, whatever may be its form, it is in equity a mortgage. If it be not a security then it may be a conditional or an absolute purchase. It is said that here there was no loan made, or intended to be made, by Walker and Fisher to Richardson ; and that they refused to make any loan. There is no magic in words. It is true that they refused to make a loan to him in money. But they did not refuse to pay for him the amount due to Bennett and to take the premises as their security for reimbursement within five years. It is said that there is no covenant on the part of Richardson to repay the money paid, which should be paid by Walker and Fisher to discharge the incumbrances on the premises. But that is by no means necessary in order to constitute a mortgage, or to make the grantor liable for the money. The absence of such a covenant may, in some cases, where the transaction assumes the form of a con- ditional sale, be important to ascertain whether the transaction be a mortgage or not ; but of itself it is not decisive. The true question is, whether there is still a debt subsisting between the parties ca- pable of being enforced in any way, in rem or in persofiam. The doctrine is entirely well settled ; and for this purpose it is sufficient to refer to Floyer v. Lavington, 1 P. Will. R. 270, 271 ; King v. King, 3 P. Will. R. 360 ; Longuet v. Scawen, 1 Yes. R. 406 ; Mellor V. Lees, 2 Atk. R. 496; Goodman v. Gricrson, 2 Ball & Beat. R. 278, and Conivay's Ex'rs v. Alexander, 7 Cranch R. 237, out of many cases, ^ovf, it seems to me clear, upon admitted principles of law, that, upon the payment of the money due to Bennett by Walker and Fisher, Richardson became their debtor for that amount, as it was paid at his request, and for his benefit. It is a common principle, that if A., at the request of B., pays a debt due by him to C, A. may recover the amount in assumpsit for money paid to his use, or for money lent and accommodated. In my judg- ment, that is the very case at bar. If it should be asked why no personal obligation was given by Richardson on this occasion to pay the money, it might be an- swered that the whole circumstances of the present case show an extreme looseness in the transaction of business between the parties ; and considering that much of it was done by the advice and with the assistance of counsel, it is not very creditable to the skill and diligence of the profession. The negotiations between Flagg and ^fann and Richardson evince a most obstinate carelessness in the draft and cxcfiition of important instruments, leaving much to personal confidence and the imperfect recollections of the parties, as KIC. I.] FLACO r. .MANN. 171 well as that of iho witnosjfs. And tliciv is no ;:rouii(l for surjtri.«i' in finding the same laxity pervade the arrangements of Kichardsoii with Walker and Fisher. Hut the satisfaetorv answer is that Hieh- anlson was j)0()r and einharrassed, and Walker and Fisher relied on tlic premises for a full indemnity and satisfaction <»f all their ad- vances, helieving that Kiehardson would never l)e ahle to redei-m. They were indifferent about the personal obligation, as they pos- sessed an ade([uate fund in their own hands. It is well known that Courts of F(iuity lean against construing contracts of this sort to be conditional sales: and, therefore, unless the transaction be clearly made out to be of that nature, it is always construed to be a mortgage. So Lord llardwicke laid down the doctrine in Lotujtief v. Scatirn, 1 A\'s. K. 40(;, and it has never been departed from. The onitt; prohandx, then, is <>n the defendant lo establish it to be a conditional sale. If it be doubtful, then it imi-t be construed to be a mortgage. If we look to the condition of tlie bond, it is ditlicull to resist l!" iinj)ression that it is jirecisely in its terms such as would be aj*]):' - jtriate if the conveyance were a mere jnortgage to secure futu:e advances to be made by Walker and Fisher in discharge of the in- cumbrances referred to in the recital. The language of the aeetuii- panying lease points to the same conclusion. The dwelling Imu.-e and garden (a valuable ])art of the premises) were let to Richard- ^"U for five years at a nominal rent: a j)roci'eding not easily recon- lable with the notion nf a positive purchase, but quite reconcilable with the notion of a mortgage. That lease contains some language not without significance on this sul)jeet. The lease is " for the ternj of five years from this date, yielding and paying therefor the sum of one cent annually, unless the said premises shall be redeemed by the said Luther, agreeably to the provisions of a IkmuI bearing even (bite lierewith from Walker and Fisher to said Ltither." I do not lay great stress upon the word, '' redeem." in this lease, a-; eon- ilusive in regard to the understanding of the parties, though it is a word peculiarly appropriate to tlie case of n mortgage; for it is sometimes used as ('([uivali'iit to " reconvey." But. certainly, it i.s not without weight in a case of this nature; and it was relieil on by Lord llardwicke in Lnirhtj v. Hooper. W Atk. If. v*7S. as indieativt» of a mortgage. But the fact that Walker and Fisher were not to go into possession of the entire premi-es. but that Hichardson wa> to retain the ))ossession of a valuable portion f<»r fiv«' years, without paynu-nt of any rent, is certainly important. It i-; remarked by Mr. Butler, in his learned note to Co. Lit. '^MM. b, that the circumstance that the grantee was not to be let into imnu'diate posse.-s.sjon of the estate, affords a presumption of its being a mortgagfv It is not unimi)ortant. also, that, in the very a>;-ignmeiu ina' 172 . SECURITY. [CHAP. II. of the bond by Richardson to Fhigg and Mann, the conveyance to Walker and Fisher is expressly described as a mortgage. And sup- posing that assignment to be a valid and subsisting instrument, it is not easy to see how Mann can now be permitted to set up that con- veyance as an absolute estate to defeat the rights of his co-assignee, he having purchased in the title for his sole account. But what strikes me as most material in this case is the allega- tion by both Walker and Fisher in their testimony that notwith- standing the conveyance to them, they did not contract, and were not bound, to pay off any of the incumbrances. If this were true, there would be an end of treating it, as has been already suggested, as a conditional purchase. I have endeavored to show that they were positively bound to pay off Bennett's incumbrance. In regard to the antecedent mortgages, they positively deny that they engaged to pay them off. Now, if this be true, it would be impossible to consider this as a conditional purchase without the grossest injus- tice. The purchase would be for little less than a tenth of the value of the property ; for Richardson would still be personally bound for the payment of those mortgages. Nay, he Avould be bound to pay to Walker and Fisher, as the assignees of those mortgages, and now to Mann, as their assignee, the full amount due on those mort- gages, notwithstanding the extinguishment of his title in the prem- ises, by the lapse of the five years. Those mortgages, in their view of the matter, are still subsisting mortgages, capable of being enforced at law, and. were not to be extinguished by the purchase and assignment to themselves. So that, if this be admitted to bo the true interpretation of the whole arrangement. Walker and Fisher obtain property, confessedly worth, in their own opinion, more than $10,000, by the payment, at most, of the sum of $1200 onl}', to Bennett. I have not heard any such doctrine contended for at the argument, although it seems to me a natural consequence from the positions assumed. If the mortgages were not agreed to bi> extinguished by Walker and Fisher when they took the conveyance, nothing nas since been done by the parties to extinguish them. On the other hand, if that transaction was a mortgage, the whole pro- ceedings are, in legal operation, exactly what they should be. The debt to Bennett and the mortgages constitute a subsisting lien on the premises; and they must be paid by Richardson, before he can claim a reconveyance. Now, it has been well remarked by Mr. Butler, in the note above cited (Co. Litt. 201, /;. note 1), that if the money paid by the grantee is not a fair ]irice for the absolute pur- chase of the property conveyed to him, it affords a strong presump- tion that the conveyance was a mere mortgage. The same sug- gestion was })ointedlv made in (\)invai/'s Ex'rs v. Alcxonikr (7 Cranch, R. 211). sKf. I.] l-LA(i<; C. MANN. n'5 Oil till- I'ontrarv, if, in opjjosilioii ir their a;a;;es to Walker and than the doctrine, that where the conveyance is a mere security, it is a mortgaolute title. This api)ears to be the manner in which liemis understood the transaction: and the only mistake in he matter has been a mistake of law. Luilin- Richardson's own testimony points still more distinctly to the transaction as being a mortgage in contemplation of law, whatever ndght have been the understanding of the |)arties as to its reileemable qiuility. Tli • iiegotiati(»n, according to his statement, lu-gan in asking a loan and ended in an agreement to pay olT all the incund)ranees. taking the eonveyantr for the repayment within live years. TlnTe is an intrinsic ditlicidty in treating this transaction a- a conditional sale, in whatever manner the circumstances are viewt-d. It seems to be of the verv essence of a sale, that there should be a 174 SECURITY. [CHAP. II, fixed price for the purcliase. Tlie language of tlie civil law on this subject is the language of common sense. Pretium autem constitui oportet; nam nulla emptio sine pretio esse potest, say the Insti- tutes (lib. 3, tit. 24). Ulpian, in the Digest, repeats the same sug- gestion; Sine pretio nulla venditio est (lib. 18, tit. 1, c. 2). Now, here is not the slightest proof, in this case, of any sum being agreed on as the price of the purchase. No money was in fact paid ; and if Walker and Fisher are to be relied on, none was contracted to be paid; and even the incumbrances were not to be discharged. The money which was to be repaid on the reconveyance, was only what had been, in the intermediate time, actually paid to discharge the incumbrances and expended in improvements. If none had been so paid, none was to be repaid. So that not only was there no fixed price; but the premises stood as a mere security for future advances. Hitherto the case has been considered, upon the question of mort- gage or not, upon the footing not merely of the conveyance and bond, but of the parol evidence admitted as explanatory of the in- tent of the parties. It has been suggested, however, on behalf of the plaintiff, that as the papers, upon their face, taken together, do actually import a mortgage, it is not competent to admit parol evidence to control their legal effect. There is weight in the objec- tion ; for, in my judgment, the papers, taken together, do distinctly proclaim the case to be a present mortgage for future advances. But it is unnecessary to consider this objection, as the same con- clusion is arrived at upon a full survey of all the parol evidence and circumstances attendant upon the transaction. h».« . 11.] COTTEKKi.i- r. ri K» iiA.^i:. 175 (,'II.\l''ri:i; II. {Cnnlltmnl). Section 11. Ausoijii: l)i:i;i) — r.vinti. I",\i m:\ri:. COTTEKKLr. v. i'lKCllASi:. ConiT or CiiAXCKUY, 1T;U. {('(IS. I nil p. 'J'alh. laiiitiH"s sistt-r was in i)ossession of the whole estate, and so continued till the year 1710. when the de- fendant turned her out of possession of the moiety by ejectment ; and from that time he enjoyed it quietly till 1720. at which time file plaiiitiir filed luT bill to [1m'] let into redemption; to which the e coining to be heard upon tln> nu'rits, the Musdr of llir Halls was of opinion, that the drcds of 1708. amounted to an absolute eonvi'yance ; and dismisssed the bill. Kor the defendant wen- given in evidence several jiarticulars to sb«'W that by the deeds of 1708. the parties intended an absolute Miiiveyaiice of iliis estate. An-i>lutc conveyance in law. by the statute of frauds no I rust tir mortgage coidd bi' implietl without an agreement in \\riting. And they insisted likewise, that as the defenilant had i'ccn in possession ever since the year 1710. the plaintitT was barn d ' f the redemption by the statute of limitations. It was said on tlie other hand for the plaintitT, Tlial the d- - 176 iSECUKITY. [CHAP. II. fendaut's plea admitted the first conveyance made in consideration of the 104L to be intended but as a mortgage; and tliat the second conveyance was in the same form, excepting the covenant ; and that it was therefore probably intended in the same manner. That as to the covenant, it made strongly for the plaintiff; since to suppose a person would absolutely sell away his estate, and then covenant not to make a division of it, is absurd. That the statute of frauds makes nothing against the plaintiff; this being in nature of a resulting trust, and so within the proviso in that statute. Nor can the statute of limitations affect the plainiff; since in cases of redemptions the court always gives what it thinks a reasonable time. And though the general rule be not to exceed twenty years, unless it be upon extraordinary circumstances ; yet that rule cannot affect the plaintiff, who did not lose possession till 1710. and brought her bill in 1736. Lord Chancellor [Talbot]. The case is something dark. The first deed is admitted to be a mortgage ; and the second is made in the same manner, excepting an odd sort of covenant, which is the darkest part of the case: for, to suppose that it is an absolute conveyance, and to take a covenant from one who had nothing to da with the estate, makes both the parties and covenants vain and ridiculous. But then it will be equally vain and ridiculous if you suppose the deed not an absolute conveyance ; so that it is of na great weight, and must be laid out of the question. Then as to the circumstances; on one side has been shewed an account stated of money received; and it is there said so mucli received on account of purchase money, and in another general account the sum of 184Z. is called purchase money. Then as to the agreement in 1710. that if the plaintiff had a desire for it, she should have her estate again upon payment of the money with interest, and the costs he had been at : this shews it was not redeemable at first. There have been strong proofs on both sides as to the value : one has shewn the rent to be but 27Z. per ann. and then deducting one third out of it for the dower of the plaintiff's mother, a moiety of what remains is near the value of the money paid. Tlic other side has shewn the rent to be 4lOI. per ann. But I rather give credit to the first; because it is certain the dower was but 9?. per ann. So that, upon the whole, I am inclined to think this was at first an absolute conveyance.' Had the plaintiff continued in possession any time after the execu- tion of the deeds, I should have been clear that it was a mortgage; but she was not. And her long acquiescence under the defendant's possession is, to me, a strong evidence that it was to be an absoltite conveyance; otherwise, the length of time would not have signified: for, they who take a conveyance of an estate as a mortgage, without any defeazance, are guilty of a fraud; and no length of time will sKc. U.J Ki;i.i.i;i; AN r. iu;o\vN. \',', l»iir a fraiul. Ik-sidcs, In-rc tlif Itill was lilcd in H'-iG. Ami llu)Uji;li the cause lias lain dormant ; yet it is not like making an en- try and then lyin^ still; for, in the present ease, the defendant might have dismissed the l)ill for want of ])rosecuti">n. or Hm-v themselves might have set down the plea to he argued. In the Xortlu'rn parts it i< the custom iti drawing mortgagr.- to make an ahsolute deed, with a defea/.ance separate from it; hut I think it a wrong way; aiul, to me, it will always appear with a faee of fraud: for, the del'eazanee nuiy he lost ; and then an al)solute con- veyance is set up. 1 would discourage the practice as much as pos- .^ihle.' Upon the circumstances of the case, allirmed the decree, &c. KELLERAN v. BROWN". SupiiEME Judicial CotuT oi-' M.vssachusetts, 1808. (4 Mas.'i. 443.) This was a writ of entry, and upon the general issue j)leaded was tried hefore Thatcher, .1., Sc})tcmher term, 1SU(>, when a \er- dict was n-ndcred for the demandant. In sup])ort of the action, the demandant read in evidence a deed of Timothy Manly conveying the land demanded to the demanti>ad of nitiMiii;; and icffivini.' tho profits, demands interest fe adiiiilled to explain tlie nature of tlie eonveynnce. "-/'cr I^ird <•• N'ottin^'liani. in Mnj-uiU v. /,(/*/(/ Mouutnrtiti-, Finch. Pre. C'h. !iH\ (17I!>'. " Suppose a person wlio advaneeH money sliouM. after lie has e\e»u;i- I the absolute eonveyan<«'. refuse to exe<'ute the ilefeiisame, will not thi court relieve a;,'ainst sn Court arr (liriv»'(l from statute, Hiid are extreinely limited. We can relieve mortgagors only in rjisi's where the lands are granted on conilition, hy force of any iloed of inoitgage, or bargain and sale with defeasance. ( Vide Stat- utes 178."), c. 22 ;• 1798, c. 77.) Now a defea.sance of any instru- ment of conveyance must Ik- of as high a nature as the convey- ance, must be executed at the same time, and is to be considered -as part of it ; so tiiat the conveyance and defeasance must be taken logethej" and considered as parts of one contract. If, tiierefore, tlie conveyance is by deed, the defeasance must be by deed. In this case the conveyance by ilanly to Kdleran was by deed, and ilie agreement by Kelleran was merely by a simple contract; and, however it might in equity have the elTect of a defeasance, at law it i< not a defeasance of the deed of Kelleran. The counsel for the tenant referred to the statute of 1802, c. 33, which provides that no conveyance of any land, unless for a term less than seven years, shall be defeated or incumbered by any bond or other deed, or instrument of defeasance, unless they are regis- tered. This provision cannot avail to enlarge our jurisdiction, which was not within the purview of the act. What shall be deemed an instrument of defeasance must still be determined upon the prineiples of the common law. The written contract to Kelleran not under his seal was, in our opinion, properly rejected as evidence. Judgment according to the verdict. STROX(J V. STEWART. Court of Chancery of New York, ISIO. (4 Johns. Ch. ir,7.) Bill to redeem mortgaged ])remises. The defendant set up an absolute sale, by an assignment, absolute in terms, of the right of Mitchell in the land, and denied the fact of a loan. Hut tiie de- fendant, at the same tinu', admitted in his answer, that after the ;uisignmcnt was executed he gave Mitchell, at his request, time to return the money, and take l)aek the assignment. Parol proof was taken, whicli estahlislied c-onelusively the fact ' .in .\ct giving Re medics in tiiptili/, I'ripftuiil Law-* of Ma-is., ji. KIS. I'oiupnrp Mass. Stat. 1855, v. VM, 9 l. (ion. Stats.. <•. IKl. 9 1. and »c« p.»^'t« 190, post. 180 SECURITY. [CHAP. II. of a loan, and not a purchase and sale; and that the assignment was made, given and received, by way of security for a loan. The Chancellor [Kext]. On the strength of the authorities, and on the proof of the loan, and of the fraud, on the part of the defendant, in attempting to convert a mortgage into an absolute sale, I shall decree an existing right in the plaintiffs to redeem. The cases of CottereU v. Purchase, Cases temp. Talbot, 61 ; Max- well v. Mountacutc, Prec. in Chancery, 526; Washburn v. Merrilh; 1 Day's Cases in Error, 139, and the acknowledged doctrine, in 2 Atk. 99, 258, 3 Atk. 389, and 1 Powell on Mortg. 104 (4th Lon- don edit.) are sufficient to show, that parol evidence is admissible in such cases, to prove that a mortgage was intended, and not an absolute sale, and that the party had fraudulently perverted the loan into a sale. In this case, the admissions in the answer were sufficient to presume a mortgage, against the absolute terms of the assignment.^ Decree accordingly. TOWX OF EEADINO v. WESTON. Supreme Court of Errors of Connecticut, 1830. (8 Conn. 117.) This was an action of assumpsit for the support of the wife and minor children of Samuel Darling. The cause was tried (after two former trials),- at Fairfield, De- cember term, 1829, before Williams, J. The paupers derived their settlement from Lucy Darling, the mother of Samuel Darling. She was once an inhabitant of the town of Weston. The defendants claimed, that in March, 1808, she became the owner of a piece of land in the town of Reading, of the value of 800 dollars, by virtue of a deed from one Joseph ^ " Courts of equity generally exercise such power. While the ground-^ upon vvhich the doctrine is admitted vary with diflferent courts, there i^ a great concurrence of opinion as far as the result is concerned. In our judgment, it is a sound policy as well as principle to declare that, to take an ahsolute conveyance as a mortgage without any defeasance, is in equity a fraud. Experience shows that endless frauds and oppressions would i>r perpetrated under such modes, if equity could not grant relief. It is taking an agreement, in one sense, exceeding and differing from the true agree- ment. Instead of setting it wholly aside, equity is worked out by adapting it to the purpose originally intended. Equity allows reparation to be made l)y admitting a verbal defeasance to be proved." — Per Peters, J., in. Stinchfield V. Millikcn, 71 Mc. 5G7 (1880). ' ' '"'. =" Sec 7 Conn. Rep. 143, 409.— Hep. sKc. II.] TOWN OF i(i;ai)IN period specilied. l^viiU'Uce was introduced as t(» the character of their respective possessions, or the right in which they occupied the l»riniises: the j)lainti(Ts claiming that Lucy Darling occupied as mortgagee \iiuler Burr and not in her own right. In support of tlii< claim the ))laintiirs introduced proof of her declaration that she had only a mortgage of the premi.-^es, and other i)arol evidence to shew that the deed and writing were given only to secure a sum of money, which Burr at that time borrowed of her, and for which he gave her his notes. This evidi'iice was objected to by the de- fendants, but was received subject to the opinion of the court. And the court charged the jury that such evidence was proper to shew the nature, character and extent of her occupation; but that in this >;uit parol evidence could not be admitted to alter, enlarge or ex- plain the deed or condition, or to shew that this conveyance was a mortgage. The jury returned a verdict for the defendants; and the plain- tiffs moved for a new trial, for a misdirection. HosMKij, C'h. J. The only (luestion in tlu' lase is, whether tlu' parol evidence ofTt'red by the i)lainti(T, to control or vary the abso- lute deed, was admissible. On a former occasion between the present parties, it was decided liy this Court that the writing in question was only a contract, on eirtain terms, to re-convey the land; and that it diil not reiuler the deed a mortgage {lieadintj v. Wrsloii. 7 Conn. Hep. 1 13). In the -e before u-j, the parol evidence adduced by the plaintiffs to prove an absolute deed to be a deed on eoiulition, was entirely inadmis- sible. X(i ease determined in a court of law j)roving its admissi- bility, has been cited ; nor am I aware that any such case exists. On the contrary, in Flint v. Slirliltiii. 1.3 Mass. Hep. 1 13, it was ad- judged that an absolute deed of latul cannot be varied by parol evidence shewing that it wa- for the loan and re-payment of a sum <>f money. This determination is directly in j)oint for the defend- 182 SECURITY. [CIIAIV 11- ants. It has been so frequently adjudged by the courts on both sides of the Atlantic, as to have the resistless force of a maxim, that parol evidence cannot be received, in a court of law, to contradict. vary, or materially affect, by way of explanation, a written con- tract {Sl'inner £ al. v. Hendriclt, 1 Eoot, 253 ; Stachpole v. Arnold,. 11 Mass. Kep. 27; Jackson d. Van Vechtcn <£• al. v. Sill & ah, 11 Johns. Rep. 201; 3 Stark. Ev. 1002; 1 Phill. Ev. 423, 441). It is not in opposition to this legal truth, that extrinsic parol evidence, when requisite, is admissible to apply the terms of a written instru- ment to a particular subject matter, but in perfect consistency with it. This is not to vary or contradict, but to give its intended effect to the contract. Undoubtedly there have been determinations, some of which have been cited, proving that a stranger is not estopped by a written agreement; but that he may adduce parol testimony to prevent a fraudulent operation of it upon his interests {The King v. Scam- monden, 3_ Term Rep. 474; New Berlin v. Norwich, 10 Johns. Rep. 229; 3 Stark. Ev. 1018, 1052). But this principle has no appli- cation to the present case. The plaintiffs have not suggested that there was any fraud contemplated and practised on them. The pretence would have been very strange unless it were followed up by explicit testimony to this effect. The inhabitancy of Lucy Dar- ling, 'prima facie, with property sufficient to purchase a farm of the value of 800 dollars, was a benefit to the plaintiffs, and not a preju- dice ; and all our towns would be pleased in this manner to extend their population. It will be observed that the question before us is not what a court of chancery may do, in the exercise of its peculiar jurisdic- tion, but what is the established rule of a court of law. It has been often decided in chancery that parol evidence is admissible to shew that an absolute deed was intended as a mortgage, and that a de- feasance was omitted through fraud or mistake. Hence, a deed absolute on the face of it, and though registered as a deed, will in chancery be held valid and effectual as a mortgage, as between the parties, if it was intended by them to be merely a security for a debt, although the defeasance was by an agreement resting in parol {Washburn v. Merrills, 1 Day, 139, 1 Row. Mort. 200; Slron(j (.(■ al. v. Stewart, 4 Johns. Chan. Rep. 167; James v. Johnson £• al. 6 Johns. Chan. Rep. 417; Maxwell v. Jjady Mountacute. Free, in Chan. 526 ; Dixon v. Parlcer, 2 Ves. 225 ; Marks £ al. v. Pell, 1 Johns. Chan. Rep. 594 ; Clark v. Henrij, 2 Cowen, 324; Sles v. Man- hattan Company, 1 Paige, 48). But these decisions are altogether in support of the determination of the judge in this case. Chan- cery interposes because a court of law does not afford a remedy. The rule in the courts of law is that the written instrument, in ISKC. II.] SWAH'l' C. SKRVIf'E. 183 contemplation of law, contains the true a|;reenient of the parties, and that the writing furnishes better evidence of their intention than any that ean be su|)j)lied by j)arol. Hut in e). On the whole, it is incontrovertibly clear that the decision com- l)lained of is correct, and that a new trial must be denied. Peters, Williams and Bissell, JJ., were of the same opinion. Daggett, J., having been of counsel in the cause, gave no opinion. New trial not to he granted.^ SWART V. SERVICE. Supreme Court of New York, 1839. (21 Wend. 30.) This was an action of ejectment, tried at the Saratoga circuit in May, 1837, before the Hon. John Willard, one of the circuit judges. The j)laintifrs, the chikiren of James Swart, deceased, who was the only child and heir at law of Derick Swart, showed title by lease und release, bearing date 21th and 2r)th Sejjtember, 1784, executed by John Cuerdon to Derick Swart, conveying t)8 acres of laml, tiie premises in question : which instruments of lease and release were duly acknowledged by Cuerdon on the sixth day of April, 1804. Cuerdon, the releasor of the premises, died in possession of the premises eight or nine years before the trial, having occupied them since the date of the lease and release. The defendant was in ))n>- fession of the premises at the commencement of the suit. Hi- offered to prove that the lease and release was in fact given as a mortgage for the security of a debt due from Cuerdon to Swart, and that the debt was paid by Cuerdon to Swart many years before his death: this evidence was objected to, unless the defendant would ' onnect himself with Cuerdon, and the objection was sustained by 'le circuit judge. The defendant then rcMpiested the judge to liarge that tlu' evidence established an adverse possession in Cuer- don. The judge refused so to charge, and directed a verdict for tin- plainliffs. and the jury found accordingly. The defendant now ' MrClnnr v. Whilr. .% Minn. 17s (lS«il) ; <}at Mich. •2:n (1880), accord. 184 SECURITY. [CHAP. II. moved for a new trial on the two grounds raised at the circuit, and on the additional ground, that from lapse of time, payment of the mortgage might be presumed. . . . M. T. Rei/nolds for the defendant. S. Stevens, for the plaintiffs, insisted that a grantor cannot set up adverse possession against his grantee ; and that it is not admis- sible at law to give parol evidence, showing that a deed is in fact a mortgage, unless fraud or mistake be shown. By the Court: Cowex, J. The first offer made by the defendant had no dependence on privity of title between him and Guerdon. It was a simple offer to prove an outstanding title, by turning the conveyance by lease and release into a mortgage, and shewing its extinction by payment. That would divest the title of Swart and of his grandchildren, the plaintiffs ; for payment extinguishes a mort- gage at law as well as in equity {Jackson, ex dem. Rosevelt, v. Stacl'house, 1 Cowen, 122). But independent of that, if Swart were a mere mortgagee, neither he nor those claiming under him could recover (2 E. S. 237, § 37, 2d ed., Jaclson, ex dem. Titus, V. Myers, 11 Wendell, 533, 538, 539; Steivart v. Hutchins, 13 Wen- dell, 4.^^; Morris v. Mowatt, 2 Paige, 586). It has often been held in the courts of equity of this State, that a deed, though absolute on its face, may, by parol evidence, be shown to have been in fact a mortgage, in the terms offered here ; and the same doctrine was held by this court in Boacli v. Cosine, 9 Wendell, 227, and ^Yalton v. Cronley's Adnir, 14 id. 63, equally applicable to a court of law, and has it seems ceased to be the subject of. contest ; for no objection to the doctrine is now made. For one, I was al- ways at a loss to see on what principle the doctrine could be rested, cither at law or in equity, unless fraud or mistake were shown in obtaining an absolute deed where it should have been a mortgage. In either case, the deed might be rectified in equity; and perhaps even at law, in this State, where mortgages stand much on the same footing in both courts. Short of that, the evidence is a direct contradiction of the deed ; and I am not aware that it has ever been allowed in any other courts of equity or law. But with us the doc- trine is settled, and I am not disposed to examine its foundations, at least, without the advantage of discussion. It is not necessary to say whether the lapse of time might be called in as presumptive proof of payment, though that, as a gen- eral doctrine, is too clear to be disputed. If the defendant, on a new trial, shall succeed in making out a mortgage, he will be entitled to such proofs of payment as the nature of his case may afford, subject to the answering proofs of the plaintiffs, provided proof of payment shall become necessary. It will not, however, be necessary that we see, to complete his de- sKf. 11.] : sw Aiti' /•. si;i;\i(i;. 185 i.nsc lull', wliatfVtT it may lir uii a lull lilcd to I'oroclo.-«c hy tlio n-'pri'si'iitativos of Di-rirk Swart ; for .-iinc ilic revised statutes, showing' that the i)laintiirs or tliosi- hiuUt whom tliey claim are iiitre morl;,'a^H'es, |)rove, fraud and false swearing. And besides, a court of erpiity can and will protect third persons who may have parted with their money on the faith of the deed, liut a court of lav; lias neither power nor process to reform a deed. If parol evi- dence to contradict or in.sert a condition in the conveyance can be received at all, it must of necessity be in a collateral proceeding; and it must be received whenever either party chooses to offer it. It can be given without notice, and without the means of guarding against the obvious danger of fraud, surprise and perjury. And be- yond this: when a court of law turns an absolute deed into a mort- gage, it has no power to protect a bona fide ])urchaser. OtluT mis- chiefs will be likely to result from admitting such evidence; but without attempting at this time to point them out, T shall content myself with dissenting from what 1 deem a new and very danger- ous doctrine. 186 SECURITY. [CHAP. II. HODGES V. THE TENNESSEE MARINE AND FIRE INSURANCE CO. Court of Appeals or New York, 1853. (8 N. Y. 416.) This was an action brought in the Superior Court of the city of New York upon a policy of insurance upon a hotel in Massachu- setts, issued by the defendant to Joseph A. Slamm on the first of September, 1848. On the same day Slamm conveyed the premises to the plaintiff by a deed absolute on its face. On the 4th of the same month Slamm with the assent of the company assigned the policy to the plaintiff " as a collateral security." The property in- sured was burned in the month of April, 1849. In the complaint the plaintiff alleged that Slamm had conveyed the insured premises to him by deed, " and that prior tO and at the time of the conveyance the said Slamm had been and was legally in- debted to him, and as a further security, simultaneously with the conveyance " assigned the policy to him as a collateral security. The defendant in the answer denied the plaintiff's right to recover, on the ground that the assignment was approved on the represen- tation that it was intended as a collateral security upon an indebt- edness secured by a mortgage, when in fact the insured premises had been conveyed absolutely to the plaintiff, by means whereof the policy became void. The plaintiff replied, denying that any representation that the indebtedness was secured by a mortgage was made, or that the approval of the defendant was made on the faith of such a representation, and averring that at the time of ap- proving the assignment the defendant was informed of the deed. Oil the trial the plaintiff, after giving in evidence the policy and assignment and proving the loss, rested. The defendant's counsel then moved for a nonsuit, which was denied. The deed from Slamm to the plaintiff was then given in evidence, and it was proved by witnesses in the defendant's office that at the time the approval of the assignment was made, it was understood to be collateral and to cover some mortgage, and that the blank for the assignment was there filled up at the request of the plaintiff. The defendant then rested. The plaintiff then called a witness to show that the deed was given merely as a security for money due to him from Slamm. The defendant's counsel objected, on the ground that the ])laintiff's pleadings alleged the deed to be an absolute conveyance, and the court sustained the objection. The plaintiff's counsel then moved to amend the complaint by adding an averment that the con- BTU-. 11.) IlOlMiKS J'. TKNN. M. 4 I'. INS. t'O. 1^7 vcyanic of tlic insuivd jirciniscs was made as a collalcral M-tuniy for an indt'litciliU'ss of Slainm to llic plaintilf. Tin- (h'ft'iHlanl op- posed the anu'iuliiicnt, on tlic ground that proof of such proposcil alli'gation was inadmissible, as it went to contradict or vary the deed, and also that it was not allowaldc under the code of pro- cedure, as it went to make out a new case, and to remedy a failun? of j)roof. The court overruli'd the objections and allowed the amendment on condition that it he deemed traversed by the answer. The plaintiff then ])rove(l hy ])arol that the deed was <;iven as a collateral security for money owinj,' to him by Slamm, and also to cover expected advances. Tlu' parties then rested. The defendant's counsel then submitted that the testimonj showed an absolute title in tlie plaintitf under tlie deed: that if as between the immediate parties to it it might be construed as a mortgage, yet as to the defendant it was wh;'t it puri)orted to lie, an absolute deed. The court overruled the objection and directed a verdict for the plaintiff. The judgment rendered upon the verdict was allirmed by the court en banc, and the defendant appealed. Johnson, J. The determination^ of the judge in allowing the amendment of the pleadings was within iiis discretionary power, and is not the subject of review, in this Court. The remaining question in the cause relates to the existence of an insurable interest in Slamm at the time of the assignment of the policy 'o Hodges and of the loss. If such an interest <'xisted, then the plaintiff's recovery cannot be disturbed. Upon the evidence there is no doubt of the following facts: That at the time when the in.surance was effected, September 1, 1848, Slamm was the owner in fee of the premises insured; that on the -1th of Sejitember, 1848, he conveyed the premises to Hodges by a deed absolute upon its face, but intended to operate as a mort- gage, and that upon the same day he transferred the policy to Hodges as collateral security, and that this transfer was made by till' assent of tlu' comi)any. If there is no rule of law forbidding us to take notice of the fact that the deed was intended as a mortgage, then lu'yond all (pu'stion Slamm as the owner of the equity of redemption in the |)remises liad an interest in the insurance which had been cfTeeted by him as the owner of the fee, and tlu- assignment with the company's assent transferred this interest to Hodges as collateral .security, and he may upon the ground of the same interest sustain the recovery which has been had in this case. The (piestion then, taking it mo.-t strongly against the plaint ilT. is, whether in eipiity Slamm might have a bill to redeem again-t Hodgpt!, notwithstanding the deed was absolute njion its faei\ M'rhh V. nirr. C Hill, '.'1!'. does not conflict with the proposition that 188 SECURITY. [CHAP. II.. such a l)ill might be maintained. It only professes to decide that at law unwritten evidence is inadmissible to show that a deed was in- tended as a mortgage. From an early day in this State the admis- sibility of such evidence had been established as the law of our Courts of Equity, and it is not fitting that the question should now be re-examined. Upon the authority of Strong v. Stewart, 4 J. C, 107; Claris v. Ilcnri/, 2 Cow. .332; Whittick v. Kane, 1 Paige, 206; Van Burcn v. Ohnsiead, 5 Paige, 10; Mclntyre v. Humphreys, 1 Hoff. 31:, with which agree Taylor v. Little, 2 Sumner, 328; Jen- l-ins v. Ehlrcdfjc. 3 Story, 293, in all which cases, except Clarh v. Henry, the point was' directly before the Court, we think that the plaintiff's recovery in this case ought to be sustained. Ruggles, Ch. J., and Gardiner, Jewett and Morse, JJ., con- curred with Judge Johnson in favor of affirming the judgment. Willard,^ Taggart and ]\Iason, JJ., were for its reversal. Judgment affirmed. DESPxVPl) v. WALBEIDGE. Court of AppEAts of Xew York, 185T. • (15 X. Y. 374.) This action was brought to recover for the use and occupation of a store, in Buffalo, by tlie defendant, from j\Iay 1st, 1851, to August 1st, 1851, which the complaint averred to be worth $375. It also averred that the defendant on May 1st, 1851, agreed to pay for such use and occupation $1500 per annum, payable quarterly. The ac- tion was tried before a referee, who found the following facts : On the 8th of ]\Iarch, 1850, one Sherwood demised to H. B. Eitchie the store above mentioned, and another adjoining, for two years from tlie first of May then next, with a right of renewal on certain con- ditions, Ritchie covenanting to pay a certain rent. On the 17th of Noveml)er, 1850, Ritchie assigned this lease and his title to the term tlierel)y granted to the plaintiff. At the time of such assign- ment the defendant was in possession of the premises as a sub- tenant of Ritchie, under a lease executed April 30th, 1850, for the term of one year from ]\ray 1st, 1850. Sherwood, the original lessor, on the J)th of October, 1850, as- signed liis interest in the lease executed by Ritchie to Robert Codd for the purpose of securing a debt which he owed to Codd. On the 19th of November, 1850, Ritchie assigned to Codd all his interest as landlord in the siil)-lense executed between himself and the de- ' Tlie dissenting oi)inioii of W'illard, J., is oniilted. j,K<'. 11.) DKsi'Aiii) r. \vai,iii;iim;i;. Ib'J fi'liilaiit. The (Icrfiidaiit u«(U]»ii'»l llu- jnH'iiii.-o iiudtr ilir lta.«c from Kitcliie, and altir iIk.- assi^Miiiicnl thereof to L'odd jmid llie rent to the hitter. On the 1st day of May, 1851, the i)hiinliir .-erved oil tlie (U'l'i'iidant a written notice that he was the assi;j;nee of IJitehie's term, and tlial in ease the defen»hiiit hehl <»vcr hcyond hii term, then at the |)(»int of ex|iiriii;r. the |thiinliir wmdd collider the premises as heUl and taken l»y di IVndant U>v llie itrni of one year from May 1st, 1.S51, at the annual rent of .$1.>00, payable t and for the benefit of Codd, and for the sole purpose of aiding the latter in the collection of his delit against Sherwodd. It is also stated that this debt had been fully paid before May 1st, 1851, by Hiram E. Howard, who liad succe<'ded to the rights of Sherwood in the premises, and tliat Kitcliie, on the 1st of May, 1851, surrendered all Ids rights in the premi.HN'. Supreme Jlduiai. Coi kt t)F Massachusetts, 1872. (109 Mass. 130.) Bill in oquity,' filed July 12, ISCJl), to compel a reconveyance of land l)y the defendant to the plaint ilT, on the j^round that the plain- tiir's conveyance of it to the defendant, althouf,d» in form ahsolute, was in suhstanee a mortgage. Tlic bill allefjed that the plaintiff on June 11, 18G(J, agreed with Artemas Tirrill for the purchase by him from said Tirrill of a par- . el of land in C'harlestown, and at the same time Tirrill ^'ave him a bond to convey the land at any time within three years from -aid June 11, upon the payment to him of $5500, the plaintiff to j)ay all assessments upon the land meanwhile; that since taking the IkhkI the i)laintilT has occupied the land; that in the early part of June, 18G!t, he made arrangements to borrow the sum of $5500 from Charles J. Walker, in order to tender the same to Tirrill, and -ecure performance of his obligation to convey, within the time lixed in the bond; that on June 11, 18GJ), being disappointed in linding Walker, he met the defendant ; that the defendant expressed regret that the plaintiff should be obliged to lose fulfilment of the bond through not having in time the money required, and V(dun- tarily offered to lend to the plaintiff the required amount, and the plaintiff ac<-ei)ted the offer as an act of frii-ndship, as he supposed; that the defendant and the plaintiff went immediately to Tirrill ind tendered to him said sum of $5500, and Tirrill thereujwn de- livered to the plaintiff his deed of the land in fee simple, in com- j.liance with the houd, which deed was dated May 21, and was icknowledged before the di'fendant as a justice of the peace on said •fune 11, lS»;i); that upon leaving Tirrill the defendant said to the idaintifT that he ought to be secured for his loan in some way, and proposed that they should go to tiie defendant's attorney, to have the necessary iiajH'rs jirepared ; that they thereupon went to the attorney's otlice. where the defendant and the attorney consulted together privately, and. withoid consulting the j)laintiff. an instru- ment was drawn, and handed to him to sign, wliieh upon reading he found to be drawn fo convey tlu* land in fee simple to the defiMid- iint ; that the |)laintitf objecled fo this form of conveyance, ant* lin- been somowfiat curtailed. 19g SECURITY. [chap. il. have the same effect ; that, being ignorant of tlie legal effect of said instrument made under such circumstances, and relying on the statements of the attorney and the defendant, he on said June 11 executed and delivered said deed to the defendant; and that it was recorded in the registry of deeds at the same time witli Tir- rill's deed. . . . The defendant, in his answer, denied that he ever made or of- fered to make any loan to the plaintiff; alleged that, on the con- trary, he refused a request of the plaintiff for a loan; and further alleged that " the defendant agreed to pay Tirrill the said sum of $5500 for the premises described in the bill, provided the title to said premises should stand in the defendant's name," and the plaintiff agreed that immediately on payment of the sum to Tirrill the land should be conveyed in fee simple to the defendant, ''and the plaintiff should not have any interest or title thereto;"' that thereupon the defendant paid the $5500 to Tirrill, and Tirrill exe- cuted and delivered to the plaintiff a deed of the land. . . . Wells, J. Eegarding the money paid to Tirrill for the land as the money of the plaintiff, by loan from the defendant, there is still no resulting trust in favor of the plaintiff arising from the whole transaction. A deed was taken to the plaintiff, according to his equitable interest ; and he thereupon conveyed to the defendant by his own deed. The recitals and covenants of that deed preclade him from setting up any trusts by implication, against its express terms (BlodgeU v. Ilildrcih, 103 *Mass. 484). His agreement with the defendant for a reconveyance cannot be enforced as a contract for an interest in lands (Gen. Sts., c. 105, § 1), nor will it create an express trust (Gen. Sts., c. 100, § 19). The question then is, Can the deed be converted into a mortgage, or impeached and set aside, or its operation restricted, upon any ground properly cogniz- able in a court of chancery ? This question was somewhat discussed, though not decided, in Newton v. Fay, 10 Allen, 505. Some suggestions were made as to the bearing of the statute of frauds upon it, in Glass v. Hidbert, 103 Mass. 24. For the reasons there suggested, we do not regard the statute of frauds as interposing any insuperable obstacle to the granting of relief in such a case ; because relief, if granted, is attained by setting aside the deed ; and parol evidence is availed of to establish the equitable grounds for impeaching that instrument, and not for the purpose of setting up some other or different con- tract to be substituted in its place. If proper grounds exist and are shown for defeating the deed, the equities ])et\veen the parties will be adjusted according to the nature of the transaction and the facts and circumstances of the case; among which may be included the real agreement. It does not violate the statute of frauds, to admit si;( . II. J CA.Mi'Ui;i.i, c. iti;.\i;it()i[N'. VJ'i jtainl ivitk'Uce of ihu real a;,^n'i'iin.iil, a> an t-loincnt in tlii' proof of fraud or otlier vice in tlu' transat-tion, which is n'lie(l on to dc- fi-al the writlun instruini'Ut. Wliat will justify a court of chancery in .setting aside a formal deed, and •;ivin<; Iho grantor an oi)|)ortunity to redeem the laml, on the ground that it was conveyed oidy for security, although no defeasance was taken, is a question of great dilliculty, and one u|»o!i which there exists a considerable diversity of adjudication, as well as of opinion. In Story Eq., i^ lUlS, it is stated in general terms to be " fraud, accident and mistake." In 4 Kent Com., Gtli ed.. 142, 113, it is laid down that " jjarol- evidence is admissiljle in ecpiity, to show that an absolute dee: and FCC Story Eq.. § 7G8. This indeed is only one form of api>licaiion of ihe general rule of equity, that one, who has induced another to act upon the sup- ])osition that a writing had 1)een or would be given, shall not take advantage of that act, and escape responsibility himself, by plead- ing the statute of frauds on account of the absence of such writing, which has In'cn caused by his own fault. Besides the cases cited in (ilass V. llulhcrt, 102 Mass. 24, see Bartlett v. Vickersgill. 1 Eden, h\7>\ s. r. 1 Cox C'h. lo; Browne on St. of Frauds. § Dl. But tliis principle will not help the plaintiff here, because he does not allege that any defeasance was intended or expected; and it is found by the report that the deed " was executi'd by the ])laintitT intelligently, and not by ay its judj^cs, are uniform in favor of the oxistcntc of the ])owc'r, and the jtroprirty of its exercise by a court of chan- cery {Iluyhes v. /'Jdicanls, "J Wlieat. 489; Spriyj v. Bank of Mount Pleasant, 14 Tet. 201, 208; Morris v. Nixon, 1 How. 118; Russell V. ."Southard, 12 TTow. 130; Tai/lor v. Luther, 2 Sumner, 228; Fhig;/ V. Mann, ih. 48(1; Jenkins v. KJdredtje, 3 Story. 181; Bentley v. Phelps, 2 Woodh. & Min. 42(5; Wi/man v. Bahcocl', 2 Curtis C. C. 38(i, 3!I8; .<. r. 1!) IIow. 28!)). Althou^di not hound by the author- ity of the courts of the United States, in a matter of tliis sort, still Me deem it to be important that uniformity of inter[)retation and administration of l)oth law and equity should prevail in the state and federal courts. We are disposed therefore to yield much defer- ence to the decisions above referred to, and to follow them, unles.s we can see that they are not supported by sound principles of juris- pruilence, or that tliey conflict with rules of law already settled by the decisions of our own courts. We cannot concur in the doctrine advanced in some of the eases, that the subsequent attempt to retain the property, and refusal to ])ermit it to be redeemed, constitute a fraud and breach of trust, which alTords ;,M-ound of jurisdiction and judicial interference. There can be no fraud or legal wrong in the breach of a trust from which the statute M-ithholds the right of judicial recognition. Such conduct may sometimes ajq)ear to relate back, and give character to the original transaction, by showing, in that, an express intent to deceive and defraud. But ordinarily it will not be connected with the original transaction otherwise than constructively, or as in- volved in it as its legitimate conscfpience and natural fruit. In this aspect only can we regard it in the present case. The decisions in the federal courts go to the full extent of alTord- ing relief, even in the absence of j)roof of express deceit or fraudu- lent purpo.se at the time of taking the deed, and although the in- strument of defeasance "be omitted by design upon mutual confi- dence between the parties." Tn Russell v. Southard. 12 Ilmv. 1.3!>, 1 18. it is declared to be the doctrine of the court, "that. wIkmi it is alleged and proved that a loan on security was really intended. and the defendant sets uj) the loan as ])ayment of purchase money. and the conveyance as a sale, both fraud and a vice in the consid- eration are sulliciently averred and proved to re(|uire a court of njuity to hold the transaction to be a mortgage." The conclusion of the court was, "that the transaction was in substance a loan of money upon security of the farm, and. being so, a court of efjuitv IP Ixnind to look through the forms in which the contrivance of the lender has enveloped it. ;ind dechire the conveyance <^f the land to be a mortgage." 196 SECUKITY. [CIIAP. II. This doctrine is analogous, if not identical with that ■which lias so frequently been acted upon as to have become a general if not universal rule, in regard to conve^-ances of land where j^rovision for- reconveyance is made in the same or some contemporaneous in- strument. In such cases, however carefully and explicitly the writ- ings are made to set forth a sale with an agreement for repurchase,, and to cut off and renounce all right of redemption or reconveyance- otherwise, most courts have allowed parol evidence of the real na- ture of the transaction to be given, and, upon proof that the trans- action was really and essentially upon the footing of a loan of money, or an advance for the accommodation of the grantor, have construed the instruments as constituting a mortgage ; holding that any clause or stipulation therein, which purports to deprive the bor- rower of his equitable rights of redemption, is oppression, against the policy of the law, and to be set aside by the courts as void (4 Kent Com., 6th ed., 159 ; Cruise Dig., Greenl. ed., tit. xv., c. 1, § 21 ;. 3 Washb. Eeal Prop., 3d ed., 42 ; Williams on Ileal Prop., 353 ;, Story Eq., § 1019; Adams Eq., 113; 3 Lead Cas. in Eq., 3d Am., ed. ; White & Tudor's notes to Thornhorough v. Bal-er, pp. 605- [*874] & seq.; Hare & Wallace's notes to s. c. pp. 624 [*894] cf- seq.). The rule has been frequently recognized in Massachusetts, where, until 1855, the courts have held their jurisdiction of foreclosure- and redemption of mortgages to be limited to cases of a defeasance- contained in the deed or some other instrument under seal (Erskine- V. Townsend, 2 Mass. 493 ; Kelleran v. Brown, 4 Mass. 443 ; Taijlor V. Weld, 5 Mass. 109; Carey v. Raivson, 8 Mass. 159; Paris v. Hall, 2 Pick. 206, 211; Rice v. Rice, 4 Pick. 349; Flagg v. Mann. 14 Pick. 467, 478; Eaton v. Green, 22 Pick. 526). The ease of Flagg v. Mann is explicit, not only upon the authority of the court thus to deal with the written instruments of the parties, but also npon the point of the competency of parol testimony to establish the facts by which to control their operation ; although, upon consid- eration of the parol testimony in that case, the court came to the conclusion that there was a sale in fact, and not a mere security for a loan. By the St. of 1855, c. 194, § 1, jurisdiction was given to this court in equity " in all cases of fraud, and of conveyances or transfers of real estate in the nature of mortgages" (Gen. Sts. c. 113, § 2).^ The authority of the courts, under this clause, is ample. It i;' limited only by those considerations which guide courts of full chancery powers in the exercise of all those' powers. If then the advantage taken of the borrower by the lender, in re- quiring of him an agreement that he will forego all right of redemp- tion in case of non-payment at the stipulated time, or an absolute j^j(. II.] ' C'AMrUKl.l. 1. ItLAlIllollV. 1!*T il«vil Willi a 1m. 11(1 or c-crlilicati' haik, wliicli fal.-ely rcciU's ilir diiir- lulcr of tilt' tiaiisaclioii, ivpiTscntin^' il to l)e a sale of tlic land with a iirivilcge of rVpureliase, be a sullicicnt j^round for inlerfcrcucM' in Oiiuity by restricting the oj^'ration of the deed, and eonvorting the writings into a mortgage, contrary to the expressed agreement, it is dillitult to see why the court may not and ought not to inter- pose to defeat the same wrong, when il attempts to reach its object by the sinijiler process of an absolnte deed alone. In each ease the relief is contrary to the terms of the written agreement. In one ease it is against the exjjress words of the instrument or chaise relied on as a defeasance, on the ground that those words are falsi ly written as a cover for the wrong i)ractised, or an evasion of tlu; right of redemption. In the other it is without an instrument or clause of defeasance, on the ground that it was ojjpressive and wrongful to withhold or omit the formal difeasance. In strict- ness, there is no defeasance in either case. The wrong on the part of tlie lender or grantor, which gives the court its power over his deed, is the same in both. " For they who take a conveyance as a mortgage without any defeasance are guilty of a fraud "' (Cottrrrll v. Piirrlinse. Cas. innii. Talbot, (il). See also Pxdnhnrl v. Grrni- ^hiclJs, Moore P. C. lS\Balrr v. Wiinl. 1 Ves. Sen. 1(50; Mellor v. Lccs, 2 Atk. 404 ; Williams v. Owen, 5 :Myl. & Cr. 303 ; Lincoln V. Wriyht, 4 De Cex cS: Jones, 10. As a question of evidence, the princi|)le is the same. In either case the parol evidence is admitted, not to vary, add to or contra- dict the writings, but to establish the fact of an inherent fault in the transaction or its consideration, which afTords ground for avoid- ing the elTect of the writings, by restricting their operation, or d •- feating them altogether. This is a general princii)le of evidence. well established and recognized both at law and in e(|uity (Shul- pole V. Anwhl, II Mass. 27; Fletcher v. Willanl, 1 I I'i.k. IH! : 1 Creenl. Ev., i; 281 ; Perry on Trusts, § 22(1). The reasons for I'xtending the doctrine, in I'lpiity, to absolute deeds, where there is no ])rovision for reconveyance, are ably pre- sented by Hare i^' Wallace in their notes to Woollani v. Ileum. 2 Ix'ad Cas. in K(|.. 3d .\in. ed., (iTCt. and to Thornhnrnutjli v. liulrer. .1 ih. r,21. See also Adams K(i., Ill; 1 Sugd. Vend., 8th Am. ed., Perkins notes, pp. 207, 2(18. 302, 303. The doctrine thus ex- tended is declared, in numerous decisions, to prevail in Xew York ; also in Vermont and several other States. Mr. Washburn, in hi> chapter on Mortgages, 5^ 1, has exhibited the law as held in the difTerent States, in this particular; and the numerous references there made, as well as by the annotators in the other treatises which we have cited, render it sujierfluous to rejM'at them here (2 Washb. KN'ul Prop.. 3d I'd.. 3.") tf* .sr^y.). Upcui the whole, we are convinced 198 SECURITY. [cnxv. II. that the doctrine may be adopted without violation of the statute of frauds, or of any principle of law or evidence; and, if properly guarded in administration, may prove a sound and salutary prin- ciple of equity jurisprudence. It is a power to be exercised with the utmost caution, and only when the grounds of interference are fully made out, so as to be clear from doubt. It is not enough that the relation of borrower and lender, or debtor and creditor, existed at the time the transaction was entered upon. jSTegotiations, begun with a view to a loan or security for a debt, may fairly terminate in a sale of the property originally proposed for security. And if, without fraud, oppression, or unfair advantage tal^en, a sale is the real result, and not a form adopted as a cover or pretext, it should be sustained by the court. It is to the determination of this question that the parol evidence is mainly directed. The chief inquiry is, in most cases, whether a debt was created by the transaction, or an existing debt, which formed or entereii into the consideration, continued and kept alive afterwards. "If the purchaser, instead of taking the risk of the subject of the con- tract on himself, take a security for repayment of the principal, that will vitiate the transaction, and render it a mortgage security" (1 Sugd. Vend., 8th Am. ed., 303, in support of which the citations by Mr. Perkins are numerous). But any recognition of the debt as still subsisting, if clearly established, is equally efficacious; as the receipt or demand of interest or part payment (Eaton v. Green, 22 Pick. 526, 530). Although proof of the existence and continuance of the debt, for which the conveyance was made, if not decisive of the character of the transaction as a mortgage, is most influential to that effect ; yet the absence of such proof is far from being conclusive to the contrary (Rice v. liice, 4 Pick. 349; Flagg v. Mann, 14 Pick. 467, 478; Ihissell v. Southard, 12 How. 139; Brown v. Dewey, 1 Sandf. Ch. f(^>). When it is considered that the inquiry itself is supposed to h'i made necessary by the adoption of forms and outward appear- anoo differing from the reality, it is hardly reasonable that the al/Pence of an actual debt, manifested by a written acknowledgment or an express promise to pay, should be regarded as of more signifi- cance than the absence of a formal defeasance. It of course compel-' the party attempting to impeach the deed to make out his proofs by other and less decisive means. But as an affirmative proposition it cannot have much force. A mortgage may exist without any debt or other personal liability of the mortgagor. If there is a large margin between the debt or sum advanced and the value of tlie land conveyed, that of itself i^ an assurance of payment slrong(M' than any promise or bond of SEC. II.] rAMriiiM.i. r. DiCAitiunts. 10!> a necx'ssitous borrower or dditor. IIi'Ikt i!ia(l('(|uacv of j>ri(.«', in Mieli case, Ixroinos an iiii|)(irtanl I'U-mciit in cstaljlislung tlu- cliar- ucter of the transaction. lnaiU'(iuacy of price, though not of itself alone sulVicient ground to set in motion chancery powers of tho court, may nevertheless j)roperly he efTeetive to quicken their exer- cise, where other sullicicnt ground exists (Story Kfj., sj^i 'i'-^^, -l">. 24G) ; and in connecticm with other evidence may alT(»rd strong ground of inrereiiee that the transaction |nir|)orting to he a sale was not fairly and in reality so (Kerr on I'raud and Mistake, isc and note; Wlmrf v. Iloirrll, 5 Binn. I!>:»). Another circumstance, that may and ought to have much weight. is the continuance of the grantor in the use and occupation of the land as owner, alter the ai)parent sale and conveyance {Cotlercll V. Purchase, Cas. temp. Talhot, 01 ; lAncohi v. Wriyht, 4 Dc Gcx i*;' Jones, Ui). These several considerations have more or les.-i weight, according to the circumstances of each case {Conwaij v. Alexander, 7 ("ranch, 318; BenUeij v. Phelps. 2 Woodh. & Min. ■\2C}). It is not necessary that all should concur to the same result in any case. Each case must he determined uj)on its own special facts; hut tho.se should he of clear and decisive import. In the present case, we arc able to arrive at the clear and satis- factory conclusion that there was no real purchase of the land hy the defendant, either from Tirrill or from the i)laintifT; that hi.- advance of the purchase money at the request of the plaintilT created a deht upon an implied assumpsit, if there was no express proini-e ; and that it was the expectation of both parties that the money wouhl he repaid soon and the land rcconveyed. Whatever may have been the intention of the defi'iidant. he must have known that this was the expectation of the ])laintifT; and it is most favorable to him to suppose that it was his own expectation also. These concl\ision< are not in the least modified in his favor by an examination of his answer. We must declare therefore that in equity he holds the tith' subjeel to redemjjtion by the plaint ifT in such manner and upon such terms as shall he determined upon a hearing therefor before a single justice. Decree acronlintjhj} "^vv Horn V. I\rlrlt,i.i. 4C> N. V. dO.") (1S71). Tlio view tluit fraud, mistak*' (ir uikIuc inlliienco imi>o sliown. omv HciUTiil, lias Imtii for tin* most part altaii(iom'«l. See. for «'\aiii|>lt>. Uminrnt \. lirainerd, 15 Conn. 575 (lS4.'n ami I'rnwh v. liunt.s. li't Conn. 3.'»1> l.SCiS). It siiivivos, liowi'vcr. in a few S(at»'>< ( .Vorn'.v v. Mrl.iiui, KM \. C. l.'iO (ISSni : r,n. Cod.., 1HH5. § 272.">: Mi^^s. .Ann. Cod.'. § 42X\\ . and it* inftnoncc may hv (racrd in many otIipr>i (Suliihru v. ('iishnuni. .1.% Fll. ISii |lrtt;.tl; Sfinrhfirlfl y. .Ui7/(Ar;., 7 1 Me. .^>t!7 (ISSOl; Russrll v. Snulh.int. 12 How. no, 147-S [isr.ll ). " It will 1)0 pcr^ion of tiir jn-opi-rty, shall not be j)roved (at the instance of the parties) by parol evidence to be a mortgage only, unless fraud in its procurement is the issue to be tried.' ' Misti. Ann. C'udi', § 4233, is to the same effect. CHAPTER III. THE OBLIGATION SECUEED. Section I. Is an Obligation Necessary? ACTON V. ACTON. Court of Chancery, 1704. {Finch, Pre. Ch. 237.) The plaintiff's husband before marriage gives her a bond to leave her 1000?. if she survived him, and the same day marries her; and some years after dies intestate, leaving a freehold and copyhold estate all in mortgage. The plaintiff takes out administration, but the personal estate not being near sufficient to satisfy the said bond, she brings her bill against the heir and mortgagee to redeem, and be let in to have satisfaction of the said bond. The defendant, the heir, urged, that by the marriage the bond be- came void in law, and could not be maintained here, especially against him, who is chargeable only in such case by being specially named ; and though it would be supported as a marriage agreement in writing, yet could only charge the personal estate ; and that, how- ever, it cannot affect the copyhold. On the other side it was said, this was once a good bond, and tlio heirs are bound in it ; and though by the marriage it lost its force in point of law, yet in equity it will have the same force as before, and bind the husband, and entitle the plaintiff to a redemption; as if the obligee loses his bond, yet equity will set it up, and give him the same advantage of it, as if it were in being; and if equity does sup- port it, it must support it, not only as an agreement in writing, but as a bond, and therefore the plaintiff ought to have the redemption as a bond creditor would have had ; and though it was agreed, it would not entitle her to redeem the copyhold, if mortgaged by itself, yet when that and the freehold are mortgaged together, she must redeem the whole, and cannot redeem by parcels ; and though MX. l.J lM, yet we shall hold thi' frcrholtl till satisfied the bond. LoHO Ki;KrKU [\Viiu;iit| -aid, if tiu- bond Wiv .xrciurd (which bi'ing doubtful, was ordiTcd to lie tried) the court would support it as a bond; and that the frei'hold and copyhold being mortgaged together, the plaiutilT should redeem both.* BUCKLIX V. lUCKLlX. Court of Appeals of Xi:\v Yohk, 1864. (1 Abb. A pp. (V/.S. 242.) Olive E. Bueklin brought this action in the Supreme Court against William and (ieorge K. Bueklin, to foreclose a mortgage made by their ancestor, William Bueklin, Sr. William Bueklin, Sr., and his wife, Esther, previous to his ex- ecuting this mortgage had separated, and she had filed a bill in chancery for a judicial separation ((; meiisa ct thoro) on ihe ground of his cruel treatment of her. In the bill she prayed that he might be compelled to maintain her, and that the custody of their infant daughter, Olive E., might be awarded to her. Upon the bill she obtained an injunction restraining him from molesting the child. In order to eom|)romise tlu- controversy and stay the prosecution of the suit, the husband, William Bueklin, Sr., agreed to make provision for the support of his wife and the infant, together, and separate from himself, and convey a house and lot to the child within six months. To effect this settlement the mortgage in suit was executed to \'eddcr (ireen (who apj)eared as the next friend of the wife in her divorce suit) and was expressed to be made to him in trust for the wife and infant daughter. The mortgage, which was set forth in the complaint, recited the ' " As 1(( tlic (il)j((tii)ii (hilt licre was no covfiuiiit fm tin- jtaymont of tin* ]iiinoi|)a! or inttrest, \\v said lliat was not nuitrrial ; \\\v sanu* not l>oinjr nrct'ssary for tlio nmkiri; of a niortnanc nor yet nrct-ssary (hat (ho ripht Hhniihl W mutual — viz., for (ho jnort^ap'o (o <'om)|h-1 (lu" payment an well as for (lio mort^japor to comjM-l a rt>Heph .Tekyll. nrpurnilo, in Floi/vr v. Lavingtnn. 1 P. U'nis. 2t»8 (1711*. And .see I. it.. 5 33S. and Co. Li(., 200, n. h. p. 1 1 . .vii/)ra. 204 THE OBLIOATIOX SECURED. [ciiAr. ill. above facts, and after providing for the said support of the wife and daughter, and the suspension of proceedings in the suit, with- out modification or discontinuance, the mortgage contained the fol- lowing language : " Xow, for the purpose of securing the perform- ance by the said William, of the aforesaid agreements and covenants on his part to be performed, this indenture witnesseth — that the said "William Bucklin, in consideration of the premises, and also on consideration of the sum of one dollar, paid to the said William by the said Vedder Green, the receipt of which sum is hereby confessed and acknowledged, hath granted, bargained, sold," &c., " and doth grant," &c., to Yedder Green and his heirs and assigns forever (hero was inserted the description of the lands; habendum to him, his heirs, and assigns, forever), ''provided, that if the said William Bucklin shall within the period of six months convey to Olive Esther Bucklin real estate of the value of one thou- sand dollars, to consist of a dwelling," &c., and if he shall permit Esther to occupy the same without molestation, and if he shall pay to Esther Bucklin three hundred dollars annually during their joint lives, and shall permit the said Esther Bucklin to have the custody, management, (Src, of said Olive Esther Bucklin, without any inter- ference on his part (and if he should also perform certain other conditions relating to personal property), then this indenture shall be void. And it is hereby declared that this mortgage is given to Yedder Green in trust for the benefit of Esther Bucklin and her in- fant daughter, Olive Esther Bucklin. And in case the above con- ditions on the part of said William, or any of them, shall be broken, and it shall at any time hereafter be necessary to enforce this mortgage, the amount that shall be recovered on said mortgage shall be recovered for the benefit of the said Esther and her infant daughter or the survivor of them. The complaint then averred that Bucklin, Sr. wholly failed to convey land and dwelling, &c., as he agreed (though payment of the annuity was admitted), and demanded Judgment for the fore- closure of the mortgage for the sum of one thousand dollars, the value of the land and dwelling promised to be conveyed, and in- terest, &c. When the mortgage was made, in 183G, the child (the present plaintifi') was about three years of age. The trustee, Yedder Green, died in 1841, the husband and Avife died in 1843 and 1844. In 1857, the daughter, coming of age, procured an order of court appointing her to enforce the trust and bring an action in her own name. The defendants were heirs of the mortgagor in possession. The judge before whom the cause was tried sustained the mort- gage; found that the husband and wife never afterward cohabited. sKC. I.J BLlKLIN r. lUtKl.IN. 205 lliou<;h for a >lioil liiiif they rrsidrd in the suiiu" Iioum-, and li«j piw jml^'incnt for j)laintitr with interest from the (hitu of tlie inort^Mp'. Tile Sui»niiie ("oiirt, at (It'iierai 'i'eriii, allirrmd liiis jiul<,'ineiit, liokling tliat tliis was au action on a sealed instrument, and, if the I ause of action had accrued after the Code of Procedure went into . tTecl, it would have heen «;overned i)y section IM) of the Code, but that as it had accrued hefore tliat time, it was j^overned hy 2 \l. 8., <•. 8, tit. 3, art. 1, i; D, which enacts that the time which sliall have lapsed between the death of any person, and the grantin«; of letters ti'stamentary or of administration on his estate, shall nj)t be deemed anv |)art of the time limited by any law, for the commencement of actions by executors or administrators. That had the trust de- scended to the personal representatives of the trustee, this cause of action would have been saved from the operation of the statute; and ihat the cestui que trust should not be prejudiced by having the trust fall on the court of chancery, as it did on the death of (Jreen, but that an analogous rule should be applied, and the whole term of twenty-one years allowed in which to bring the action, which would ]irevent it from being barred. From that judgment the defendants appealed to this court. F. h'enian for defendants, apj)ellants. John II. Rei/nohls for plaintiff, respondent. Ihf the Court: Denio, Ch. J. The mortgage, so far as it is now MUght to be enforced, was created, among other objects, to secure he jdaintifT, then an infant of tender age, a portion of her father's Toperty, to aid in her maintenance during her infancy, and to iirnish her with a small independent estate in real jjroperty. The .litTerences which had arisen between her parents presented the oc- I asion for this gift ; but its validity did not depend upon the merits ■f that controversy, nor yet upon the legal effect of the agreement :or a separation l)ctwecn her father and mother, nor upon the legal- ity of the provisions made by the former for the latter. The con- tract, so far as it relates to that i>rovision, lias either been per- formed or it is now incajiable of performance. The j)arty entitled to its benefits has been long dead, and it does not apjiear that >he left any representative capable of enfoning any of its stipulations which were not performed at her death. Moreover, this suit was not brought to recover such interest. Hut the plaintiff survives, and is entitled to the settlement attemiifed to be jiia of time.' 'The sprond portion of the opinion, «l«alin^' witli (lio i-lTt-rt of the Iap*e tniii|»il a >i>i'(i(ic iK'rr<>nii- ancr. On iioii-ixTforiiiaiicc of tin- conditions the mortgage is for- lVit«'(l at law, but the e(|uilv ol" rccK-niption remains in the mort- gagor or his rej)res('ntativ(s. No j(ros]>e(tivo hmguage of the parties which c-an In' writti-n is strong enough to j)ro(Iuce the for- fi'itiire of that ('(juity, which can only he extinguished hy a decree, or an equivalent proceeding, under a jtositive statute. Tliis rule is cx|)ressed hy the jihrase. " once a mortgage, always a mortgage." The mortgagee cannot destroy this (Mpiity t-xcept hy a suit in ehan- cerv or a statute foreclosure. Formerly, he could bring ejectment to get |)ossession of the estate, after forfeiture at law, but that is now forbidden by statute. Still if he can be got into possession with- out a breach of the peace, his title under the mortgage ^\oc(\ is strong 4nough in law to enable him to defend an ejectment brought by the mortgagee {MIckIrs v. Pilhiifc. IT X. Y. SO; Mirklcs v. Townarml, 18 id 57.")). The j)laintilV brings her suit in equity, not for the l)urpose of being aided in establishing her mortgage under the no- tion of remedying a defective conveyance, or obtaining a specific ])crformance, but to foreclose and extinguish the defendants' equity of redemption, which a court of law is not competent to deal with. She does not come to establish a voluntary equitable agreement, but to enforce a legal title under an executed conveyance, and to ('aniphcll, Lane A: ('•). {of which the cDinphiinant was a iiK-in'iMr ami lor which tho homl ami m<)rt<2:a;.C(' wore taken, though taken in the name of the eomjjlainant ak)ne) liail heen subjected hy rea-on of tlie defense nuide hy the lirm of Nichols &, Tompkins (of wliieli Mr. 'romi)kins was a member), against certain promissory notes put by the hitter firm on the money market, and bought by Cami)bell, Lane & Co. The notes amountecl in the aggregate to over $7000. The re- sult of the litigations was that Cami)bell, Lane & Co. recovered only what they had paid for the notes, with interest. The litigations were ended and the money for which judgment was recovered therein jniid before the mortgage was given. When the agreement for the mortgage was made, Mr. Tompkins applied to the complainant for a loan of $1000 on mortgage of tlu? premises described in the mortgage. Wholly of his own accord, and without suggestion from the conii)lainant, or any member of his firm, or any one else on his or their account, Mr. Tonijjkins pro- posed that if the loan was made the mortgage would be given for such an amount as to include a sum sufficient to compensate Mr. Cami)beirs firm for their expense and troulde in prosecuting the suits upon the notes. This proposition was wholly voluntary on his part, and the amount of the proposed compensation ($1000) was fixed by him. Mr. Camj)lKll acceded to the proposition thus made, and made the desired loan, the amount of which was, at the refpiest of Mr. Tompkins, raised from $1000 to $1100, and took the mortgagr. In 187n, before the commencement of this suit, the complainant bought the interest of his partners in the mortgage, so that wh. n this suit was brought he was the sole owner of the mortgage. Bv their answer, "Mr. and Mrs. Tompkins insist that, as to the $1000 included in the mortgage as compensation for expense. trouble, &c., in the litigations on the notes, the mortgage was with- out consideration, and that, therefore, there should be no decree U'V that money; or, if there should be any decree on that account, it should be for a smaller sum. They insist that $1000 was an un- reasonably large allowance on that account. Neither in th(> answ. r nor in the testimony is any fraud alleged or even hintetl at. 'i'ii • conduct of the complainant appears to have been entirely fair. Nor is it alleged that any manner of deceit or misroi)resentation w;h practised on Mrs. Tompkins, nor that she was not fully aj>pri-Ml .>•' all the partieidars of the transaction which res\dtfd in the ni'>r:- gage. The only question, therefore, is, whetlier the defence of want of consideration is available to the mortgagors. The seals to the bond and mortgage import a consideration, and. before the passage of the act "concerning sealed instrument-." which was approved April (!th, 1875 (Kcv. p. 387), neither a ."v.rt 14 ^10 THE OBLIGATION SECURED. [CIIAP. III. •of law nor equity would allow the consideration of such instruments to be inquired into with a view to declaring the instrument void for want of consideration, but a court of equity would do so for the }3urpose of ascertaining what was due upon it (Farnum v. Burnett, {) C. E. Gr. 87) . That act provides that in every action upon a sealed instrument or where a set-off is founded upon a sealed instrument, the seal thereof shall be only presumptive evidence of a sufficient consideration, which may be rebutted as if such instrument was not sealed. That act is a mere change of the rule of evidence and does not operate to make a valuable consideration necessary where the requisite did not exist when the contract was made {Aller v. Aller, 11 Vr. 446). As before stated, the mortgage in this case was given in 1868, prior to the passage of that act. It cannot be doubted that even now a, valid mortgage may be given where no valuable consideration ex- ists. Otherwise, the absolute control of the owner over his property is taken away, for he would not be permitted to give it away in his lifetime by deed. The mere fact that there was no consideration would not now render the mortgage invalid. A mortgage may be sustained as against all except creditors whose claims existed at the time of giving it, although it was intended merely as a gift ; and, when executed and delivered, it is as valid as if it were based upon a full consideration, and it is not open to the objection that it is a voluntary executory agreement, but it may be enforced according to its terms as an executed, conditional transfer of the real estate mortgaged (Bj'ooIs v. Dalrymple, 12 Allen, 102 ; Bucklin v. Buck- Tin, 1 Abb. App. Dec. 242; Jones on Mort., § 614). In this case there was no fraud, illegality or oppression. The act of the mortgagors in giving the mortgage to secure the payment of the compensation, was entirely voluntary and was the result of Mr. Tompkins's unsolicited and uninvited proposition. He made it part of the consideration of the loan which he solicited, and it is, perhaps, not too much to say that without this inducement the loan would not have been made. The voluntary mortgage by the wife of her land to secure the payment of her husband's bond is binding upon her not only so far as the loan is concerned, but as to the debt voluntarily created by him against himself and arising from a merely moral obligation Avhich he acknowledged without demand or even solicitation, but solely from his sense of justice. A married woman may, with her husband, mortgage her land to secure the payment of the debt of her husband or of any other person, for the payment of which she is in no way liable and in which she has no interest (Jones on Mort., § 113). And her mortgage, given to secure the payment of the bond of her husband, will not be regarded as having no validity or bind- HLC. I.] HAllil) / . IIAIUI). 211 in^^ tiri'it simply becaust.' ila- LoiisiiK-ration of iIk- lx)nil is an obliga- \iou merely moral and not enforceable at law or in e(|uity. There will be a decree in accordance with these views. l^AIIM) \. I'.AIIII). Court of Aim-kals ov \i:\v ^'ears that the father had some fears that liis sons would not be al)le to take care of the property thus conveyed ami tliat it might be lost in sjH'culation or otherwise. In order to prevent such a result, as he said, he recpiired the sons to give back to him mortgages for $1500 each on tlu; farm. \o bond was given and no actual di-bt was intended to be see\ired. and thev were not recorded by the father in his lifetime. Willi n>spect to the pur- [Hise and consideration of these innrtL'ages the testimony t<'niled to show, and the trial court found, that thev were not intended to 212 THE OBLIGATION SECURED. [CHAP. ml secure any debt or to be or become a valid subsisting security, or to be recorded or enforced, and were, in fact, without any considera- tion whatever. In the year 1875 the wife of John Baird, and mother of the defendants, died, and the year following he mar- ried the plaintiff. lie died in 1883, leaving a will, in which the plaintiff was named as executrix. In that capacity she brought ac- tions against each of the sons to foreclose the mortgages given by them respectively. The complaint was dismissed in each case and the judgments were affirmed at General Term. There are two appeals and two records, but both judgments rest on precisely the same facts, and the questions involved in both appeals are identical. Both cases may, therefore, be conveniently considered and disposed of as one. " The plaintiff's right to enforce the mortgage is the same and no other than the mortgagee, her husband and testator, had in his lifetime. She stands in the place of her husband, and cannot en- force the instrument unless he could, and every defense that the defendants could urge against the mortgage during the life of the father, they may interpose now against his personal representative. The instruments purport to have been given to secure the payment of money, but it was shown at the trial affirmatively, and found by the trial court, that no debt in fact existed in favor of the father against either of the sons; that there was no intention to give the mortgage on the one hand, or to hold it on the other, as security for any debt ; that in fact there was no legal or equitable con- sideration moving between the parties and no intention on either side to treat the instruments as binding obligations or as valid or subsisting securities. The evidence upon which these findings were made, if competent, was sufficient and the fact is not open to question or review here. " The findings are based upon the business relations which the parties occupied to each other before the father gave up the posses- sion of the farm to the sons and then conveyed it to them, taking back the mortgages in question, and upon his subsequent conduct and declarations as to the character of the instruments and the purpose of their execution and delivery. The general principle that an instrument under seal, in the form of a mortgage upon real estate, which upon its face expresses a consideration and pur- ports to have been given as security for a debt may, nevertlieless. as between the parties, be shown to have been purely voluntary or Avithout any consideration, and so invalid, is not denied (Davis v. Bechstcin. HO K Y. 440; TliU v. Hnnle. 11 G id. 299; Brir/fjs v. Lafigford, 107 id. 080; Thomas on Mort. § 84 7; Jones onMort. ij 1297). "The point upon which the learned counsel for tlic plaintirf ,,,!.] HAIItl) r. II AllUt. 213 I. ill'.-, is that i'\ iili'iuc was not ailmissiblc at llu' trial to wholly .Hiitradict and (Icfcat tlu' iiistruinciits \>y showing', contrary to wliat aj)i)ear(»l on their face, that they wen- intended to have no (Iteration whatever. It is sou<^ht to (listin;:\iish this ease from that of a ileed, ai)solute upon its fnee, which may he shown to be in fact a mortj^a^o, and from the numerous other casis'in which eijuitv i)ermits a i)arty to show that an instrument, appearing upon its face :hl to he in truth of <|iiite another character. It is said that the jjrincijjle upon which these cases rest gives no sanction to what was held hy the court helow in this case, that a party may impeach his deed hy show- iuiT. not only that it was without consideration, hut that it was intended to have no validity oi- hecome of any hinding force wluit- ••V.T. • The desire on the part of the fatlu'r to retain some sort of j:uardianship over the title to the farm whiih he had conveyed to the di'fendants was, perhaj)s, natural enou^^di under the circum- istances, and it is frequently shown in such transactions. That the mortgages were not intended to he held hy him for any other ]turi)ose is supported hy the circumstances that no bond was given, that they wi-re not recorded, and no claim was nuide by the mort- gagee during his life, a jjcriod of about nine years, that they were in his hands for any otlier ])urpose or for the payment of either principal or interest though jiast due. All the circumstanees, when considered with the proof of the statenu-nts and declarations of the father, were sulhcient to warrant the findings of the trial lourt with resjiect to the real purpose with which tlu^ instruments ■ re nuule and tlu'ir true consideration (Ifolmcs v. Rojirr. Ill .. Y. (>7 ; Li/on v. Uirkcr, id. t?'^")). '' Th(> presumption of soiue ■ iisideration that arose from the j)resence of a seal was overthrown, id we must assume that the instruments were without considera- •n of any kind ( flniif v. linrion. ')'> X. Y. C.S : lirst v. Thirl. 79 iil. '. ; Torn/ v. lihiH-. hn i,l 185; Home Ins. Co. v. Wafson. 50 id. '.'»; f)iif)<>i.^ V. Ifcniiatur, 5(1 id. Cu^) . "There is no reason that we can perceive for giving to these instruments any greater force or effect than was eoutemplated by 'be parties when they were executed and delivered. There is no -topj)el or any right which attached in favor of third parties, ami we are not aware of anv prin(i|ile which would now retpiire a court of e but as In-twi'di iIk' j)arlit's to tlu- iiisiriniu-iil tliciv is no reason why the truth, with respect to tin- real object and consideration of the instrunu-nt, nuiy not be niach' to ajjpcar. The plaintill was not entitled to maintain the actions for ihi' foreclosure of the niort- <,'ap's unless it was found that there was some del)l due to her for the payment of which they were the security. The lindin;,'s are that no debt ever existed, and this is conclusive against the plain- titT's richt of action. In an action to enforce a niort^^a^'c by sab- of (he land the anu)unt, if anythin*,', of the lien is an issue which the i)arties certainly have the ri^dit to contest. It is the debt which gives the mortgage vitality as a charge uj)on the land, and gener- ally where there is no debt or obligation there is no subsisting mort- gage. The instruments contain a consideration clause and a seal, and much of what has been said l)y courts and writers to the efrecl that a party cannot be permitted to defeat his own deed by parol j)ro()f is based upon the importance which was attached to the pres- ence of these conditions in an instrument by the common law. Th<- conception that some consideration was necessary to support every promise and covenant was borrowed from the civil law, but tlw consideration was formerly deemed to be conclusively established by the ])resence of the consideration clause or the seal. It was originally suj)posed that the recitals and clauses of a contract e.\- j)ressing a consideration coidd not Ik- varied by parol ])roof to the contrary, but tiiat rule was gradually al)andoned and now that clause is open to parol proof {McCrca v. Purmot, 1(1 Wend. irtO; Jlehhard v. Ifaufjliian, 70 X. Y. 54; Ham v. Vun Onlrn. 84 id. 2<>9). So. also, the conclusive ])resumj)tion of a consideration which formerly arose from the presence of a seal was modiflefeated in either ca.<;e. It is quite certain •^16 THE OBLIGATION' SECURED. [CHAP. III. that by recent adjudications deeds and other instruments have been defeated, in a great variety of cases, by parol proof of want of consideration, or that they were delivered upon conditions which would render their use for any other object a fraud upon the maker, or that the purpose for which delivery was made was dif- ferent from that indicated upon their face. It will be sut?icient to refer to some of the cases without further comment : Reynolds V. Bolnnson, 110 X. Y. 654; Bhioitt v. Boorum, 142 id. 357; An- dreas V. Brewster, 124 id. 433. So, also, actions to foreclose mortgages have been defeated upon allegations and proof differing in no" substantial respect from that appearing in this case {Briggs V. Langford, 107 N. Y. 680; Haniian v. JIannan, 123 Mass. 441; ^Ycar$e v. Pcirce, 24 Pick. 141; UiU v. Iloole, 116 N. Y. 299; Davis V. Beclisiein, 69 id. 440; Parl-liurst v. Higgins, 38 Hun^ 113). There may be cases, no doubt, where the party will be held estopped by his deed from claiming that it is void for want of consideration, especially where by its terms it appears to be an ab- solute conveyance of land (Matter of Mitchell. 61 Hun, 372). A voluntary conveyance, intended to take effect as such, and not ■executory, is generally good between the parties without actual consideration, but that principle has no application to this ease. It is not quite correct to say that the defendant was permitted to show bv parol that these instruments were never to have any oper- ation or effect. They were in fact executed and delivered for a purpose, though not to secure the payment of money, and they may luive accomplished the very object contemplated. That was to pro- tect the defendants against their own improvidence in contracting i:c. I.I it\ii;i» / . HAli;i». 217 Were iiiiulc and dtlivcri'tl, lu-in;,' ailinissions apiinst his inlerests, would have Imiii niiii|ii'li'nl jnoof a^Miiist liiiii in a suit to enforce the ni()rt;j:a^('s in his lifclinu', and hciuc arc now coinix'lcnt a;,Minst tlic plaint iir who r('|H'fsents him {Ifolincs v. Uojirr. Ill X. \. 07; l.iian V. li'lrhir. iuh and thai ilir judg- ments shouhl !)(' alhrmed, with costs." W . A. i^utln'rhuitl for api>cliant. (Jeuryc A. Jicnlon for rcsponcK'nl. O'Brien, J., reads for allirmancc. Barth'tt, J., concurs; Pi'ckham and dray, JJ., concur in the result ; Andrews, Ch. J., dissents; Ilaigiit, J., not sitting. Judgments affirmed. 218 THE OBLIGATION SECURED. [cHAP. III. CHAPTER III. (Continued). Section II. Illegal Obligations. WHALEY V. NOETOiW High Court of Chancery, 1687. (1 Vern. 483.) The bill was to be relieved against a bond and judgment, defeaz- anced for the payment of 4001. to the defendant; and the bill charged, that whereas the security recited 400?. to have been lent and paid by the defendant to the plaintiff, that in truth the money was never really lent or paid: the defendant by answer confessed,, that the 400/. was not lent or paid by her, and that it was never meant or intended so to be, and that it was the mistake of the scrivener in making the security after that manner, for that the 400?. thereby intended to be secured was the free gift of the plain- tiff unto the defendant. The truth of the case was, that the defendant was for some time kept by the plaintiff, and this 400/. was given her upon that ac- count; but of that no notice was taken in the bill, and the counsel, for the defendant insisted, that it being a free gift, no equity could relieve against it; and cited the case of Bourman and Uphill, which was this very case in point, and the equity laid in the bill the same, to wit, that it purported to be a security for money lent; Avhereas no money was really lent or paid : and the Court would not relieve in that case, though the gift was upon the like account : and the case of Peacock and Mainlin was also cited. The Master of the Rolls [Sir John Trevor] said, that there would be a difference in these cases between a contract executed and executory ; and that this Court would extend relief as to things executory, which if done, it maybe might stand : but as this case was, he saw no ground to relieve the plaintiff, nothing appearing to him, but it was a free and voluntary gift, without anything of turpis contractus: and in case it had been so, yet wo know that Adam was punished, tliough tempted by Eve ; because he would be tempted. But if it liad been cliargod in the bill, that the de- fendant was a common strumpet, and she commonly dealt and BEc. II.] w r. B . u r. w . 21M practised after that sort, and used to draw in yoim^' griitifiiicn, m Mich case lie thought it reasonable the Court should relieve; and the plaintitTs had, in this cause, proved as much; but the defend- ant's counsel ojjposed the reading to that matter, by reason it was not charged in the bill, nor in issue in the cause; so they prayed liberty to amend their bill, and to charge that special matter, pay- ing the costs of that day, and of the depositions taken in the cause.* W V. B- B V. W- TlIE KOLLS COUKT, ClIANCKUV, 18G3. (32 Bear. 574.) The Master of the Kolls (8iu John Komilly)." This is a case which has caused me considerable ])ain; but I can state very shortly why I think that this deed cannot be supported. There are two suits, one to enforce a deed of the 20th of August, 1855, by which, in consideration of 1700/. lent by the defendant Mr. W. to Mr. B., Mr. B. and his five children (two only of whom were adult) covenanted to surrender copyholds for securing that amount. The second suit is instituted by B. and his two daughters to set that deed aside. The case is a very painful one in this respect: It aj)pears that Mr. W. .seduced C, one of Mr. B.'s daughters, and that in June, 1855, Mr. T., a brother-in-law of Mr. B.. had pointed out to him the attentions paid to his daughter by Mr. \V.. that it was a matter of notoriety in the town in which they resided, and that it was e.s.spntial to put a stop to it. At the ■^ame time, Mr. T. toM Iiini '"Has llioie been any case upon tluil distinction [between a retonipen-.< for past and a jirovision for future coluiliitation]. wliere tlio ••ourt, tindinir ttio woman in actual possession of the property, lias upon tluit ;rround taken it out of lier liands? Tlie distinction upon the doctrine of iinrmium innln i- tifr lias prevailed in the case of restrainin;.' her from enforciufr a aecjiritv. Hut I doubt whether there is any instance of taking,' the property out of her hands, except as to cretlitors." — I'rr I.ord Kldon. I,. Ch.. in /I'lW. r \. Kidiler, 10 Ves. .ICO. 3(5(5 (ISO.")). " Kv«'n in cases of a j>ra-iiiiiiiii innlicititr, the di'>t inctiou has been cun- >«tan(ly maintained bcl ween bills for rest rainin;: the woman fr ftuiml where (he contrary doc(rine has been ac(ed on. except where creditors were concerned. ■■ — Story. V.t\. .Turis.. 5 20!) llS4(M. 'Thi< -(atcnicnt of facts and a portion of the opinion are omitted. 220 THE OBLKIATTOX SECURED. [eilAP. III. lie should require the moucy due to him to be repaid, which con- sisted of 1 100/., and two sums of 3007. each for which he was surety. When T. required the money to be repaid, Mr. B. applied to Mr. W. for an advance. A day or two after, in June, 1855, in conse- quence of the strong remonstrances of Mr. T. and of Mrs. T., who was the aunt of this young lady. Mr. B. wrote a letter to Mr. W., in which he told him, that in consequence of the reports, he must discontinue his visits to his house. In answer to this, Mr. W. wrote that there was no truth in the suggestion, but that he ac- quiesced in the propriety of the refusal to allow a continuance of his visits. On the following day after writing this letter, Mr. W. wrote to Mr. B. and told him that he would advance the money required by Mr. B., and a treaty took place, and it was arranged that the advance should be made, and it was effected on the 20th of August, 1855, about two months after. It is impossible to read the letters and the evidence in this case, and not come to the conclusion, that a part of the considera- tion for the advance of the money by ]\Ir. W. and for the security which was given, was a promise that W. should be at liberty to con- tinue his visits to the daughter. It is impossible that the father should not have been aware, after all the representations made to him by Mr. T. and by the public talk, that Mr. W. had, at that time, actually succeeded in seducing, or that ho was attempting to seduce, his daughter. It is impossible to doubt the fact that the money was given in order that Mr. W. should be allowed to con- tinue his attentions to the daughter, whether successful or not. I am of opinion, in that state of the evidence, that no person can come into a Court of Equity and ask that effect should be given to a deed, the consideration for which was of that character. The Court is compelled to look at the whole of the consideration. and cannot execute the deed in part. And I am of opinion that no person can, on such evidence and facts as are here established, require this Court to give any assistance to either party concerned in such a transaction. It occurred to me that I could leave the matter there, but, ob- serving that others besides the parties to the corrupt bargain are atfected by this deed, I am of opinion that I ought not. I am also influenced by this consideration, that, upon an action on the deed, the same defense would 1)0 open at law, and I think that I should not act properl}', if I did not, as far as I am able, put an end to this painful case. Without saying anything as to what might be done in an action at law to recover the money lent, I shall order tlie deed to be delivered up to be cancelled. The grounds on which I decide this case make it unnecessary for me to enter into the consideration whether proper protection sKr. 11.) l(()>\Nv' i;i 1' '. I>A>1I\\<><>I). '.'"'l uas alVdixlcd to iIr- iwu \ouii;,' liKiio ill this matter; l)Ut it woiiM 1)0 dillicult lo see liow i-itlicr of tlicsi- deeds of J 85:5 and 1855 could be supported in this Court as upiinst them. r,osA.\(,)ri;i"r \. dasiiwood. CULKT Ol" ('llA.\( i;UV. \','->'>. {Cas. ln,ii>. Tiilh. :?S.) The ])laintiirs htiii^f Assignees under a Commission of Bank- ru])toy against the two Cottons, brought their Bill against Dajli- wood the Defendant, as Exeeutor of Sir Samuel Dashwood, who had in his Life-time lent several .Sums to the Cottons, the Bank- rupts, uj)on Bonds bearing G/. per Cent. Interest; and had taktii Advantage of their neeessitous Cireumstanees, and eompelled them to pay at the Kate of 10/. per Cent, to whieh they submitted, and enter'd into other Agreements for that Purpose; and so eontinucd paying 10/. per Cent, from the Year ITIO, to the Year 17'^ 1. "Twas deereed at the Bolls that the Defendant should aeeount ; and that for what had been really lent legal Interest shouhl be eomj)uted and allowed; and what had been ijaid over and above legal Interest should be dtdueted out of the Prineijtal at the Time paid; and the I'laintill's to ])ay what >hould be due on the Aeeount : And if the Testator had reeeived more than was due with legal In- terest, that was to be refunded by the Defendant, and the Bonds t<> be delivered up. Mr. Solicitor General and Mr. Faiakerleij insisted for the Di- fondant. That 'twas hard to intpiire into a Transaetion of so long standing, the Parties having on all sides submitted to the Agree- ment, and that Voleiili non fit Injuria; whieh was the Beason of the Lord Holt's ojjinion in the Ca-se of Tomkins versus Unmet. 1 Salk. 22. why an Aetion would not lie for Beeovi-ry of Money \m\'u\ upon an usurious Contract; and tlrat the Bankrupts being /' barred And cited the ease of Walker versus I'enri/. 2 AVrn. 7S. 115. LoKi) CiiANCKLLou fT.vLUOT|. Tinre is no Doubt of the Bond< and Contracts therein being good : But it is tlie subso«pu'nt .Xgn-e- 222 THE OBLIGATIOX SECURED. [cHAP. in* ment upon which the Question arises. It is clear that more has been paid than legal Interest. That appears from the several Letters which have been read, which prove an Agreement to pay 107. per Cent, and from Sir Samuel Dashwood's Receipts; but whether the Plaintiffs be intitled to any Relief in Equity, the Money being paid, and those Payments agreed to be continued, by several Letters from the Cottons to Sir Samuel Dashwood, wherein are Promises to pay off the Residue, is now the Question? The only Case that has been cited, that seems to come up to this, is that of Tomhins versus Barnet; which proves only, that where the Party has paid a Sum upon an illegal Contract, he shall not recover it on an Action brought by him. And tho' a Court of Equity will not differ from the Courts of Law in the Exposition of Stat- utes ; yet does it often vary in the Remedies given, and in the Man- ner of applying them. The Penalties, for Instance, given by this Act, are not to be sued for here; nor could this Court decree them. And though no in- debitatus assumpsit will lie, in Strictness of Law, for receiving of Money paid upon an usurious Contract ; yet that is no Rule to this Court, which will never see a Creditor running away with an exor- ])itant Interest beyond what tho Law allows, though the Money has 1jeen paid, without relieving the Party injured. The Case of Sir Thomas Meers, heard by the Lord Harcourt, is an Authority in Point, that this Court will relieve in Cases which (though perhaps strictly legal) bear hard upon one Party. The Case was this: Sir Thomas Meers had in some Mortgages inserted a Covenant, That if the Interest was not paid punctually at the Day, it should from that Time, and so from Time to Time, be turned into Principal, and bear Interest : L^pon a Bill filed, the Lord Chancellor relieved the Mortgagors against this Covenant, as unjust and oppressive. So likewise is the Case of Broadway, which was first heard at the Rolls, an-d then affirm'd by the Lord King, an express Authority, that in Matters within the Jurisdiction of this Court it will relieve, though notliing appears which, strictly speaking, may be called illegal. The Reason is ; because all those Cases carry somewhat of Fraud witli them. I do not mean such a Fraud as is properly Deceit; but such Proceedings as lay a particular Burden or Hardship upon any Man: It being the Business of this Court to relieve against all Of- fences against the Law of Nature and Reason: And if it be so in Cases which, strictly speaking, may be called legal, how much more shall it be so, where the Covenant or Agreement is against an ex- press Law (as in this Case) against tlie Statute of Fsury, thongli the Party may have submitted for a Time to tlie Terms imposed on him? The Payment of the Money will not alter the Case in a Court of Equity; for, it ought not to have been paid: And the ]\Iaxim of. sKc. 11.] iLLi:t;AK oiu.itiATioxs. 2'^;{ \'ulcn(i nan fit Injuria will hold as well in all Cases of hard IJur- -ains, a^'ainst whiih tlu; Court rdii'vcs, as in this. It is only the Corruption of the Person luakin;,' such Har-^Mins that is to l)e fon- ridered : It is that only which the ^<(ah^l(' has in View ; and 'tis that ..nly which intitles the Party oppressed to Kclicf. This answers the Ohjection that was made hy the Defendant's Counsel, of the Bank- rupts heing I'drlitijics Criminis: for, they are oppressed, and their N'eccssitics ohliged them to submit to those Terms. Nor can it ho -aid in any Ca.se of Oppression, that the Party oj)pres.sed is Pur- lirriis Criminis; since it is that very Hardship which he labours under, and which is imposed on him l)y another, that makes the Crime. Tlu' Case of Camesters, to which this has been compared, is no way parallel; for, there both Parties are Criminal: And if two I'ersons will sit down, and endeavour to ruin one anotiier, and one pays the ;M()ney, if after Payment he cannot recover it at Law, I do not see that a Court of Kcpiity has anythin*^ to do but to stand Xcutcr; there being in that Ca-se no Oppression upon one Party, as ihere is in this.' Another Dilliculty was made as to the Kefunding: liut is not that a common Direction in all Cases where Securities are sought to be redeemed, that if the Party has been over-paid, lie -liall refund? Must he kceji Money that he has no Higlit to, meerly iiecause he got it into his Hands? 1 do not determine how it would be if all the Securities were delivered uj); that is not now before mc : I only determine what is now before the Court ; and is the com- iiK.ii Direction in all Cases where Securities are sought to be re- ileemed. And so affirmed the Decrrr, d'-r. Stat. 9 Anne, c. H. — .1/j net for lite better preventimj r.rcrssire and dei'utful (/amin;/. — Wliereas the laws now in force for prevent- in(f the mischiefs irhich maif happen hi/ (jamimj, hath not hem found sufficient for that purpose : therefore for the further prevent- ing of iill excessive aiul deceitful gaming. b(> it enacted by the Queen's most excellent majesty, by and with the advice and eon- >cnt of the lords spiritual and temporal, ami commons, in this pn'sciiii>lrd. ami l>y authority of the same. That '"III ca^cs wlicrc !i;,'nriiiciit- i>r ntlu-r trnnsuctionn lUi' rr|uiilinlo«l oii iifrDiiiit lir puiiiv. tile finMun.-^luin c tliat tin* n-lirf i< aski'd hy n pmty \\\u> i-. prrliiipH. pnittrrfts rnniiiiis is not in «i|iiity (iiatcriiil. Tin- rca-on i-> tlial tlic piililir iiitorrst in|iiin<-i tliiit rrlii'f slionM Ix" yivi'ii. ami it is >;i\i'ii t<> tit- puldii' tlinni^'li llu' party (Story. Kt|.. S :i()Si.'— /'. , Kn-'Ii-li. Cli. .1.. in Hir,ithirit v. h'oi/ns. ■^•- Ark. TTiS (1878). 224 THE OBLIGATIOX SECUKED. [CIIAI'. HI. from and after the first day of Maij, one thousand seven hundred and eleven, all notes, bills, bonds, judgments, mortgages, or other securities or conveyances whatsoever, given, granted, drawn, or entred into, or executed by any person or persons whatsoever, where the whole or any part of the consideration of such convey- ances or securities, shall be for any money or other valuable thing Avhatsoever, won hy gaming or playing at cards, dice, tables, tennis, howls, or other game or games whatsoever, or by betting on the sides or hands of such as do game at any of the games aforesaid, or for the reimbursing or repaying any money knowingly lent, or advanced for such gaming or betting, as aforesaid, or lent or ad- vanced at the time and place of such play, to any person or persons so gaming or betting, as aforesaid, or that shall, during such play, so play or bett, shall be utterly void, frustrate, and of none effect, to all intents and purposes whatsoever ; any statute, law, or usage to the contrary thereof in any wise notwithstanding; and that where such mortgages, securities, or other conveyances, shall be of lands, tenements, or hereditaments, or shall he such as incumber or affect the same, such mortgages, securities, or other convey- ances, shall enure and be to and for the sole use and benefit of, and shall devolve upon such person or persons as should or might have, or be entitled to such lands, tenements, or hereditaments, in case the said grantor or grantors thereof, or the person or persons so incumbring the same, had been naturally dead, and as if such mortgages, securities, or other conveyances, had been made to such person or persons so to be entitled after the decease of the person or persons so incumbring the same ; and that all grants or convey- ances to be made for the preventing of such lands, tenements, or hereditaments, from coming to or devolving npon such person or persons hereby intended to enjoy the same, as aforesaid, shall \)v deemed fraudulent and void, and of none effect, to all intents and purposes whatsoever. FANNING V. DUNHAM. Court of Chancery of New York, 1831. (5 Johns. Ch. 123.) The bill, filed August 2, 1813, stated, that on the 2Gth of Octo- ber, 1811, the plaintiff and defendant, who had dealings togethci- in the exchange of promissory notes, &c., entered into a written agreement, which recited that the defendant had advanced to the plaintiff, at sundry times, his promissory notes in exchange, SKC. 11.) r\.\MN(i (. IJIMIA.M. 225 iimouiiting lo 188,11; I dollars and bS cunts, und for winch the dt- ffiidant was entitled to a coininission of two and an linlf per cent. : and a further advance of "JiKOOO dollars, in exchan^'c (d" notes, wu> af,'reed upon, in four notes, i)aval)lc in •■*, ;}, 1, and ."» months, with the privilege of one renewal; and also, the further advance of v'o.OOO dollars, in the notes of the defendant, payahle at (i, T, 8. and 5) months, with notes of the jjlaintill in exclianfje, suhjeet to a commission of two and an half jxt cent., as well as the said re- newals; and thereupon the i)laintiir, in consideration of the above advantages, assigned to the defendant all his right to the ship iJordeaux and cargo, the ship Tea Plant and cargo, and the schooner Brothers and her cargo, which three vessels were then on foreign voyages, and it was agreed that the jdaintifl's interest in the said vessels and cargoes should he sold by the defendant at auction, on their arrival; and if the commissions of two and an lialf per cent, on the said sums, should he erpial in amount to the several sums above stated, then no other charge, more than the de- fendant's interest at seven per cent., and all necessary charges, as auction duty, storage, &c., should be made to the defendant ; but if the goods did not amount to that sum, or not arriving, then the plaintiff guaranteed to the defendant his full commissions on anv ueficiency that should so occur; and the defendant was to have full power to take possession of the interest of the plaintiff on the ar- rival of the vessels, and to dispose of the same or hold it, at his discretion, accounting to the ])laintiff for the surplus, first deduct- ing his own demand, due by that or any former agreement. That in the spring and summer of 181-2, the plaintiff, finding il necessary to raise money, applied to the defendant, who, from tinu' to time, advanced the plaintiff his notes, in exchange for the plain- tiff's notes, and his endorsements on the plaintiff's notes, amount- ing to l()3,(;r8 dollars and IC cents. And it was agreed be- tween them, that the jdaintiff should pay to the defen.laiit a commi.>;sion of two and an half per cent, on the aniouui of all such notes and endorsements; viz., the plaintiff was to |)ul iuto the hands of the defendant (an auctioneer), goods to be sold at auction by the defendant, and out of the proceeds lie was to re- lain the commission of two and an half per cent, on the amount of all such notes and endorsements by him advanced, over and abo\r the usual connnissions, expenses, and charges, upon such . made at auction, if such ])rocee(ls on sales should be sullicient f..r the j)urpose; and if not, the balance or deficiency should be mad.- «ip and paid by the plaintiff to the defendant. That as a condiiion of this last agreement, the jdaintifT. ui)on receiving the notes an>l endorsements of the defendant, always gave his owu note^ to tJie defendant, in exchange for the amount of bis notes and end."o.- 1.1 226 THE OBLIGATIOX SECURED. [CIIAI'. lU. monts. payable respective!}-, in each instance, one day before the day on which the notes of the defendant, or the notes of the plain- tiff, endorsed by him, were payable. That on the 9th of March, 1812, to secure to the defendant pay- ment of his notes and endorsements and his commission thereon, the plaintiff assigned to him one hundred shares in the West Ches- ter Manufacturing Society; and on the 27th of April, 1812, for the same purpose, the plaintiff gave to the defendant a bond condi- tioned to pay 100,000 dollars, with a warrant of attorney to con- fess judgment thereon ; but no judgment was to be entered, until there was a default of the notes or endorsements ; and on the 13th of May, 1812, the plaintiff, for the same purpose, gave to the defendant another bond conditioned to pay 30.000 dollars, and also a mortgage by him and his wife on lands at New Rochelle and Pelham, in the county of West Chester. That on the 27th of August, 1812, the defendant gave to the ])laintiff a declaration or deed of trust, reciting that the plaintiff was indebted to him in the sum of 43,818 dollars and 30 cents, in promissory notes therein specified, and for securing the amount of those notes, and such other moneys as the plaintiff owed, or might owe to him by the renewal of the said notes, or otherwise, the de- fendant held the said bond and mortgage, tbe one hundred manu- facturing shares, the ship called the Zephyr, one-third of the ship Tea Plant, and the said bond and warrant of attorney ; and that when the notes and other moneys were paid the bond and mortgage sliould be cancelled, and the other property given up or re-assigned to the plaintiff. To this deed was annexed a schedule of the notes. That the last mentioned writing was given in lieu of, or as a sub- stitute for, the agreement of the 26th of October, 1811. The bill set forth the exchange of several notes between the parties, and that tlie plaintiff gave the defendant a note for 229 dollars and 47 cents, with an endorser, for the commissions, or premium thereon. It then set forth other exchanges of notes, and that the defendant's notes were less than the plaintiff's, by the amount of the commis- sion of two and an half per cent. That other exchanges of notes took place; and that on the 21st of August, 1812, the plaintiff gave to the defendant six promissory notes, with an endorser, amounting to 6898 dollars and 20 cents, all of which were exclu- sively given for premiums or commissions on tbe exchanges of notes, as stated in tlie l)ill, that sum being the balance, after credit- ing the amount of sales of the goods of the plaintiff at auction. Tbat several of the notes mentioned in the schedule, besides one of Ibc premium notes for 1149 dollars and 70 cents, were paid by Ibc ])laintiff, when they fell due. Tbe ])ill charged iliat tlie de- fendant had no other notes or demands against tbe plaintiff, but : . ll.J I'AXNINU r. IJIMIAM. 227 Muh as won' sju'cidcd in the silicdulc. takin;; oul sinli as were ho- forr sjx'cifu'd as paid ; and Ihat all tlic notes miiainin;,' unj)aid wero usurious and roid in law; and that the bond and warrant of attor- nrv, tlif bond and niortj^a^'c. the assij^nnicnts of ships and shares held as security for the payment of those noti's, were also void in law. That on the iSth ICth of neeendu-r. 1813, the plaintifT appealed from that order, to the Court for the Correction of I-'rrors; but it was, afterwanls, agreed between the parties, that j)roce(>(lings on the appeal should be suspendi'd until after a decision on the feigned issue. That the feigned issue was settled, under the directions of the Supreme Court, and the plead- ings were set forth in the bill, at length. That the feigned issu.' wns tried before Mr. Chief Justice Thompson, at the sittings, in June, ISIT), when the jury found all the issues in favor of the plaintifT; and the bill set out the imstra. at length, by which it ap- '■•ared that the jurv found that the said bond and warrant of 228 THE OBLIGATION SECURED. [cuAr. lii- attonioy were made and executed i;pon an usurious consideration : that the said bond and warrant were made as collateral security, for certain promissory notes made by the plaintiff to the defend- ant, upon usurious considerations, or upon other engagements and transactions between the parties upon usurious considerations, and that the said promissory notes, for which the bond and warrant of attorney were given as collateral security, were respectively made and delivered upon usurious considerations. That to maintain the feigned issue, the plaintiff gave in evidence the bond and warrant of attorney, the judgment entered thereon, the instrument exc- lutcd by the defendant, August 2rth, 1812, and the schedule (A.) thereto annexed, the answer of the defendant to the original bill, and the cross examination of the defendant's witnesses. That after the verdict, the defendant made a case, on which to move foi- a new trial of the feigned issue ; that a motion for a new trial wa-^ accordingly made and argued in October term, 1817, and that Court, in January term following, unanimously refused to grant a new trial. That before the case was settled, an agreement, dated 7th of May, 1816, was entered into between the counsel of the par- ties respectively, that the defendant might have a bill of exception-; prepared and signed and sealed, in the same manner, as if it had Ijeen tendered at the trial of the feigned issue, to the end that a Avrit of error might be brought, if either party thought proper, and that the. decision Avhicli should be pronounced on such bill of excep- tions, should be final and conclusive upon all matters put at issue- l)y such feigned issue between the parties. That although the Su- preme Court decided against the defendant, he never thought proper to take a bill of exceptions under the said agreement, and bring a writ of error; but has expressly declined doing so. That the writing of the 27th of August, 1812, and the schedule A. an- nexed thereto, and the bond and warrant of attorney, are the sanio as are set forth in the original bill. That according to the agree- ment of the 7th of May, 1816, the verdict and judgment on the. feigned issue, as no writ of error has been brought, conclusively establish the fact, that the said promissory notes and other securi- ties, held by the defendant, are usurious and void ; notwithstanding which the defendant still holds the notes and securities, and refuse- to give them up, but declares his determination to enforce the pay- ment of the moneys for which the notes, &c., were given. That on the 31st of Octol)er, 1818, the Supreme Court, by an order, re- scinded the order for a feigned issue, and all proceedings thereon, and directed all further proceedings on the judgment against the ])laintiffs to be stayed, until the further order of the Court. That in January, 1819, the Supn^ue Court allowed the defendant io lake out execution on tlie judgment. ii.ii.l FA.\MN(i r. DIMIAM. 229 That till' appeal from tlif nnUr u> (li>solv(' tho injunction liad liccn dismissed lor waiil of prosecution, 'riic supplemental bill j)raye(l a similar injunction to tlie one orijrinally <:rMntc(|. \-c., ;in day brought to a hearing on the pleadings and proofs. /»*('_'///N and Wells for the j)lainliir. 7'. .1. I'Jmmct for the defendant. Tin: C'li.vN'cKi.Lou [Kkxt|. 1. The first and great point in this t a.-o is, wliotluT the charge of a commission of two and a half per Mt. uniformly made by the defendant, upon the advance or cn- 'isement of negotiable notes to and for the ]daintilT, wa.s usu- rious. - 2. The ne.xt, an«l the more endiarrassing point, is as to the nature and extent of the relief. If the defendant was endeavoring to enforce any of his securi- • s in this Court, and the present plaintilf had set up and made out the usury, by way of defense, the remedy would have been obvi- ous. The securities would have been declared void, and ordered to be delivered up and cancelled. But the defendant has not resorted to this Court. He has causi-d a judgment to be entered up at law, \ipon the warrant of attorney given by the i)laintitT; and the Su- preme Court have ultimately refused to afford any relief to thr plaintiff against that judgment, though that Court awarded a feigned issue, and had the usury in the bond upon which the judg- ment was entered, established by the verdict of a jury. The de- fendant has also proceeded to foreclose the mortgage, not by the aid of this Court, but by advertising under a power contained in the mortgage, and it is the })resent plaintiff who is comjielled to come here and ask for relief, which he cannot obtain elsewhere, against the judgment at law and other legal securities infected with usury, by means of the original transactions and responsibilities which they were intended to cover. The (luestion now is, uj)on what terms he can have relii'f ? The feigned issue, which was awarded by the Supreme Court, upon the judgnu'ut in thi.s ca.se, was granted while I had the honor to preside in that Court ; and that course was then understood to 1m> the jiractice of the Court, when a judgment entered by confes- sion was alleged to be affected with usury. And I shoidd have supposed, that if the usury had been found by the jury (as it was in that case, and ujion the evidence now before me), that the Court would have administered the same (Mpiitable relief that is usuallv ' Thf Htutcinrnt of facts fiiis hwn iililirrviatfil. ' Tli«» ilisiiission of tliis j)oiMt is omittiMl. Tfic It-ariUMl iliiuitoll.n rr.ulios t1u« conclusion that the charj). r)3(;, the same rule wa< followed in this Court, where a jiarty came to he relieved a^Min-t usury in a mortgaji;e. I have heen thus j)arti(uliir in showinjr the rule of equity on tlii- subject, because the ])laiiiliir has sou;,'lit l)y his hill to have all the securities taken by the defendant, and infected with usury, declared void, and ordered to be cancelled, without offerinf; to pay any- thing. His counsel have also contended, at the hearing, that thi' rule in equity, wbere the defendant either confesses the usury or it is established by testimony, is the same as it is when iisury i- set up as a defense to a denumd in law or ecpiity. All that I can do in this case, consistently with my view of the established doctrine of the Court, is to direct an account to be taken of the dealin-:- between the ])arties, and to hold the securities which the defendant has taken to be good only for the balance which may a])pear to lie due to the defendant, after deducting all usurious e.\ces< Im i"\ of his commissions and charges. The objei'tion that ])resses upon the subject is that the .-i.iiui- of \isury may be, in a great degree, eluded, by taking a judgnieiii bond, which precludes the deiitor from an opportunity of pleading the usury in a court of law; and if he can only be relieved ujion the ]irinciples of a Court of l'](piity. or by the summary powers of a Court of law, acting u|)on cipiitable j)rinciples, the usiirious cred- itor is sure to preserve his j)rinci|tal sum and the lawful int«'relead. they seem now to have abandoiunl the case to ecpiitable re- lief, and to choose to administer no otiier. It is the folly of ihe party to have precluded 1iim of »^()oils for sail' at auction, was unfoundod in point of fact. Ami it is flirt luT di'dari-d to !)•• the i'stal)lislu'd doctrine and j)rac- ticc of (lie Court, that tlu' plainliir who seeks the aid of the Court to set aside a juilgnient at law, or other legal security, on the ground of usury, cannot he entitled to relief, whether the usury be t'stahlished hy proof or admitted hy the answer, except upon the terms of i)ayin^^ the i»iiu(ipal and interest lawfully due thereon, after deducting every usurious excess; and that the judgement and ili«' mort^'a III. 1S(! fl.m;41). For llio nilo a|>i)lip.l in niHos wlipie tlio tiiort this court concurrent jurisdiction with courts of law in every case sKr. II. J WILLIAMS /•. I I 1/111(111. V.5/ of a usurious contract ; l)Ut merely to give to thi.s court tlu- j)»»wer to exercise its jurisdiction in those cases where it was necessary to ■lid the defense of usury; or to remove itsnriotts sciurilica whirh were a cloud iiiion llir romphiinnnt's title to real property, or which might be used ;it hiw to his injury in such a manner that lie could not interpose a le<,'al (lef(>nse to a suit on them in a court of law. Here the note is ucijoliabU', so that it may he sued in the name of a lliird person; and if the bill had contained the alIe;:;ition that tin- usury could only he proved by the oath of the defendant, it might possibly have presented a case for the interference of this court." Conceding th.it this relaxation of the stringent and imperative language of the statute is reasonable, no constniclion of the statute has gone further. Accordingly, bills by borrowers to remove usurious ."Securities, which are a cloud upon the comi)lainant's title to real property, have uniformly been entertained. (See Coh v. Saviigc, 10 Paige, .'(Hli, (piestioned, without impeaching the general doctrine, in Post V. Bank- of Utica, 7 Hill, 35)1 ; Peters v. Mortimer, 4 Edw. Ch. 27!); Pearsall v. KingsIaiuJ, 3 id. 195; Dry-Dock Companij v. American Life Insurance and Trust Companij, 3 Comst. 3(51 ; Schermerhorn V. TaJmnn. 11 X. Y. 93; Manice v. Dni-Dock Conij)ani/. 3 Edw. 1-13.) It is no answer to such a hill that the mortgagor has a good de- fen.'ie to a bill for the foreclosure of the mortgage. It is an api)ar- ent ineuiiibrance on the land. Its invalidity depends ui)on extrinsic facts. The doctrine of Cox v. Cliff, 2 X. Y. l-.'3, eited by the ap- pellant, that the complainant has a perfect legal defense against it (when a right under it is asserted), "written down in the title- deed," has no aj)plication to it ; and Ward v. Deirei/. Ki X. Y. 510, was decided on like grounds. The mortgage is an impediment t<> a sale of the land for its value. The mortgagor is not bound to wait until the mortgagee attempts a foreclosure, not only for these reasons, but because in the meantime it may become imi)ossible to prove his defense. If this l)e so, then, if the lands mortgaged wtn> situated in this State, the mortgage in (piestion was wholly void. and there is sullicient ground for invoking the interposition of the court to deer(>e that s\icli a mortgage be surrendered antl cancelled or discharged. Whether it should iu- so di.pt'al, is to be deemed l)oth legally iind e(|nitably due. will lie |)resently considered. Second, how. then, is the (pieslion alTected by the circumstance that the m. 8 Trice, 616). On what ground is the plaintiff in this case entitled to have his mortgage set aside without qualification or condition? ' The discussion of tliis point is omitted. 11.] uii.i.iAM-^ r. rn/iirciii, 239 Tlic notes wliicli lie liad -:ivtii to M'ciirc a u.-iiriou.-. d.ht aif v lam riled, lie eaniiot Im* |iir»seeute(l ii]ioii his iiiort^'a^'e ill aii\ form ill llii> Slate, heeaux" liv law il is void. H lie lia> need of luitlier e(|iiilal>k' interference. It i< hecause the nioriLra an ajiparent lien, a eloml niioii thi- title I'l his laiid.-^, and he should he relieved therefrom. Whv, then, if lie a.-ks further e(|uitahli' relief, and invokes tlifi iither interjiosition of a court <»f e(|uity therefor, should he not do .uity? Why should he not j)ay to the defendants what he in fact <-eive(l ? The answer, and the only an>wir which is or can he su<;<,'e>ted, 1^ that our statute declares (Laws ni 1S;U, c. i;?(», 5; 0, that wiienevi-r any horrower of money, floods or thin^^s in action, shall file a bill in chancery for ri-lief or di.-^covery. or hoth, a^^ainst any violation of the provisions of the title of the Statutes, coneernint; ihe interest of money, "or of iliis act, it shall not he necessary for Ijini to pay, or offer to i)ay. any interest or jtriiicijKiI on the sum or Ihiiiij liKini'd, nor shall any court of chancery re(|uire or compel the |tayment or de])Osit of llir ^irinciixil sunt or interest, or any portion thereof, as a condition (d" "granting relief, or conii)eIling or discover- ing to the horrower. in any case, usurious Joans forbidden by the said title or this act." This section of the act of ISIU was pas.-^ed to «-.\lend the i)revious title, so that it should embrace ca.^Jcs in which the court was applied to for di.scovery, as well as cases in which i<'Iief alone was sought, and to relieve him from paying any part of the princi|»al or interest in either case, and it should therefore Ik- read and construed in connectif)n with sui-li previous law, which i^ as follows ( 1 Kev. Stat., j). 772. ^ 8) : "Whenever any l)orrower of any money, goods or things in action, shall file a bill in chancery for a discovery of ihe money, goods or things in action taken or re- reii'cJ in violation of either of the foregoing provisions, it shall not Ih* necessary for iiim to j)ay, or offer to i)ay, any interest whatever 11 the sum or thing loaned, nor shall any court of e(|uity re<|uire ■ r compel the payment or deposit of the principal or anv |)art thereof, as a condition of gianting relief to the borrower in any ca.'JO fa ustirious loan, forliidden by this chapter." (See Livingston I/arris. :\ Paige. ."i^S ; same cas<^ on appeal. II Wend. :V2\: see III" history of this legi-lation in I'osl v. Hani,- of I'lica. 2 C'omst. •!!»!, rt se,).) What in the.-e statutes is the princi|)al >um nv interest which ilie liorrower shall not be re(|uired to pay? Is it not the "u-uriou-? loan" and the interest thereon? Is it not the money, goods or things in actiiui. taken or received in violation of the provision* of the »et ? M(><| clearly that, and only that. It doe«; not eonteni- jdate. it is true, the existence of any other equitable condition. 240 THE OBLIGATION SECURED, [CHAP. III. but it by no means requires that any other condition should be waived. The subject dealt with is a loan upon usury; it designs that there shall be no means, direct or indirect, in which the payment of such a loan, or any interest thereon, shall be compelled either by a court of law or equity. And relief against such payment accom- plishes the end, so far as this statute directs relief to be given. Hence the discovery spoken of, and authorized by the statute,, is a discovery of the money, etc., taken or received in violation of the statute, and not money which, not being so received, tlie borroM'er is bound both at law and equity to repay. And it is tlic principal or interest on the sum loaned, i. e., loaned in violation of the statute, the payment of which cannot be required as a condition of relief. It follows that where a contract or obligation is given for two or more separate and independent things or objects, having no connection with each other, and one of those objects is the security of a usurious debt, although the contract or obligation is altogether void for reasons above given, and no action at law or elsewhere could be maintained thereon, nevertheless, if the party comes into a court of equity to ask that it be surrendered, all that the statutes of usury have done affecting the complainant's right to relief, is to forbid that any payment on account of such debt shall be made a condition of relief. As to other conditions, the statute is silent, and the court is left to administer relief upon those principles which govern the subject generally. When, therefore, the plaintiff asks that a mortgage be cancelled as a cloud upon the title to his lands, and that a court of equity shall so direct, in virtue of its power and its disposition to enforce his equitable rights, the court may not require that he pay a usurious debt, or any part thereof, or any interest thereon, but it may require the performance of any other duty which is just to the adverse party, unembarrassed by the statutes in question. In equity, the mortgagor in such case stands, in reference to debts not usurious secured by the mortgage, in the same attitude as a com- plainant seeking to redeem. He must pay what at law and in equity he owes. Nor is this any departure from the doctrine already stated, that the mortgage, being void in part, because given to secure a usurious debt, is void altngether. Upon that doctrine, the plaintiff, if he see fit, may rely, and on that ground he may, if he can, defend himself and the title to his lands whenever and wherever assailed, but if he asks afifirmative action and interference from a court of equity to set aside the mort- gage and adjudge its surrender, he must do equity l)y paying hi.-: just debt, not impeached for usury. sw. M.l HAflfFT C. I{(»1,I,. 'M 1 The most that the cDurt Ix-low should havo dono, was to adjud^'c that so iiuuh of the aj)j)arfnt d('l)t as was secured l)y the lour notes dated in July, 1854, j)roved und adjudged (by the decree as mod- ified by the (leneral Term of the Supreme Court) to he usuriou-, was void; that the said notes he surrendered to he cancelled, and that the (U-feiidanls he enjoined a^'ain-t the prosecution of ;iny >ui! upon those four notes. The judgment should he iiioililiril to conform to these view- without costs to either party on the apj>eal, and the judgment ren- dered at the Sj)ecial Term, so far as it adjudged or decreed the -ur- render or discharge of the mortgage should he reversed, and so fjii- as it awarded costs to the plaintiff, should be further reversed and modified so that neither party recover costs of the other in this action. All the judges concurring. Judgment nffirmrd, iritJi modification. RAGUET V. ROLL. SUPRKMK CoiKT OF Oil 10. 1830. (T Ohio Hrp. lo I 1 -Jill.) This waf? an action of ejectment for a lot of land in the city of Cincinnati. On the trial, the ])laintill' gave in evidence two mort- gages executed by the defendant to him, for the same lot, one dated IGth October, 1820, the other the 2(»th October of the sanu' year; each to secure the payment of oOU dollars. The defendant, on hi- part, adduced evidence to show that these deeds of mortgage were given to secure the ])aynu'nt of 1000 dollars, in consideration of thi- ))laintifr's agreeing not to ])rosi'cute the son of the defendant for a theft, with which he had charged him. (JiMMKE, J. delivered the opinion of the court. This was an ejet tineiit on a mortgage executed by the defendant to the lessor of the ])laintiir. <<)nditioned for the ))ayiiu'nt of lixc hundred ilollars. 'j'he defense was, that although this was the con- sideration expressed iti the Ai'vA, yet, that the real consideration wa- an agreetnent on the part of the plaintiff not to prosecute the .-on of the defendant for a theft, and that the mortgage was given to secure the payment of one thousand dollars, as a reward for that ])urpos<'. In Hiiijurt v. Unit, ante. \>. '.*(>!•. which was a srlrr fii< i,i< on the .>^anie mortgage, it was lieUl that this defense might be .-et up for tlie pur]ios(^ of avoiding the j)avment of the monev : and r ;- 10 242 THE OBLIGATIOX SECURED. [CHAP. UI. now supposed that it will be equally effectual in bar of the action of ejectment. In the act under which the scire facias was instituted, it is provided that the defendant may jDlead any plea which would be good in avoidance of the land or money ; so that the principles decided in the former case do not necessarily furnish a governing rule for the determination of this. The distinction between an executed and executory contract, where the consideration is unlaw- ful, is a very plain one. In the former case, the Court will not annul; in the latter, they will not enforce. And this course, so totally opposite in the two cases, is intended to be subservient to the same end, the prevention of an immoral act. As long as the agree- ment continues executory, there is an incentive to the commission of the deed ; but when it is executed, no further motive of this kind exists, since the estate has already vested or the money actually been paid. It may bo supposed, however, that although a deed operates an actual transfer of the title to land, yet, if it is necessary to institute an action in order to recover possession, the Court will not enforce the right of recovery ; in other words, that the principle in pari delicto^ etc., comes in conflict with the other principle to which I have referred, and that it necessarily affords the governing rule of determination. "Where two apparently opposite principles have been established, the presumption is that they are both in- tended to have effect, and that the one shall not annul or neutralize the operation of the other. The rule in pari delicto, etc., then, will be found to be universally applicable to executory agreements only. Thus in Hawes v. Leader, Cro. Jac. 270, the intestate of the defend- ant granted by deed to the plaintiff all his goods ; the real purpose was to defraud creditors; the grantee brought an action to recover them, and obtained judgment. So in Starl-e's Ex. v. Littlepage, 4 Randolph, 308, which was an action of detinue to recover personal property transferred by a fraudulent bill of sale by the defendant to the plaintiff's intestate, the contract was enforced, and the plain- tiff recovered. The rule, then, does not apply when the policy of the law requires that a fraudulent or vicious conveyance should be enforced ; and such is declared to be the law by Coke, in his " Com- mentary on Littleton," and by Powell, in his " Treatise on Con- tracts." But there are exceptions to the rule in pari delicto, etc., even in its application to executory agreements. Watts v. BrooTcs, 3 Ves. G12, is an instance of this, where the plaintiff and defendant, having entered into a contract to be jointly concerned in ship insur- ances, in violation of the Stat. 6 G. 1st, although the Court would not execute the contract, it Avould not exclude the result of it in 'de- creeing a general account. And in Osborne v. Williams, 18 \'es. 379, the exception was pushed still farther; it was held that the rule, " in pari delicto melior est conditio possidentis," " preventing k.c. II.] icA(;ri:r /■. koi.i,. 213 .-nil,** is not universal; and a direct deeree was made in favor of the plaint ilV, althotifjh the agreement was a fraud on the post- •licc. If till- (U'cd ill this in-taiuc were an absolute eonvevanee, there ■ iild he no doubt, tlifii. of the right of the plaintilF to recover. I lu' real dilliculty arises out of the double character of the instru- Micnt, which is evidence of a del»t hereafter to be paid, and at the lilt' time, o])erates an actual Iransfi'r cf the land to the mortgagee. Although a strong disposition existed once to treat a mortgage as a mere ehose in action, and although individual judge.s were heard to declare that the money was the jirincijial. and the hind only the incident, and that whatever would carry the money, would convey the land; yet such is not now sujiposed to be the law. .\ mortgage i- in reality a conditional fee, which is as large an estate as a fee iiiple, though it may not be so durable .\nd the case comes then within the princijile that when a conveyance has actually been I'xecuted on an unlawful coii-idcration, the Court will not merely not annul it, they will even ])ermit it to lie enforced. The cases put by elementary writers are all of them conveyances on condition. Thus, if a feofTment be madi' to one man. on condition that he shall kill another, it is said to be good and \inavoidabh'. But in the ca>e of a mortgage, it may be said that there are two conditions, ■:>■ to be performed by the grantor, the other by the grantee; the nMiiH'r is to pay the one thousand dollars, the latter is to suppress 41 criminal i)rosecution. This is the apjiarent. but it is not the real nature of the transaction; and it is in consequence of this false ap- pi'arance, that the (piestion seems to be surrounded with an un- usual degree of difficulty. A mortgage is in reality an actual pay- ment of the debt, as well as an actual transfer of the land; al- though, in conse(iuence of the land being sometimes greater in value than the debt, (in ((juih/ was sui)])osed to arise in favor of the mortgagor, which was called his right of redemption, and which is now extended to every ea.se of a conveyance iiy wav of mortiiaire. It IS a mere e(|uity, then, an (.'([uity which is not recognized bv a court of law, but only by a court of chancery; an ecpiity which, proceeding on the ground that the debt has already been i)aid in one way, enables the grantor, on certain terms, to pay it in another. There is, then, no real dilliculty in the ca.se, however intricate the questions preseiite Wood and Aljbot, at the February Icnn of Uk- Court of C'ouiinon Pleas of Ilaniilloii Couiily, 1833, recovered a jud',Miient aj,'aiii>l lia<,MU-t, wliiili was levied iipon the interest of |{a;,niet in the inort^'a^cd premises on the tilth «d" April, ISlO. The defendants, lirown, Chase and Company, recovered a like j.nl^'ment a^Minst Ra^au't at the August term of the same Court, 1833. and took out exeeution, which was levied on Ww same interest, oil the tiTth (d" Ajiril, IS In. In 18;}."), Roll executed a niorlga^^e on liie same iircmises to thr «ase are not now to the Court, at le«st those whicli may he con- sidered as the leading ones. They have been repeatedly presented to us, have been as often passed ujion, but the controversy does not 4i«! yet seem to have been clo.seidciiitioii of the jtarlicular (jues- tions arising in this case, it nuiy be wi-ll to ascertain what has been the jirevious action of the Court. Previous t»t the December term. 1831. Haguet commenced a suit against Roll, upon the notes se- cured by the mortgage, referred to in the statement of the ease. This suit was commenced in the Court of Common Pleas of Hamil- ton County. The defendant ])leaded in bar, that before and at the lime of the commencement, Charles Uoll, the son of the defendant, was susj)ected and accused by Kaguet of having stolen his goods and chattels in Cincinnati; that Kaguet was about to institute a criminal ])rosecution against Charles, for the theft, and that tlic consideration for wliich the note was given, was a ])romise or en- gagement on the part of Kaguet that he would refrain and desist from instituting such criminal prosciution. To this ])lea tiiere was a general demurrer. The Court of Common Pleas sustained the demurrer and rendered a judgment ag;iinst poll for the amount of the notes. Po reverse this judgment, a writ of error was sued out, and the e came on for hearing at the aforesaid December term of this iirt, 1831. ]^\ the decision of the Court, the judgnu>nt of the I ourt of Common Pleas was reversed, upon the principK' that whenever an agrcenu'ut ap|)ears to be illegal, immoral, or against public policy, a court of justice lcave> I he parties as it finds them. If the agreement be executed, tin- Court will not rescind it; if •<»xecutory, tlu> Court will not aid in its execution. This case is reported at length, .') Ohio Pep. 100. Hague! then commenced :i suit, by scirr fiii-i(t>:. upon the mart- 246 THE OBLIGATION SECURED. [cilAl-. IIU gage, under the law llien in force, to enforce payment by the sale of the mortgaged premises. A plea substantially the same as that interposed in the action upon the notes, was tiled ; and, upon trial, the Jury found the facts as stated in the plea. A motion was made for a new trial, which the Court overruled, sustaining the decision in the former case (7 Ohio Rep. TG, 1). Raguet then commenced an action of ejectment upon the mort- gage, and this case came before this Court at the December term, 1836. Roll attempted to set up the same defense as in the former cases, but it was not allowed hy the Court ; the Court holding that a mortgage was not an executory, but an executed contract; and that, as the Court would not aid in carrying into effect a contract of the former character, so neither would it aid in avoiding or re- scinding a contract of the latter character (7 Ohio Rep. 70, p. 2). What then is the situation, at this time, of the original parties to this contract ? The fee of the land is vested in Raguet or those claiming under him; and, by execution upon the judgment in eject- ment, he may at any moment be put into the possession. This judgment cannot be enjoined, because, by ordering an injunction, the Court would be doing, indirectly, what it has refused to di> directly. It would in effect amount to the recision by a judicial tribunal of an executed contract, the consideration of which was against public policy, and which would be contrary to the opinion of the Court, as expressed in the case already cited from -1 Ohio Reports. Now what is the case before the Court ? The interest of Roll in the lot of ground, was transferred to the complainant by judicial sale in 1839. He has in his hands about fifteen hundred dollars, which belongs to Roll, unless the same is necessary to satisfy prior incumbrances. The complainant prays the Court, in the event t};t> mortgage of Raguet is held to be an incumbrance upon the land. to allow him to redeem ; and he prays further that the funds now in his hands may be applied to that purpose. The Court have already decided, not only that the mortgage is an incumbrance, but have sustained an action of ejectment in favor of the mortgagee, for the recovery of the possession of the mort- gaged premises; and, as already remarked, the mortgagee may, at any moment, through the instrumentality of the proper writ of ex- ecution, acquire the i)osscssion. The legal title is vested in the mort- gagee ; but the deed under which he claims, and l)y virtue of which the title is vested in him, is subject to a condition that the same shall be void, upon the payment of a certain sum of money by the mortgagor. Now there is nothing in this condition requiring of the mortgagor to perform an impossible, immoral, or illegal act. If such were the fact, the condition would be void and the SKC. II.J fOWLKS r. KAlilKT. '-i 1 '' (Iwd absoluU'. iiul it is not .so. It i.s a .simpk- fonditinn f..r thr l)aynient of money. Hilt it may Ik' said that the ori^'inal {onsidiTation for the proiiiisi- to pay this money was an ilk'^^d considi-ration. lit- it so. Still the jJiTson to whom the promise was made, cannot he jiermitted to ^.et tliis np to destroy the effect of a condition inserted in the deed, executed to secure (he performance of that promise. When the ni()rt<:a;.,M't' ^vas proseeutine honest in the complainant to pay it ; and we think he has a right to do it, and iherehy redeem the land from the effect of the mort- But, in this case, the mortgagee docs not object to the redemp- tion. The objection comes, so far as there is any, from the mort- gagor himself. He claims to be discharged from the ))erformance of the condition, and still to retain the land. He seeks to induce this Court to do, indirectly, what it would not do directly. In this aspect of the case, it is nothing more nor less than an attempt to obtain an injunction against the judgment in ejectment, 'i'liis cannot be done. The mortgagor has conveyed this land by a deed duly executed, subject nevertheless to a condition. If he would retain the land, he must perform that condition. But it is insisted by the counsel of Roll, that, admitting the right of the comj)lainant to redi'cm, still, that the surplus money in his hands caniu)t be apj)lied to this object, because, as they say. he purchased the land subject to the mortgage of Kaguet. The fact apjiears to be this: in the decree in the case of Cowles against Uoll aiul others, under which the com])lainant purchased, the Court, although they ordered a sale, did not undertake to decide the \alidity of Kaguet's mortgage. Of course that sale must be subject to this incumbrance. But still the land could not be, and was not -'•Id for afly less sum. The law re(|uired that it should be sold for at least two-thirds of the apj)rais('d value. It was so sold. The land itself for its fidl value; not the land ri'duced in j)rice in eonsequence of Kaguet's mortgage. I'nder the.se cireumstanees, it -e<'ms e(|uital)le to the Court that this surj)lus should lie a))plieil irst to remove the iiieunibranee of the mortgage now in contro- versy. If anything remains, it must be jiaid to Roll. The ne.xt (piestion is. as to which of the defentlants is «Mititled 048 THE OBLIGATIOX SECURED. [CIIAP. III. to tlK- money to be paid for the redemption of this mortgage. Mc- Micken claims as the assignee of Raguet, by deed executed in 1832; Wood and Abbott, and Brown, Chase & Co., as judgment creditors of Eaguet, under judgments rendered in 1833, and levied on his interest in the mortgage premises in 1840. From a careful examination of the deed of assignment, we are ■clearly of opinion that the interest of Raguet, by that deed, was vested in McMicken ; and such being the opinion of the Court, it is unnecessary to enquire as to the claims of the other defendants. McQUADE V. ROSECRANS. Supreme Court of Ohio, 1881. (3G Oh. St. 443.) Error to the District Court of Scioto Coimty. The action below was brought by Sylvester II. Rosecrans against Elizabeth McQuado and John McQuade, administrator de honii< -non of Hugh Reiley, to foreclose two mortgages executed by said Reiley and his wife Elizabeth, now the plaintiff Elizabeth Mc- <,)uade, to secure the payment of certain promissory notes, amount- ing in the aggregate to $1600, executed by Hugh Reiley and de- li\^ered to Emanuel Thinpoint, the defendant's testator, in the years 1857 and 1858. Said Elizabeth was sole heir of the said Ilugh Reiley. The answer averred, among other things, that at the time said Hugh Reiley executed the said notes and mortgages, he was in embarrassed circumstances, and involved in debt beyond his means to pay, without resort to the real estate mortgaged, and that said mortgages were executed by said Reiley and received by said Thinpoint in double the amount actually loaned, for the purpose of placing the property mortgaged beyond the reach of the creditors ot Reiley. The reply admitted that the consideration of said notes secured by said mortgages to the amount of $800 was never paid to said Reiley by said Thinpoint, but was a trust fund created by said Reiley in favor of said Elizabeth, who after the death of said Hugh Reiley and before said suit was commenced, intermarried with John McQuade. The reply denied that said conveyances were made with intent to defraud the creditors of said Hugh Reiley. On the trial in the district court, to which the cause had been ap- ]i('aled. the plaintiffs in error called as a witness Cornelius ^McCoy. M-ho stated that he was acquainted with Hugh Reiley in his life- time, the former husband of the said Elizabeth ^[cQuade, and conn- KKf. 11.1 M' t/i \iii: r. ijosiKiiANs. 249 I lor (lc|'cii(liiiit> tlici-ciii itruii ua> not |>crniitti'(l i answer said (jiR'>tion. Coun.sol for (U-fciuhmts tlicii propox'd and olVcicd lo jjiovc \i\ lid witJK's^s, and otht'r wiliu'sst's, that at tht' tinu' of the execution of said notes and in()rt^aetent ; that the contract, as between the said -Hmanuel Thinpoiut and Hugh Kciley must be regarded as executed, and that the de- fendant, J''li/.abeth IJeiley, was not in a position to raise the cjues- lion of fraud upon the creditors of the said Hugh Reiley, and there- fore excluded the tc>stimony offered. Judgment having been given for the plaint itT below, the exclusion of said t<'stimony is here as- .*:igned as error. IJoYNTON, ('. .1. W'c think the court erred in excluding the evi- dence offered to show tliat the object of the mortgagor in giving the mortgages sued on to secure double the amrtgages void. If any distinct note that either mortgage was given in ]>art to secure, was not tainted with the fraudulent pur|H>sc> to defraud the nuiker's creditors, no doubt eecemb(T Term, 18(5.5, in manuscrij)t, that an agreement to credit a payment in Confederate' Treasury notes, for which Mr. Wun/. had given his receipt, and on (he trial sought to have credi(ed on the note, was no payment; that Confederate Treasury notes were issued for an unlawful purpose, and in violation of (he laws of tlie State and Consti(u(ion of (he rni(ed S(a(es, and (ha( all contrac(s founded upon (hem were illegal, and could not i)e enfon-ed through (he Courts, in (he case of ('riiid at (he Loan Ollice of Chari(on. Missouri, pay- al>le to the State of Mi.>is()uri. under the .\ct of (he L<>gisla(ure establishing Loan Ollices. was void ( I I'e(ers, 110). the .Vet being in conllicf Willi 111,. Constitulion of the United States. 252 THE OBLTGATIOX SECURED. [CHAP. III. In the case under consideration, the notes were issued by an un- lawful confederation of States, whose declared purpose was to over- throw the Constitution. The enforcement of all such contracts is against public policy. The party seeking the aid of the Court will be repelled. The defendant, not out of any favor to him, but be- cause he is such, can allege and show the illegality of the contract. That being made apparent, the legal consequences follow. There is no error in the decree of the Chancellor, and the same is affirmed.^ McLAUGHLIX v. COSGEOVE. Supreme Judicial Court op Massachusetts, 1868. {99 Mass. 4.) Writ of entry by the heir of a mortgagor of land against the mortgagee in possession after foreclosure. In the Superior Court, on agreed facts which are stated in the opinion, Eeed, J. directed a verdict for the tenant, and reported the case. J. C Kimball for the demandant. T. H. Sweetscr (G. Stevens with him) for the tenant. Chapman, J. The demandant admits that her ancestor, Daniel McLaughlin, gave the tenant two mortgages of the demanded premises; one dated April 25, 1855, and the other dated February 12, 1858; that the tenant entered for foreclosure on the Gth of March. 1SG3; and that the foreclosure was completed prior to the commencement of this action. But it appears that these mort- gages were made to secure the payment of notes which were given in payment for intoxicating liquors illegally sold by the tenant to the mortgagor. By the statute then existing, these notes Avere void ; and it is admitted that, if tlie mortgage had not been foreclosed, this action could not be maintained. For, as a security for a debt made illegal by statute, the mortgage could not be enforced against the demandant, who is the heir of the mortgagor. It is necessar}', then, to consider the effect of the foreclosure. A deed of mortgage conveys to the mortgagee the legal title to the land, subject to a condition. If the condition be performed ac- cording to its terms, the title of the mortgagee is thereby defeated. If not performed at the day, the legal estate remains in the mort- gagee, and an equitable riglit to redeem by payment at a later day is all that remains in the mortgagor, unless he can show that the 'Accord, Drexler v. TyrreU, 15 Nev. 114 (ISSO) : Peed v. MvKer, 42 I a. 089 (1870). Ik .-.i:<-. 11.) ATWool) r. II-^K. 2">3 (on.-idi'iiition \va> illc^'al, in wliuli lax- lie may defeat the iii; (11 ; Wahiii v. Kcrhij, nulr. 1 ). But the statute does not extend to payments made in real estate. The demandant has lost her claim to the land hy not hringing her actiou till after the mortgage wa< foreclosed.' Judgment for (lie tenant on the vcrdicl. ATWOOD V. FISK. Supreme Judici.vl Coi-kt of M.vssaciiusetts, 1869. (101 Mass. MW.) Two hills in equity to compel the surrender or cancellation of two overdue promissory notes, dated in hStjl, and signed hy the jilaintifFs respectively, with Jose))h Atwood, each note for the pay- ment hy the promisors, jointly and severally, to the order of the defendants, of $i;{l(), in equal semi-annual instalments of ^CT, with interest; and of two mortgages of real estate, containing the \isual j)ower of sale clauses, given hy the plaint ilTs. respectively, to the defendants, to secure the ])ayment of the notes. The ground on which the hills were sought to he maintaiiK'd was, that th'- consideration of the notes and mortgages was a jjromisi' of tlie d<- fendants to the plaintifTs, to forhear to prosirute Joseph .\twood. who was a hookkeeper in the employ of the d(>fendants. for em- l)ezzling money of his emj)loyers ; that therefore the instrument- W(>re null and void ; hut that, so long as they remained (Mitstand- ing, they constituted a chmd on the title of the piaintilTs in tlie real estate, and might he used to the injury of the plaintifTs at soni^' future time when evidence of the illegality of their eonsid«'rati«'n should he lost. The answers deniecl the piaintilTs' nllegation< con- ^Arconl. Sninpl,- v. Itanirs, H How. if. S. Slip. ((.» 70 ilS.'i^t. 254 THE OBLIGATION PEC FRED. [CIIAP. III. eerning the consideration for the instruments, and alleged a lawful consideration therefor. Issue was Joined on the answers, and the cases were reserved by Colt, J., on the bills, answers and evidence, for the determination of the full Court. Ames, J. A note, given in consideration of a composition of felony, or of a promise not to prosecute for a crime of a lower degree than a felony, is illegal, and cannot be enforced by the prom- isee against the promisor. And it makes no difference that, of various elements making up the entire consideration, a part, and even the larger part, was legal and valid. If part of the considera- tion was illegal, the effect upon the note would be the same as if the whole were illegal. Tlie plaintiffs insist that the notes referred to in their bills of complaint fall within this rule of law. But it has also long been settled that the law will not aid cither party to an illegal contract to enforce it against the other, neither will it relieve a party to such a contract who has actually fulfilled it, and who seeks to reclaim his money or whatever article of prop- erty he may have applied to such a purpose. The meaning of the familiar maxim, in pari delicto potior est conditio defendentis, is simply that the law leaves the parties exactly where they stand ; not that it prefers the defendant to the plaintiff, but that it will not recognize a right of action, founded on the illegal contract, in favor of either party against the other. They must settle their own questions in such cases without the aid of the courts. In the somewhat quaint language of Lord Chief Justice Wilmot in Collins V. Blantern, 2 Wils. 350, " all writers upon our law agree in this ; no polluted hand shall touch the pure fountains of justice. Who- ever is a party to an unlawful contract, if he hath once paid the money stipulated to be paid in pursuance thereof, he shall not have the help of a court to fetch it back again ; you shall not have a right of action when you come into a court of justice in this unclean manner to recover it back. Prociil, o procul este, profani!" In this respect the rule in equity is the same as at law. Equity fol- lows the rule of the law, and will not interfere for the benefit of one such party against a particeps crimtnis. The suppression of illegal contracts is far more likely in general to be accomplished, by leaving the parties without remedy against each other. And so the modern doctrine is estal)lislied, that relief is not granted where ])oth parties are truly in jxtri delicto CI Story Eq. § 298; Claridge v. JToare, 14 Yes. 59). There is no reason why e(|uity should !)e able to grant relief upon ])rincii)1es different from those recognized in courts of law. If the plaintiffs were occu])ying the position of defendants, and if tlu; oases before us were actions l)rouglit to recover tlie amount of the notes in question. Ihey could avail themselves of the maxim ,Kr. II.] ATUOOI) V. riSK. 255 :il)<)V(' referred to l)y way of defense. Hut they do not .stand in that position. 'I'hey are tlieni.«ans to enforce its payment or to ohtain security. The rule of the common law, that all civil remedies in favor of a party inj\ired hy a felony are either merged in the higher ofTense against Muhlic justice, or suspended until after the termination of a crim- i>al prosecution against the offender, is no part of the law of Massachusetts (Tiosfon tf- Worrcsfrr Railroad Co. v. Dana. 1 dray. "■?). The fact that the di'ht grew out of a hreach of trust, and had its origin in fraud and criminality, is not a reason, as a mattiT i>f 'aw, f(»r hestowing ui)on the dehtor any peculiar privileges or ex- Miptifuis. If tl«> su|)|)ression of a criminal prosecution was one of the (•onrson. Some of tin- in- stalments were overilue and unpaid, and for that reason n«^ indor-^ec ■ ould so hold them as to de|»rive the plaintiffs of their laintifTs to see 256 THE OBLIGATION SECURED. [CHAP. III. that any purchaser at such sale should bo fully notitied (if notice should be thought necessary) of all grounds of objection to the notes and mortgages, and of their intention to contest any title which such purchaser shall venture to buy at the sale. It is well settled that all defenses (except the statute of limitations) that can be made against the notes, can also be made against the mort- gages (Vintoji V. King, 4 Allen, 562). Whether the evidence reported can be said to prove the alleged illegality in the contract is a question which we have not found it necessary to decide, or even to consider. In any view that can be taken of that question, the plaintiffs are not in a position to claim the equitable relief prayed for; and therefore, in each case, the Bill is dismissed, with costs for the defendants.^ SHAW V. CARPENTER. Supreme Court of Vermont. [In Chancery.] 1881. (54 Vt. 155.) Petition to foreclose a mortgage. Heard on petition, answer, general replication, and the report of a special master, at the Sep- tember term, 1880, Chittenden County, Taft, Chancellor. The court ordered, pro forma, that a decree of foreclosure be rendered against the defendants, for $51.71." The opinion of the court was delivered by RoYCE, Ch. J. This cause was heard upon the report of a special master appointed to ascertain and report the amount due on the mortgage described in the petition. It appears from the report that on the 24th day of July, 1872, one Benjamin D. Peterson, who was then engaged in the business of bottling cider, soda, and mineral waters, at the city of Burlington, sold the good will of the business and all his stock — tools, bottles, machinery, and fixtures, then in use by him in said business, as specified in certain inventories, which were signed by the said Peter- son, to the defendant Carpenter. Upon said inventories the various articles sold were separately carried out, with a separate price for each item. The footings of the separate pages were brought forward upon the last page, where the aggregate correctly appeared of the sum $3221.81. To this ^Accord, Pattersoti v. Donner, 48 Cal. 369 (1874) ; Albcrtson v. Lough- lin, 173 Pa. St. 529 (189G). * The report of the master is omitted. HKf. 11.] SIIAW C. CAKrKNTKU. '2'>7 uiiiuunt an item of $110 was aiKlcd, wliitli was iiiLlinlr. On the 2Sth day of October, 1872, and before the maturity of any -•1 said notes, Peterson sold them and the mortgage for an adequate consideration to the petitioner, the petitioner then believing the notes to be based on a valid and legal consideration, and not su.s- pecting that any illegal element entered into the consideration. Of the property sold by Peterson to Carpenter, and which formed a i)art of tiie consideration of said notes, the master has found there Were the following goods, in kind and amount : Lager beer, $'33.94 ; cider, $122 ; ale, $209. ;?8 ; porter, $(1.72 ; alcohol, $2.25. The defendant Carpenter claims that if any ])art of the consid- eration for the notes was illegal, they are void; that no recovery could be had upon them : and that a court of e([uity cannot grant any relief to the petitioner. The first in(iuiry is, was the sale of any of the articles above enu- merated prohil)ited by law? It is found that the lager beer was not an into.xicating drink, and its sale was not then prohibited, the act forbidding its sale having been passed in 1878. The sale of the cider was not illegal, unless the place where it was sold was a place of ))ublie resort.' The sale of tlie ale, porter, and alcohol being illegal, the consid- eration for the notes, as far as the value of those articles went to make up the amount for which the notes were given, was an illegal consideration. The important question in the case is, as to the effect that such partial illegality of consideration is to have upon the rights of the parties. litihinson v. Bland. ill of exchange; the second, for money lent and advancvd ; and the third, for nionrv hail ami receiv(>(l. A verdict was found for thr plaintiff for l'(i72. tlic amo'int of the hill of exchange. It wa>: found 'Tin- tli.siMi-Hiuii i(f iliis <|iicsti()n i-^ nmittfil. tlio «oiu'lusion rcaclu-d btiiiif that lli(> .snle of (lie rider wax not illegal. 17 '2o8 THE OBLIGATIOX SECURED. [CIIAP. III. lliat the consideration for the bill of exchange was £300, lent by the })laintiff to Sir John Bland at the time and place of play; and £372 were lost at the same time and place by Sir John Bland to the plaintiff at play. It was held that the £372, part of the considera- tion for the bill, being for money lost at play, could not be recov- t'red, all such securities being void under the statute; and that a ])art of the consideration for the bill being illegal, no recovery could he had under the first count ; that the plaintiff was entitled to the £300 lent, and was allowed to recover it, under the count for inoney lent and advanced. Judge Denison says there is a distinction between the contract and security. If part of the contract arises upon a good considera- tion, and part of it upon a bad one, it is divisible. But it is other- Avise as to the security. That, being entire, is bad for the whole. Judge Wilmot : " As to contracts being good and the security void, — the contracts may certainly be good, though the security be void." The same principle as to such a security being void was enun- ciated in Scott V. Gilmore, 3 Taunt. 226. See also Yundt v. Roh- crts, 5 Serg. and Kawle, 139; Phillips v. Cocl-aync, 3 Campbell, 119; Edgell v. Stanford, 6 Yt. 551. These two first cases have oftenest been quoted as authority for the rule that has generally prevailed in the English and American courts, that where a part of the consideration for a security is illegal the whole security is void. The cases referred to by counsel for defendant were all cases where attempts were made to enforce such securities, and the cases of Hineshurgh v. Sumner, 9 Yt. 23, and Woodruff v. Himnan, 11 Yt. 592, were of the same kind. In none of these cases was the court called upon to decide what the effect of holding the security void would be upon the original contract, where that was bad, in part, upon a good and legal consideration. In Carlton v. TfooJ.s, 28 N. H. 290, the question was presented. The declaration, in that case, contained counts upon several promis- sory notes, and a count for goods sold and delivered. The plaintiff agreed to sell the defendant a stock of goods and groceries at cost and freight. A schedule of the articles was made, and the cost of each. The sum total of the cost of all the articles was divided into several parts, and the notes declared upon were given for the same. Among the articles so sold were some spirituous liquors illegally sold, the price of which formed a part of the consideration for the notes. A verdict was taken for the plaintiff, for the cost of the goods remaining unpaid, except the spirituous liquors; and judgment was to 1)0 rendered on the verdict, or it was to be set aside, as the opinion of the court should l)e. It was held that the counts upon the notes were not maintainable; that the consideration of the sev- bk« . II.] SHAW r. cAiU'KN ri:u. 259 <'ial notes was, in part, illegal, antl, tlit-irfun-, no recovery could bo liail upon them; that the legal ell'eet ol" the contract was, that each article was to he valucil separately, and that the sale and delivery of each article formed the consideration for the promise to pay for it; that the contract was di^isihle; and, while the sej)arate value of the articles sold could he ascertained, as fixed hy the parties, the princi|de is not readily seen, which would defeat the right of recov- ery for the stii)ulatcd price of that portion, the sale of which was legal; and judgment was rendered on the verdict. The same was substantially held in Wnlkrr v. Lnvrll, in the same volume, 138. The law does not favor any party in evading payment, while he re- tains the consideration. The notes which were given for the good will and ])roperty sold to Carpenter were all infected with illegality, and the defense of illegality attached to all of them ; so that, if what is now claimed as a defense can be allowed, if proceedings had been instituted to com- p«'l i»ayment before anything had been paid, the entire claim could have been defeated, notwithstanding Carpenter had received, and was in the enjoyment of the property, uj)on th(> ground that the por- tion of the property above enumerated was illegally sold. It has somewhere been said, that the declaring such a security void was to be regarded as a punishment of the party for having made an ille- gal contract. The loss of the i)roperty illegally sold would generally Im' considered a sullicient jjunishment, certainly, when the sale was only tnahiin prohibit urn, and no wrongful intention appears. But a court of equity could never hold that one might be deprived of his entire fortune, because, in the consideration agreed to be paid for it, there was intermingled some article the sale of which was pro- hibited. We regard the case of Carlton v. Woods, supra, as sound law and well sustained by authority. Its application works out just and e;old to him, except the ale, porter, and alcohol. The mortgage would be treated as .security for the debt due from Carpenter, on account of the property legally sold to him. Peterson might have foreclosed the mortgage, and thus have coni- {H'lled j)ayment of the debt. The petitioner, by his jmrchase of the notes and mortgage, ac- quired all the rights, legal and eipiitable, of Peterson. He could maintain a suit at law for his own benefit, in the nanu' of Peterson, or a petition in e(|uity. as assignee of the mortgage, to foreclose it. And in the disposition of such a petition it is the duty of a court of equity, which has been said to be the groat sanctuary of plain dealing and honesty, to compel the paynu^nt of that portion of 26U THE OBLIOATIOX SECURED. [c'li.\p. m. the debt that was secured by it, that was legally and fairly con- tracted. The decree of the Court of Chancery is reversed and cause re- manded, with mandate that a decree be entered for the petitioner for the amount due on the note for $800 described in the petition^ with interest after deducting therefrom the sums of $209.38, $6.72^ and $3.25, being for the ale, porter, and alcohol illegally sold, — as of the date of the note. If the amount due cannot be ascertained from the computations made by the master, it is to be ascertained in such manner as the court may direct. Dissenting opinion was delivered by Ross, J. I am unable to concur in the decision of the court in this case. On the facts found by the master, it may be question- able whether the sale of the cider was illegal, within the exact terms and language of the statute. However, when a man estab- lishes a business for the bottling and sale of cider and other fer- mented drinks in a city like Burlington, has a warehouse for stor- ing, manufacturing, bottling, and vending the same, and keeps an office, he so far makes the place of his business a place of public- resort for the sale of cider, although the vending is carried on by solicitation of orders at the houses and places of business of his cus- tomers, and the delivery of the bottled cider is at the latter places,, that in my opinion, it comes within the spirit and scope of the stat- ute, and without any forced construction, within its language. But I do not regard this point very material; and should not on this ground have placed my dissent upon record. A part of the consideration of the note being illegal, the note is void and no- action can be maintained thereon to enforce its collection. To the cases cited by the court, in the main opinion, may be added Cohh v. Cowdery et al., 40 Vt. 25; Bowcn v. Bucl\ 28 Vt. 308. In Colh V. Cowdery, supra, the distinction is taken between a consideration, in part void, and a consideration in part illegal. The note failing, what is there left for the mortgage to stand upon ? The mortgage is but an incident to the debt it secures. On the authorities cited by the court in support of its decision, as well as all the reasoning, partial illegality of consideration avoids all securities. The note was a security, or evidence of the debt, of a higher nature than the original contract. The latter was merged in the note. The note in suit, and all the notes secured by the mortgage, were tainted by illegal consideration entering into them. Each note being an entire contract of itself, no division of the legal from the illegal part of the consideration could be effected. Courts established for the en- forcement of law will not give aid or countenance to anything il- legal ; nor, where the illegal is commingled with the legal, will they aid in separating, or purging the former from the latter. Their sKc. II.] till AW c. ( ai!1'i;nti:k. t.*'il |»roi»(.T I'uiKiion is to ostablisli and ciifurct' tliu Ic^'ul and lo coiKlfimi and punish the illegal. Where a part, however small, of the consid- eration of an t-ntire contract is illegal, the whole contract is tainted, and eourts will not compel its performance. Collins v. lilaidcnt, 2 Wils. ;{41. is a leading case on this subject, in whieh the Lord Cliief Justicf Wilmot uses the (|uaint hut forcible, and often quoted language: " You shall not slliiulalc for iniiiuilij: all writers upon our law agree in this, no polluted hand shall touch the pure foun- tains of justice; whoever is a j)arty to an unlawful contract, if he iiath once paid the money stipulated to be paid in pursuance thereof, lie shall not have the help of a court to fetch it back again ; you shall not have a right of action when you come into a court of justice in this unclean manner to recover it back. Procul! procul cslc. profiini." The mortgage is an entire contract. Its consideration was the notes, the payment of which was therein secured ; every one of which was tainted with an illegal considera- tion in jiart. It was not given to secure the performance by Car- penter of Ids contract with Peterson, of July 2-i, IST*^, by which lie purchased his business and stock in trade, but was given solely to secure the payment of the notes which wvw executed in payment of that purchase. If the action were upon the notes, it is conceded that no recovery could l)e had ; becau.sc every one of them is tainted with illegal consideration. The illegal could not be separated from the legal portion of the consideration: and an enforcement of the collection of the notes would l)e the enforcement of an illegal con- tract. How does it ditTer when the mortgage, whicli is but an in- cident to the notes, is allowed to be foreclosed ? Is it not an enforce- ment of an illegal contract? To foreclo.se the mortgage for the legal part of the consideration, must not tlie illegal portion be ascertained and rejected; which the majority hold could not bo done, if the action were upon the notes? What is the fore- closure but an action ujjon the notes described in its con- dition? and to ascertain the legal part of the consideration of the mortgage must not the notes be treated as divi>;ible? I can isee no other means of separating the legal from the illegal part of its con- sideration. In Vinhtu V. Kiutj. 4 Allen. TjC*.?, Metealf, J., says: " In an action brought by a mortgagee against his mortgagor, on a mort- gage given to secure payment of a note, the defendant may slunv the same matters in defense (the Statute of Limitations «>xcepted. 19 Pick. W.\:y) whii h he might show in defen.se of an action on the note." I am not aware of any «'Xception to the rule thus stated, nor of any case to the contrary. I am not unaware that Mr. Jones in his work on mortgages, § (»20. says: " The mortgage may be upheld for sudi part of the consideration as was frrr from thi' in'ini of ilh'- tjnliiy when the consideration is made up of several distinct tran.^ao- 262 THE OBLIGATIOX SECURED. [CHAI>. lit tionsj some of which are legal, and others are not, and the one can be separated with certainty from the other." The cases he cites support this doctrine: Feldman v. Gamhel. 26 N. J. Eq. 494; Williams v. Fitzhugh, 37 N. Y. 444; McCraney v. Alden, 46 Barb. (N. Y.) 272; Cooh v. Barms, 36 N. Y. 520. It may well be admitted that a mortgage given to secure the pay- ment of several notes, or debts, a part of which arose out of wholly legal transactions, and a part of which were tainted with illegalitv, could be enforced to compel the payment of the former alone. In such a case the orator would not have to show in evidence, nor rely upon anything illegal, in maintaining his suit. In the language of Gibbs, Ch. J., in Simpson v. BIoss, 7 Taunt. 246, in speaking of Faikney v. Reynous, 4 Burr. 2069, and Petrie v. Hannay, 3 Term Eep. 418 : " The ground of their decision was, that the plaintiffs required no aid from the illegal transaction to establish their case." This, as I understand, is the test most frequently applied in this class of cases. If the plaintiff can show a good cause of action, in- dependent of, and without bringing into the case anything illegal, either by way of proof or otherwise, he may maintain his action therefor. If, on the other hand, he derives any aid from the illegal part of the transaction, by being obliged to show it to make out the legal part, or otherwise, he must fail. The court will not allow the unclean thing within the temple of justice. In the foreclosure of his mortgage the orator was bound to show in proof his notes, every one of which was tainted with illegality ; and for that reason the notes all fall, and the mortgage given to secure them alone, falls with them. This point my brethren have not deemed worthy of their attention, nor alluded to. But if I am in error on this point, I can- not concur with my associates in holding that the original con- tract is divisible. It is in writing, and amenable to the rules of evidence which forbid varying, lessening or enlarging such contracts by parol testimony. It is in the following language : " In consid- eration of three thousand three hundred thirty-seven dollars and eighty-one cents received of John W. Carpenter, I, Benjamin D. Peterson do hereby sell, transfer and assign unto said Carpenter the good will of a certain business for bottling cider, soda and mineral waters, now carried on by me in Burlington, together with all the stock, tools, bottles, machinery and fixtures, now in use in said business, as specified in certain inventories hereto attached, and I agree to deliver to said Carpenter the gross amount of property de- scribed in said inventories, which said inventories are signed with my name." The inventories are referred to and made a part of the contract to show what personal prop(>rty was to pass witli the good Avill of the business. They are not referred to for the price of the several articles included. The master has found that the aggrc- MtC. II.] SHAW (. t AKI'KNTEK. 203 pitc of tlio prices thero rarricd out, did not amount to tlic sum iiaimtl in the contract, and for wliidi tlu' notes were givi-n, into $11(1. IIciicc, if the prices carried out on the inventories are to he ri'gardeil as a ])arl of the contract, they do not show that the articles were severally sold for the price set against them, l)Ut the reverse. The contract is to he construed as a whole. Thus con- stnied, it is an entire, indivisil)le contract. It was a sale of a husiness, as a ^'oin<,' coiicenu iiu hitling the good will, stock in trade, machiiu'ry and lixturcs. It is not to he inferred, or in- tended, that Peterson would have sold the good will of the busi- ness, without selling the stoik in trade, machinery and fixtures, nor that Carpenter would have purchased the latter without the former. It was not the sale of the good will as one separate transaction, of each hottle, barrel, and fixture as another separate transaction, and so divisible. But one consideration is named or paid; and but one thing is sold — the business, including the stock, (Src, and goo*! will, as a going concern. As said by Devens, J., in Vounij «.l* Conant Mfg. Co. v. ]V(ik-('fu'hI, 121 Mass. !)1 : " If but one consideration is )»aid for all the articles sold, so that it is not possible to determine the amount of consideration ])aid for each, the contract is entire (Miiirr V. Jinidlri/. "22 Pick. 4.57). So if the purcha.rkv is to be ascertaine(l l)y the in:mber of pounds in the lot, or inimber of barrels in which the goods are packed, the contract is also held entire (Clarl- v. Baler. 5 Met. 4.52 ; Morse V. Brarkrtt. !)8 :Mass. 20,5; Man.^ficJd v. Triij,), 11:3 Ma.ss. ;?.50). While in the cases last referred to, it could b',> ascertained what was the amount of consideration paid for each pound, or barrel, yet the articles having been sold as one lot, it was to be in- ferred that one pouiul or barrel would not have been sold unless all were sold.** On thesi' prinei|»les, if the mortgage can be upheld as a security for the jiayment of the consideration of the original con- tract, as well as the notes given in jiayment therefor, the considera- tion of the contract is entire, indivisible, and tainted with illegality, and for that reason void, and should not be enforced. To my mind, the ea.■'!' Tf 2(j4: the obligation secured. [chap, iii^ part of the contract arises upon a good consideration, and part upon a bad one, it is divisible. But it is otherwise as to the security ; that being entire, is bad for the whole," is not to be pressed beyond the case in hand, and given universal application. His language, as to its being '' divisible/' was true as applied to the facts of that case. The law was more accurately expressed by Mr. Justice Wilmot : " Here are two sums demanded, which are blended together in one bill of exchange ; but are divisible in their nature, as to the money lent. The cases that have been cited are in point, that it is recover- able." Carleton v. Woods, 28 N. H. 290, comes nearer to supporting the decision of the majority of the court, but in my judgment, is distinguishable from the case at bar. It is there distinctly held that if the contract is entire, and part of the consideration is illegal, the contract is void; but that where an entire stock of goods is sold, at one and the same time, but each article for a separate and distinct agreed value, the contract is not to be regarded as entire and in- divisible. The sale was for cost and freight, and Woods, J., says: " We are unable to see how this case differs from the case of a sale by a merchant of various goods to his customers, at one and the same time, for separate values, stated at the time, which, when computed, would, of course, amount to a certain sum in the aggre- gate."' It was on this theory that the court held, that, although the notes could not be maintained, because a part of the consid- eration was for spirituous liquors illegally sold, yet, on the general counts in assumpsit, for goods sold and delivered, the plaintiff might recover for the goods sold, as the court held, independently of, and as transactions separate from, the purchase of the liquors. To say the least, this was pressing the doctrine of devisability of a contract to the extreme verge, and I am unwilling to go further. There may have been more in the case than appears in the report, justifying the holding of the court. On the facts stated, I think the authority is clearly against that contract being divisible. That case, however, lacks the element of being the sale of a going l)usiness, including the good will, and does not appear to have been reduced to writing. In my judgment, the decree of the Court of Chancery should be reversed, and the cause remanded, with a mandate to enter a decree dismissing the bill with costs. Taft, J., desires me to say that he concurs in the views I have expressed, except in regard to the sale of the cider being illegal, on whicli point he concurs in the views of the majority of the court. .-^hc. III.] 1'i;tiii»()m: c. «;i;isw()LD. 205 ClIAl'TFJI III. {Conlininul). Section Hi. I"i irui: Adv.vncks. I'Kiril'.oNK V. (IIMSWULI). SuPREMK Corirr of Ekroks of C'onxecticut, 1822. (4 Conn. 158.) This was a hill in chanivrv ti) foivclosc tho equity of rodomp- tion of the dcfciulants in certain mortgaged premises. The bill stated, that on the 3d day of July, 1815, Giles Griswold, for the consideration of 4000 dollars, conveyed to the plaintiff's testator three pieces of land in Burlin- jfing to account with the plaintiff's testator on said joint note to Klijah Cowles & Crlj,M^'(.'d. A tivililur i< not oljligcd by law Ui niaki.' iiHjuirv in /"//■>>• cnnccrnin;: tin- liens on the proprrty of lii-; debtor: but on api)li(ati()n ti> liic n-coid he may acfjuirc all tin- information wliiili his intcn>t dcinand.-. At least, he must ha\e the power of knowing from liiis >oiiree the sui»jeet matter of tlic niort^ra-^e, that his invest i<,Mt ion may be ;:ui(led by soniethin;; which will terminate in u eerlain result. And what is not of le-s importance, the ineumbraiuc on the property must be so defined a- to prevent the substitution of everything which a fraudulent <,'ran- ttir may devise to shield him.«;elf from the demantls of Ids credi- tors. The eonditinn of the deed under diM-us>ion, is dan^'crously in- definite and is at war witli the policy of the recording system. It endiraees all futun' notes and receipts without the desifination of any, and bailies the inquiry of creditors and others relative tn the condition of the mort^a^U'd estate. A condition to a deed ma„l. (I I'onn. (JS ( 1S74) : Stearns v. I'ortrr, •»»> Conn. A\.l { 1S7S» ; ddtbrr v. Umru. « Watts. (Pa.) ^^l (1H37). s,,nhlr: IhiUork v. H>itt,nhnus,». lOS III. 28 (1883). Couijiare Bill v. rUniim/s Ksrs., IJ N. .1. i:.|. 1. 4'.>U ( 1858. IS.'jO). 268 THE OBLIGATIOX SECURED. [CHAP. III. STOUGHTOX V. PASCO. Supreme Court of Errors of Connecticut, 1825. (5 Conn. 442.) This was a bill in chancery, brought by Stoughton, to redeem mortgaged premises. The plaintiff and Jonathan Pasco were trustees of the goods and effects of one Stephen Heath, deceased, for the benefit of cei^tain legatees, according to his last will and testament. The amount of the property in the hands of the trustees, in February, 1812, which had been inventoried, was, at the inventory price, 6501 dollars, 28 cents, and of property not inventoried, 302 dollars, 50 cents. On the 8th of February, 1823, Jonathan Pasco, as trustee as aforesaid, was justly indebted to the plaintiff in a large sum, the amount of which was, at that time, unascertained. To secure such sum, on the day last-mentioned, he executed a mortgage deed of the prem- ises to the plaintiff, which was duly recorded, with a condition pul)joined in these words : " If said Pasco shall pay to said Stough- tonall monies in his hands belongingto the estate of Stephen Heath, deceased; and also deliver to said Stoughton all notes and other securities for money belonging to said estate in his hands; and shall, in all respects, render to said Stoughton a true account of all monies and securities for the payment of money belonging to said estate, within twenty days from this date ; and shall pay to said Stoughton his the said Pasco's note of hand, payable to said Stoughton, for the sum of 210 dollars, on demand, with interest, dated March 5th, 1814; then this deed to be void," &c. The court found, that there was due to the plaintiff from said Pasco for monies and effects in his hands of the estate of Stephen Heath, de- ceased, intended to have been secured by said mortgage deed, the sum of 3137 dollars, 85 cents; besides the amount of the note men- tioned in the mortgage. By subsequent deeds, dated the 8th and 22d of February, 1823, and duly recorded, Jonathan Pasco mort- gaged the premises to Ashna Pasco, after a computation between the said Jonathan and the plaintiff, ascertaining the debt due to the latter. Before the execution of these mortgages, and before the del)ts secured by them had. accrued. Ashna Pasco had notice, l).v information from Jonathan, of such computation and settle- ment, and that the sum due to the plaintiff was more than 2800 dollars. Jonathan and Aslma Pasco were made parties defendants to the tihi'. 111.] STOlMill TON r. I'ASCO. 2G!i hill. As a<;ain.iin', l»u( •)••- niftl the ri'lii'f soii^Mit aj,Mins( Ashna. coiisidfrin;,' tlu' inorlgagc in qiK'stion to he void in ivlalion (o liini. To review this determina- tion, the plaintiir jjroeured the reeord to he transmitted to this Court, pursuant to the statute. lIosMKU, Ch. J. The Stoughton all the monies, and deliver to him all the .securities for money in his hands, belonging to Heafirs estate, and render a tru.« account, file deed should be void. That Jonathan Pasco was under a legal obligation to do what he stipulated, and that, as to him, Stoughton had a just demand, to the extent of the stipulation, must be implied by every one wlio reads the above condition. It would not enter into the imagination of .niy one tliat the mortgage was for a sum of money not due; and that, contrary to common sense and universal usage, Pa.sco had made a pledge of his estate to secure to the plaintilT a mere gratuity. But this ])oint nt <». iiTl i't tiic correct ion of tlicsc mistakes, \ij)on the si)ecitic ground that tui- description in the mort^M^'e deed must be j)recisely adhered to, j)ursuant to the supjjfjsed policy of the recording system. In the deiivi-ry of their opinion the court ■observed, that "as between the jiarties, it is un([ucstionably clear, that the misconct'|)tion of the date of the note ami of tlu; prom- isiee admitted of correction, on the common principles ajtplied in chancery in similar cases; and the second mortgagee liad such con- structive notice of the fact from the recorded deed as i)laced hini in no better condition than the mortgagor. Whatever is suflicient to })ut a ]ierson on inquiry is consitU'red in ctiuity to convey notice; for the law im])utes to a person the knowledge of a fact of which the exercise of coinninn ])rudence and ordinary diligence must have apprized him. Had the second mortgagee applied to (Jood- rich for information, as it was his intention {o rejiresent the facts ■correctly, relative to the mistakes, he would have had n communi- cation of all the knowledge he now possesses." Tlie same principle was recognized by the c-ourt in I'ettibonc v. 'irisuuhl, before cited. After having di'dared it to be the policy of our law that the title to real estate should In- registered for the benefit of creditors and all others interested, it was observ<'d by the ' ourt : " That it is the object of this law " (the act recpiiring deeds ' be recorded) ''to ])revent fraud, and give security and stability to title. It results, unquestionably, that the condition of a mort- gage deed liiust give reasonable notice of the incumbrances on the land mortgaged. A creditor is not oI)liged by law to make en(|uiry hi puis concerning the liens on the projierty of his debtor; but on application to the record, he may acquire all the information which his interest demands; at least, he nnist have the j)ower of knowing from this source the subject matter of the mortgage, that his in- vestigation may be guided by something which will terminate in a certain result. And what is not of less importance, the incum- brance on the jiroperly must hv so delined as to j)rev«'nt the substi- tution of everything which a fraudulent grantor may dt-vise to f^hiold himself from the demands of his creilitors." in the argu- ment of this case it has been supposi-d that the court, in I'ltti- honc V. Grisiriilil. hail rcHjuired perfect and complete certainty in the condition of a mortgage, so far as relates to ."strangers to the transaction, and to s\ich a degree as to j)reclude the neeessitv of anv further eiKjuiry, T^ut fbi- rrror i< most obvious and r''n's })roj)erty, where neitlu-r law nor ])olicy forbids, would be inhibited ; the exigencies of business, in promotion of the general conven- ience, disregarded; and the impracticable principle, in all cases, that mortgage conditions must contain within themselves, not rea- sonable certainlv only, but a certainty to a certain intent in every particular, adopted. This would be confornudile neither to correct l)rinciplcs Jior to our own adjudications. Pktkks, J., was of oj)inion that this case was not distinguishal)le in princii)le from Peitihunr v. (Irisirohl: and woidd. therefore, allirm the decree of the superior court. Bk.MNAHD, J., coiuiirre(l with the Chief Justice. Bristol, J., said that, aside from the ca.se of Pcttibonr v. Gri<- wohl. he should have no doubt that the mortgage in quest i.l.. . III.] i;i»|{|.\S()N /•. WILLIAMS. "ii') Till' niort iliily :e on (ireeiiK'af at sixty days from date, whereby he requested him to ])ay to his ((iih.son's) ordi-r, the sum of $1800. Hefore this hill became due. (iihson indorsed it to the IloUister I'ank, which discounted it and advanced to him the amount there- I'. on the faith of said hill and the niortu'a^je. This bill was also i'otested at maturity, and no i)art thereof has been jiaid. The complaint set up that the defendant Williams, among others, » laimed some interest in the morttra^red ])remises. and prayed the \isual jud<:ment of foreclosure and sale, and that said defendant, nd all others claiminir intc^rests therein subsequent to that of the ilollister Bank. mij,dit be barred and foreclosed. The defendant Williams set uj) and proved that, on the 20th of January, ISot), the Sackett's Harbor Bank (whose name was subsefjuently changed, by an act of the legislature, to that of the Reciprocity Bank), re- ««nered a judgnuMit against said Gibson to the amount of •"*!2T0S.20; that a transcri])t thereof was duly docketed in the clerk's "tfice of Erie County on that day; that said Gibson was then the owner of said mortgaged jjremises; and Williams insisted that saiil Jiulgment was a lien on said ])remises, and jirior to that of the Mortgage. Neither of said bills of exchange were due at the dale I' the recovery of said judgment. The Superior Court of BufTaln. it special term, gave judgment in favor of the ))laintitr, and de- lared Said mortgage lo be a prior lii-n to said judgment. On ap- ;r(> can be no doubt that, as between the original parties to this mortgage, the v.ilidily of it, as a j)ledge of the mort- gaged prenuses to .secure the amouid of these two drafts, could not 1k' (piestioned. It was clearly the intent of the ])arties that the lands described should stand as security f<>r all advances and dis- 'ounts made by the Ilollister Bank to (iihson. If, therefore, th(>re \vere no legal mortgage, tlu're was, undeniably, an eq\iitable one. «liieh a court of eipiily would enforce against the original parties lo it, and all other-; not in the condifion of ttoiui fide purcha-er- <>r 276 THE OBLIGATIOX SECURED. [CHAP. III. subsequent incumbrancers without notice. The advances made t<> Gibson were before the recovery of the Eeciprocity Bank's judg- ment. As soon as the advances were made, they were embraced in and secured by the mortgage. That judgments and mortgage- may be taken to secure future advances, though no present in- debtedness was subsisting at the time of their execution or rendi- tion, has long been well settled (Conard v. The Atlantic Ins. Co.. 1 Peters, 38G; Leech v. Cameron, 3 Simm. 488; Iluhhard v. Savage. 8 Conn. 215 ; Walker v. Snedil-er, 1 Hoff. Ch. 145 ; Com. Bank v. Cunningham, 24 Pick. 270; Monell v. Smith & Jenkins, 5 Cow. 441; Lyle v. Ducomh, 5 Bin. 585; 4 Kent's Com. 175; Lansing v. Woodworth, 1 Sand. Ch. 43; Barry v. Merchants' Ex. Co., 1 id. 314; United States v. Hooe, 3 Cranch, 73; Livingston £• Tracy v. Mclnlay, 16 Johns. 165; Truscott v. King, 2 Seld. 147). In Conard v. The Atlantic Insurance Company (supra), a mort- gage Avas given to secure a debt upon a respondentia bond, and it Avas said that the debt was of too contingent a nature to uphold a mortgage as collateral security for the payment of it. Story, J., at page 448, says : " We know of no principle or decision that jus- tifies such a conclusion. Mortgages may as well be given to secure future advances and contingent debts as those which already exist and are certain and due." The case of Ilooe v. United States (supra), is, in some respects, not unlike the present. There, one Fitzgerald conveyed property in trust to W. & J. C. Herbert, to indemnify Hooc for all indorse- ments or liabilities he might incur on behalf of Fitzgerald; and if Fitzgerald should pay and discharge all such liabilities, the trustee^ were to reconvey the property to him ; but if Hooe should pay any such liabilities on account of Fitzgerald, then, on demand of llooe, the trustees were to sell the trust property, and pay and satisfy the amount demanded by Hooe. Hooe became liable to pay several notes of Fitzgerald, indorsed by him, and on Fitzgerald's death he was largely in arrear to the United States, and they claimed u ])reference over all other creditors, under the laws thereof, and that such lien was superior to that created by the trust deed for tlv" benefit of Hooe, and that it was fraudulent as to the United States. It will be observed that, in this case, no sum certain, for which the property was held in trust, was mentioned in the deed. Marshall, Ch. J., in delivering the opinion of the court, says (p. 88) : "That the property stood bound for future advances is, in itself, unexceptionable. It may, indeed, be converted to improper purposes, but it is not positively inadmissible. It is frequent for a person who expects to become more considerably indebted to mortgage property to his creditors as a security for debts to be con- tracted, as well as that which is already due. All the covenants in bKr. III.] HOniN'SON /•. WILLIAMS, 277 this dtrd aj){H'ar to tho court to Im- fair, lt';^'itiiiiat(', aixl (•(»nsi>tcnt w itli t()inmt)ii usa^a'," It is j)resso(l upon us that this mortgage is invalid, bccaufte no .-uiu certain is mentioned therein. There might he some force in the argument if the Hecii)rocity Bank stood in the position of a Mihsequeiit i)Ur(haser or inc\iml>rancer in good faith, although it will he allemi)ted to he shown that the mortgag<> would he good as gainst the bank, even if such were its position. That question \v ill be considered hereafter. The Supreme Court of this State, in the case of MoncU v. Sinilli, siijini. held that a surety, wlio held a liitnd and warrant of attorney, conditioned to ])av all notes thereto- fore or thereafter to be indorsed, and to indemnify him against -ucli indorsements, might" enter up judgment and issue execution liiereon for the sum for which he was actually liable, although the li'tiid was not for a sjM'cified sum. That a bond and warrant of itorney might be taken hy a surety, to secure him against future abilities to be incurred by him, the court say, is warranted by the ■ises cited and considered by the hite Chancellor in Roosevelt v. Marl-, G Johns. Ch. 200, 279-285. The court add, "'the only rpies- lion is, whether the same cour.se may be pursued where the bond •lates in general terms to liabilities as surety or indorser, past and iiospective, without mentioning a sum certain; and we think it may. It is true, the sun. does not appear on the face of the bond ; and there is no doul)t that, in an action on such bond, breaches mu.st be assigned. It would be the same, however, we think, as to a I'ond conditioned to pay specified sums to third ])ersons. The ccr- lainty is the same in both cases. In both, wc may be obliged to look beyond the face of the bond to see what is due. In a techni- d sense, that is certain which may be made certain. W'v all know 'le objects of the parties to the.-e instruments. It i<, to alTonl the most prompt indemnity." In Shiras v. Caig. 7 Cranch, 31, the .subject under considfra- lion .seems to have elicited a very full examination; and it was •'lere held, that it was not necessary to the validity of a mortgage 'lat it should truly state the debt it is intended to secure, but it iiall stand as a security for the real, equitable claims of (he mort- .igees, whether they existecl at the (Lite of the mortgage or arose fterwards u|)on the faith of the mortgage, before notice of the de- fendant's c(|uity. Chief Justice >rarsh'all, in delivering the opin- ion of the court, at page 50, says: " It is true that the real trans- etion does not appear on the face of the mortgage. The (hvd purports to secure a debt of £30.000. due to all th(> mortgag.vs. It was really intended to secure different sums, due at the time to irticular mortgagees, advances afterwards in be nunh' and liabili- ty t,, l„. incurred to an uncertain amount. It is not denied that 278 THE OBLIGATIOK f^ECURED. [CIIAI-. III. a deed which misre})reseiits the tnmsaetioii it recites, and tlie con- sideration on which it is executed, is liable to suspicion. It must sustain a rigorous examination. It is certainly always advisable fairly and plainly to state the truth. But if, upon investigation, the real transaction shall appear to be fair, though somewhat variant from that which is described, it would seem to be unjust and unprecedented to deprive the person claiming under the deed of his real, equitable rights, unless it be in favor of a person who has been in fact injured and deceived by the misrepresentation." These principles, and the cases upon which they rest, have lately been emphatically affirmed by the Supreme Court of the United States, in Lawrence v. Tucher, 23 How. 14. I arrive, therefore, to the conclusion, that this is a valid mort- gage as between the parties to it, and that the mortgagee was s«^- cured thereby the amount of the advances upon the two drafts mentioned in the complaint, although no sum certain was men- tioned on the face of the mortgage. These advances were made prior to the recovery of the judgment of the Reciprocity Bank, anrl prior, therefore, to any equities of that bank. It follows, there- fore, they were made prior to any notice to the Hollister Bank of any such equities. No notice could be given of that which had not an existence. It is established then, it is submitted, that, at the date of the recovery of the judgment Ijy the Reciprocity Bank against Gibson, the Hollister Bank had a good legal, and certainly equitable, mortgage upon the premises, to secure the amount of the two drafts already referred to. Was that judgment a prior lien to the mortgage? The judgment became a lien; at the time- it was docketed, upon the interest of the defendant therein in all lands in the county of Erie (2 R. S. 359). In equity, the land was undeniably bound to pay off the amount of these two drafts. The law is well settled, that the equitable mortgagee is entitled to a preference over subsequent judgment creditors {Matter of Howe. 1 Paige, 129, and the cases there cited; Willard's Eq. Jur., 441,. 442 ; Rod-well v. Hohhy, 2 Sand. Ch. 9 ; Hilliard on Mortg., Vol. [.. 451). If this mortgage is to be regarded simply as an equitable mortgage, there can be no question that, in accordance with well- settled rules of law and a uniform current of decision, it is a valid security, and is entitled to priority over the subsequent judgment of the Reciprocity Bank. But, I think, i! that bank had i)een a purchaser on the day of the recovering of its judgment, or an incumbrancer by way of mort- gage for money then advanced, the mortgage of the Hollister Bank AV'ould equally have been entitled to priority. The recording of tlie mortgage was notice that the Hollister Bank harl a mortgage on tlie premises for the purposes therein specified. There was enough to si;c. 111. J KOIJINSON C. WILLIAMS. 279 have put a bona fide jmrchascr or iiKuinbraiurr uj)on iiKjuiry; and ail aj)j)lk'ation to the Ilollistcr Bank would have disclosi-J the sum ti'iMain for which tlu' si-curity was hcUl. As was said l)y tlic Sii- pri'iiu' Court in MuiuU v. Smith, supra, " \\v niay he ohlif^cd to look l»oyond the face of tiie bond to see what is due. in a technical sense, that is certain whicli may l)e made certain." Tlie precise sum for whicii the mort<;a<,'e was held as security mi<;ht, at any time, readily and with certainty, have heen asci-rtaincd, and a bond fide purchaser or incumhraiicer, with the notice which the record of this mort^afje furnished him. if he liad omitted to make the incpiiry whicli it indicated, coulil hardly have claimed to liavo heen a bona fide jnirchaser or incumhrancer. The authorities bearing: (»n this question of notice are fully reviewed in the case of Williani- snn V. Brown, 15 N. Y. 351, and the result of them stated as fol- lows: " The true doctrine on this subject is, that where a purchaser has knowledge of any fact sullicient to ])ut him on inquiry as to the existence of some ri;,dit or title in coullict with that he is about to purchase, he is presumed either to have made the inquiry and ascer- tained the extent of such ])rior right, or to have been guilty of a ecau.se they were void for uncertainty, and it could not Im' ascer- tained how or when the same became forfeite»l. or lunv the same could or would be satisfied. In the opinion, at page '.?()<». the court •^80 THE OBLIGATIOX SECURED, [CHAP. III. say, "Doyle had a right to ask indemnity, and the mortgagors had a right to give it. It was done by way of mortgage; and although these mortgages were intended to cover subsequent as well as pre- vious liabilities, they could not, on this account, be objectionable j ■iis between the parties. If, during the existence of these mort- gages, a third person had recovered a judgment against the mort- gagors, the lien of such judgment might, and probably would, have] been preferred to the lien of the mortgagees for liabilities subse- ([ueutly incurred by Doyle. But these complainants are not inj that situation. The liabilities of Doyle had been fixed before the] rendition of their judgment. It is not perceived that there would be any difficulty in ascertaining when the condition of the deeds was broken and the mortgage forfeited, nor as to the manner in which they could be satisfied. A similar rule may be deduced from] the following cases in Connecticut: Merrills v. Sivift, 18 Conn.j 366; Lewis v. De Forest, 20 id. 442; Ketchum v. Jauncey, 23 id. 327. In any aspect in which this case may be regarded, we think itj free from doubt, and that the judgment appealed from should be] ,Kr. 111.] YOLNCiS c. ull,Mi\. '^S[ nil of llioiii, of and from all dania^it-. (•o>i- aiul char;^('> on a.- niiiii of llu' >anu',"' llu-n tin- convcvanir was to cease; hut in case •default should hi- made in the |»aynu'nt of all or any jjart of the aid liahilities. as the same should heeome due," the lands were to l.e sold and the amount due, with costs and charfjes, to be dc- duelfd from tin- jtroeecds, and the surplus, if any, i)ais rej)resenting that estate, is very questionable, but as neither of the parties before the court inter- posed any objection on that account, the drfccl in flic i:? How. \V. 8.] 14; Leeds v. Cameron, :3 Suinn. in? V'.'— ^'t An- drews, J. 'The ca.scs aro numerous: Cominrrrldl Hank v. Cunniiuihnm, :i4 I'irk. 270 (1837) ; doddard v. Sairyn; !► Allen, 7H (l,St)4) ; MtDanicls v. Colrin, in V(. .-{00 ( 1S44) : Collins v. (V/;7i7r. I.J III. •_'.-)4 ( IS.")! ) ; Sprrr v. Skinner, 3.-. 111. 282 (1S(;4): Mirhi(jnn In.i. Co. v. Ihou-n, 11 Midi. 2r.(i (18(i3): Madifinn v. M.nd, M Minn. 01 (1883) ; I'rcibcri/ v. MmjuU, 70 Tex. IKJ (1888). 286 BOOK III. NATUEE AND INCIDENTS OF THE MORTGAGE RELATION. CHAPTER I. COMMON LAW RELATIONS. Section I. Title. FISK V. FISK. High Court or Chancery, IGOO. {Finch, Pre. Ch. IL) Thomas Fisk the elder had a mortgage in fee, which was for- feited; he makes his will, and devises all his mortgages to Thomas Fisk the younger, and makes him executor and dies: Thomas the younger proves the will, and after dies intestate. The plaintiff takes out administration de bonis iton to Thomas the elder, and also administration to Thomas the younger, and brings this bill against the mortgagor, and the defendant Fisk, who was heir at law to Thomas the elder and younger, and had l)ought in the equity of redemption. This cause was heard on bill and answer, and it was agreed that both the Fisks left sufficient assets without this mort- gage, and the lull was to have the defendant Fisk to assign the mortgage, and have the money paid, or else to foreclose them. And it ivas decreed, that the defendant Fisk should pay the plain- tiir his principal, interest and charges to a day, or else assign tlie mortgage, and be foreclosed; but my Lord Commisstoxer Trevok said, if the mortgagee had been in ])ossession, and died so, he would not have taken tile mortgage from the heir, there being no defect of assets. >n'. I.] BUUULN r. KLNNKUY. 287 NOYS V. MORDANT. High Court of Chancekv, 1706. (/•'(■;((■/;. Pre. Ch. 265.) A., l)oinf; in possession of an I'statc that was a movi^i^ago in fee, liv will devises it to his daughters V>. and V. and their heirs, and -lies; B. marries and dies; the question was, Whether the share of \\. sliould he decreed real or jiersonal estate, and consequently po lit her heir, or to her husl)and as lier administrator? My Loud Keei'EK decreed it a^i^ainst the husband, and ])ut this • ase: A man seised of lands in fee, whicii were only mort .a-c it wa-^ .Ic.laic.l l.y tlic l.oni i'h «l tlio poi • ■nal rstatp of tin- niort;:a;:ei'. hi- l>eint; ii citizen." — U'ifoi v. LittUt»». 1 Virn. 3 (1081). 288 COMMON LAW RELATIONS, [CHAP. I. be intitled at law to the possession, notwithstanding such assign- ment. But in the present case here is only an equity of redemption in the debtor in the leasehold estate, and an execution lodged will not affect this, as the legal estate is in the mortgagee ; and consequently, by the common equity of this court, he may come here to redeem a subsequent incumbrancer, and likewise to discover whether there was any and what consideration for the assignment. Burgess v. Wheate, 1 Eden, 177, 239, 255 (1759). The Lord Keeper [Henley]. The question upon the information in this case is whether, the cestuy que trust dying without heirs, the trust is escheated to the crown, so that the land may be recovered in a court of equity, or whether the trustee shall hold the land for his own benefit. . . . It is said the king upon a legal estate shall be liable to an equity of redemption. I do not know that it has ever been so determined. Lord Hale thought the king should, because it is an ancient right which the party is entitled to in equity. Baron Atkins thought the same, because he saw the same equity against the crown as against a common person. Yet it is observable, that there is in that case (Pawlctt V. Attorney General)'^ a recognition of the equity without any declaration of the remedy. Whether this remedy has since been settled in the Exchequer, where alone it can, I really do not know : but I hope it is so settled ; for I see a great deal of equity to support the opinion of Hale and Atkins. A mortgage is an assignment on condition. The condition being performed, the conveyance is void ah initio. Equity dispenses with the time, and when the money is paid, the conveyance is void in equity and conscience. I would by no means have it understood that I think there is any equity that the crown cannot avail itself of; and I hope that there is no equity that the subject is not entitled to against the crown. But I own, upon very diligent inquiry and consideration of the case, I at present think the arms of equity are very short against the prerogative. The next is an objection by inverting the case of a mortgage ; and it is asked, suppose the mortgagor die without heirs, shall the mort- gagee hold it free of redemption? I suppose the meaning of that question is, shall not the lord have the equity of redemption? or else it is nothing to the present purpose. If that be the question, it seems to me to be the same with the present, and admits of the same answer ; the lord hath his tenant and services in the mortgagee, and ' Hardies, 4G-5. SEC. 1.] .m'mI KI'IIV C. MINUT. 2>i'.> he has no ri^'ht to anythiii;^ moiv. IN'rliap.s it woiihl not bo dillicult to answer what woukl be the justice of that ease, but it is not to th<' business in hand.* McMriMMIV V. MI NOT. SuPRE>[H Judicial Coiut <>i- Ni;\v IIampsiiiki:, 18"^T. (I X. If. •.':.!.) This was an action of covenant broken, on an indenture made the 12th July, 1811, by whicli the ])hiintitF denii.sed to Seth Daniels a certain tract of land to hold durinf? her natural life, and the said Daniels covenanted with the j)laintiir to pay her, on the first day of May, annually, a rent of ^.'Jo. The action was brought against the defendant, as assignee of Daniels, for the said rent from 1st May, 1817, to 1st May, 182'), and was submitted to the decision of the court upon the following statement of facts: 'i'he indt'iiture was made as stated in the declaration and Daniels, having entered under it, afterwards conveyed all his estate to one Oilman Dudley, who, on the ;kl April, 1823, conveyed the land to the defen(h>nt in fee and in mortgage. Dudley remained in posses- sion and took the jirolits until his death in October, 18".'".\ and after his decease his administratrix remained in ])ossession, taking the ' " Twiis said, if u inortjjaf^or die w itliout licir. sliall tlio iii<)iij;a;,'«c liold tlie land free? [I answer, shall it cschoat to tlie crown?] No, iu'causo in tlint j-ase tlie loid has a tenant to do his services, and that is the whole he is entitled to in law and ecpiity. What the justice ini;.'ht he hetween the inortKajjee and executor, I shall not trouldc myself ahout. I think the crown has not an e<|uity on whicli to sue a sul)p(ena." — /'( »• Henley, I.ord Keeper, s. e. 1 W. HI. 1,")."). "Then it was said, suppose niort^aj,'nr die witliiuit licir, -"hall the nimt- f»nj;ee ludil the estate ahsolutely ? And if he deiiiands his money too of the IMMsiuial representatives, shall he have hotli land ami money? If the inort^a;;or di»'s without heir or creditor, I see no inconvenience if the niort- gn^fee held it ahsolutcly. In the case of a forfeiture for treason, it i< ••crtain the crown may redeem, as in Sir Salathiel Lovel's case. And as ti> tho supposition that the mortf^af^ce may demand his money too, that mu-l 1h» wher<' the mortjjaj;or di«'s without heir; therefore the demand mu>*t he against the ]iei>oiial repre-»entatives, hy virtue «)f some lioml or eo\enaiit for payment of the money. .\nd if tlie moit^ja^ee took his remedy a^jain^t the |)ersonal rejuesentatives, I think the court would compel the mortgagee to rp-eonvey ; not to the lord hy escheat, hut to the personal repre-icntat ivp. nnd, if necessary, would consider the estate re-conveyed, ns comin;; in lieu of the personalty, and as assets to answer even simple contract cretlitor*. Under these circumstances, where i-* the jjreat inconvenience? " — Per Sir Thomas (larke. M. I!., s. < . 1 K.leii. Jlo. 290 COMMON LAAV RELATIONS. [CHAP. I. profits until April, 183-1. On the 16th April, 1824, a tenant entered npon part of the land under an agreement with the defendant to pay rent to him in case the land was not redeemed. On the 23d April, 1835, the administratrix of Oilman Dudley conveyed to the defendant the right in equity to redeem the land mortgaged as aforesaid, and the defendant's said tenant has been in possession of the whole tract from that time to the commencement of this action on the 22d March, 1826. All the interest which the plaintiff ever had in the land was an estate for her own life, and the reversion was in Daniels. EiCHARDSON, C. J. It has been urged in behalf of the defendant in this case that the plaintiff is not entitled to recover anything, because the rent was never demanded of Minot. The law on this point is well settled. When a lessor proceeds for a forfeiture or to enforce a penalty he must show a demand of a rent on the very day it was payable. But in an action of covenant no demand is neces- sary {Remson v. Conkliti, 18 Johns. 447; Com. Dig. Rent., D. 4; Coon V. Brickett, 2 N. H. Rep. 163). We are therefore of opinion that this objection to the action cannot prevail. It has also been urged that this action cannot be maintained, because the particular estate and the reversion having become united in the same person the particular estate is merged and the rent extinguished. Had the rent in this case been incident to the reversion, it is clear that this action could not be maintained {Yorh v. Jones, 2 N. H. Rep. 454). But it is well settled that the rent is not inseparably incident to a reversion ( Co. Lit., 143 and47a; 3 Bl. Com. 176). Rent may be reserved upon a grant of a man's whole estate, in which case there can be no reversion. The case of Wchh V. Russell, 7 D. & E. 393, which has l)een cited by the defend- ants' counsel does [not] apply in this case. It was there held where rent is incident to a particular reversion, when that particular reversion is merged, the rent is extinguislied. But in tliis case the rent was never incident to the reversion. The plaintiff granted her whole estate, reserving a rent, and slio had no reversion to which it could be incident. In order to maintain this ground it must be shown that when he who has a reversion takes a lease of the particu- lar estate and covenants to pay rent, such rent is extinguished by llie union of the particular estate and the reversion. But this ])roposition cannot be sustained by any reason or authority, and wc .•ii'c of opinion that this ground of defence fails altogether. But it is further contended on the part of the defendaut that ])eing only a mortgagee he cannot in any event be held liable for the rent until he took possession under the mortgage, and the case of Eaton v. Jaques, Doug. 438, is cited as an authority. But tliat decision has been long questioned (7 D. & E. 313), and in 1819 the 1-1 m'mi Itl'in r. MIN'OT. 'Vf\ y way of niort^M^^e as a security for money lent, the whole interest jiasses to him and he Ix'comes liahle on the covenant for the payment of rent, thoufjh he has never occupied or hecome posse-sed in fact ( Williams v. liosanqnct et al., 1 Brod. & Bing. 7*^). In this State it lias been repeateclly decid<'d that a mort^'agr in ftc vests in the mortgagee the whole legal estate; the necessary <-onse7. MicKncU, Doug., ()3v>, it was an alfront to common sense to say the mortgagor is not the real owner. Such was indeed the doctrine of Ix)rd Mans- field and of Buller, .lustiee. but that is the very doi-trine that i- repudiated in Williams v. liosanqurl. Lord Mansfield asserts that the mortgagor is the real owner. \ot so, says C'h. J. Dallas, giving the opinion of the ten judges ; the whole interest is assigned ; it vests absolutely, and is not the le.- latf for us now to retrace our steps and adopt tlio doetrim of WilliaiHti V. Jiusumjucf. even if it was correct. To recover a«,'ainst an assignee of the lessee it must l)e averred and proved that all the riglit, title and interest of the lessee passed hy assignment to the assignee. Alter these decisions, can we .say that all the right, title and interest of the mortgagor has passed to the mortgagee out of j)ossession? So far from it, we hold that the mortgagee, before foreclosure or the commencement of j)roceedings to foreclose, has but a chattel interest. It is perfectly clear, therefore, that a mort- gagee of a term out of j)()ssession is not in this State to be considered the assignee. In Mngland there must be a reconveyance or re- assignment ; so say th(> court in Willidins v. UdsiukiwI. Here that is not neci'ssary ; the transfi-r of tlie debt transfers the mortgage; payment e.xtinguishes the lien, and so does a tender. But if a mort- gagee takes possession of the mortgaged premi.ses lawfully, he must be then considered assignee, and the assignee must take the estate cum onerc. When the mortgagee taki-s possession, he then has all the right, title and iiiterest of the mortgagor; then lie acquires and the mortgagor loses an estate liable to be sold on execution. lie is therefore substituted in the place of the mortgagor, who was lessee. and therefore is assignee and liable as such. If I am correct in the positions, that a portion of the fund in court is to be considered the representative of the premises taken for the street, and that the mortgagees, taking possession of either the premises or tlie substitute, became liable for such covenants as run with the land, and that this covenant to j)ay assessments is of that character, it seems to follow that the mortgagees in this case must be responsible for their proportion of the as.sessnu'ut, unless, as they allege, the breaches occurred previous to the assignment.' IirXTIXCTOX V. SMITH. SuPRFMi: CoiKT or Mkkoks or Co-NNKcticut, 1822. (4 Conn. •.';5:).) This was a .••'• '1 in N riN(;i()N- r. smith. 297 a iiiortga^co in mortpiged premises mny he taken in execution (S Mass. Kep. oG5 ; Pundcrson v. Brown, 1 Day's Hep. 08; Judah v. Jndd, 1 Conn. Rej). 30«J ; 2 Swift's Syst. 429). 2. That Tohey's notes were (h'livercd iiol as escrows, hut in satisfaction of tlie judg- ment and exeiution. Neither Tohcy nor his executors had any lontroul over tliem afterwards. The phiintifT may at any time get j)ossession of them hy delivering his deed, and may maintain suits upon them. Notes delivered to a third person to he delivered over to the payee on a certain event take efFect from the first delivery, and arc held in trust for the jiavee {Wliecln'gltl £ al. v. Whcvlright, X^ Mass. Rep. 452, 454). .'^. Church and L. Church, for the plaintiff, contended, 1. That the interest of the mortgagee, hefore foreclosure or entry, is a mere iring to redeem, may l)e much embarrassed. The land cannot be taken for the debts of the mortgagee until his entry upon it, and, in my opinion, until foreclosure. These i)rinciples are .-^o thoroughly established, and so frtHjuently has it been decided directly that mortgaged premises not entered uj)on by the mortgagee or foreclosed, cannot be taken for his debts, that a more extensive investigation of the subjivt is unnecessary {Fish v. Fish. 1 Conn. Rep. 559; Portland Bank v. //"//. 13 Mass. Rep. 2(1? ; Blanchard v. Cnthurn tf at.. 1(1 Ma.'^s. Rep. '"»; Jackson v. Willanl. I .Tolm-. Rep. 41; Jackson v. I)ul>o{s, 298 COMMON LAW KELATIOXS. [CHAP. I. 4 Johns. Rep. 21G; Hitchcoclc v. Harrington. G Johns. Rep. 200; Collins V. Torry, 7 Johns. Rep. 278). The second plea was, that certain proniissoi*}' notes were accepted by the plaintiff, in full satisfaction of the judgment and execution mentioned in his declaration. The proof exhibited evinces that the notes were escrows and not to be delivered until the execution of a deed on the plaintiff's part (Jackson v. Cailin, 2 Johns. Rep. 248, 259 ; Lansing v. Gaine & Ten Eych, 2 Johns. Rep. 300, 306 ; Catlin V. Jaclcson in err., 8 Johns. Rep. .520), and that they never were delivered. It is an undoubted consequence that they could not have been accepted in satisfaction. Neither plea has been supported, and I would advise that the plaintiff have judgment. . The other judges were of the same opinion. Judgment to he rendered for the plaintiff. Eaton v. Whiting, 3 Pick. 484 (1826).— Parker, C. J. The opinion expressed in the case of Blanchard v. Colburn, 16 Mass. Rep. 345, that the interest of a mortgagee in real estate mortgaged to him for security of a debt, or the performance of a condition, i.-> not liable to be levied upon for the debts of the mortgagee and so, of course, is not liable to attachment on mesne process, we sec no cause to change. It is in fact but a chose in action, at least until entry to foreclose, and although the legal efl'ect of the mortgage is to give an immediate right of entry or of action to the mortgagee, yet the estate does not become his, in fact, until he does some act to divCst the mortgagor, who, to all intents and purposes, remains the owner of the land until the mortgagee chooses to assert his right under the deed. It is, as before said, in the nature of a pledge, and a pawn or pledge cannot be seized in execution for the debt of the pledgee. The mortgagor may be compelled to pay over the debt to the creditor of the mortgagee on the trustee process, with the same exceptions as are provided for other cases, and payment under sucli process will discharge the mortgage pro tanto ; so that the creditor of the mortgagee is not without remedy, as has been suggested. 1'he law in New York and Connecticut is the same as with us. In tbe courts of both those States it has been decided that a mortgagee before entry has not such an interest in the land as can be sold, levied upon, or attached. See Jackson v. Willard, 4 Johns. Rep. 41 ; Runyan v. Mersereau, 11 Johns. Rep. 534; Johnson v. Hart. 3 Johns. Cas. 329 ; also Huntington v. Smith, 4 Conn. Rep. 237, in which Hosmer, C. J., states at large the reasons similar to those given in Blanchard v. Colburn by this court. Before the case of •^"v i] I l;l M M r. .\lAI!>ii. •,"•'♦ Jilitiuhdrtl v. Collnini tlir >aiii(' |triii(i|»l«' liad Ix-i-ii (Ircidfil m tin- nis»' of Purlluml Hank v. Hull, \.\ Mas>. Uc|». •.'(»;. So that wr an- warranted in considering it as settled law, that tlie iiit«'rr>t i a juds were s(dd under the judgment in lS(!"v*, and defendant. Sarah A. Marsh, became the i)unhaser, and receivi'd a sheritfs deed. Immediately after the sale slu- entered into posscjssion of the premises, and slie or the other defendant has ever since been in possession. In Octolier, IS»i I, bv an order td' the Supreme ' .Iudj;»> Tidwlii i(l;;o was of ii (lilTririit ii ividv S .M.i-<-.. \\t\\. 5G.»). •111(1 mucli n'>|n'i t is diH' to Jiim. Hut tin- lnw rcspi-cliiif; iimrtpiipMl ostutfs ha* txTn clian^^pd l>y tlio le';;islaturi' siiur tiis tiino, it tK-inn ''naftril l>y tlio xtattitr of 17SS, c. .")), that sucli i-sttilcs sliail Im- assets in tho liainis of ♦"Xwutors ami ndiuinistrators, nml t»o distriliuted as personal ostatr." — I'rr P»rkpr. I'. .1., in lUnnrhard v. Colburu, Hi Mass. :J4."> ( IS'JO). * Rivknt V. Mudvirn, 1 Hawlo (I'a.) 32.". (1S21>): Siihnlsou v. Wnlkrr. 4 Brarl<,^»j,'ce, to l)e y the perform- ance of a eondilion suhse<(uent, to wit, payment at the hiw day. In default of sucli payment, the title became absolute ami irredeemable in the mortj;a«jee. But, two eenturies a;;o, er)urts of equity assumed jiirisdiclion to relieve niort;.,M^'ors aueh a case, the mortgagee has also .such an estate in the land as can be sold u|)on execution, because, if he has, it does not follow that the mortgagor has not also such a right. They might eacli own an estate which could be sold. Hut I am of oj)inion that the mortgagee has no estate in the land which can be sold on execu- tion. His interest is a mere eho.se in action, a debt secured by a pledge- of real estate. His debt is not merged in the real estate by the possession. He has no interest in the real estate which he ean -ell, or which can be sold separate from the debt. Such a sale would ionvey nothing. Whoever took the real estate from him would take SOi COMMON LAW RELATIONS. [CHAP. I. it eul^ject to the same liability as he was under to account for the rents and profits to the mortgagor. It has been decided that a transfer of the mortgage without the debt is a mere nullity {Merritt V. BartlioUck, supra). The fact that at the time of the execution sale, the defendants were in possession, claiming the absolute title, can make no differ- ence, as land held adversely to the true owner can be sold upon execution against him {Tuttle v. Jaclcson, 6 Wend. 213; Trmx v. Thorn, 3 Barb. 156). I am, therefore, of the opinion that the title of the defendant under the execution sale Avas valid, and that the i^laintiflE had no right to redeem. The order of the General Term must be affirmed, and judgiuent absolute rendered against the plaintiffs, with costs.^ > ^ TEFFT V. MUNSOjST. Court of Appeals of New York, 1875. (57 N. Y. 97.) Reported, page 139, supra. RECTOR CHRIST CHURCH v. MACK, Court of Appeals of New York, 1883. (93 N. Y. 488.) Appeal from judgment of the General Term of the Supremo Court, in the first judicial department, entered upon an order made ' The concurring opinion of Reynolds, C, as well as the elaborate dissent- ing opinion of Gray, C, arguing for the legal character of the mortgage estate, especially after default and entry, is omitted. This case represents the general rule in the United States. But see Van Ness v. Hyatt, 13 Pet. 294 (1839), for the doctrine of a stranded jurisdiction. = New York Code Civ. Proc. § 1432. The judgment debtor's equity of redemption in real property mortgaged shall not be sold by virtue of an execution, issued upon a judgment recovered for the mortgage debt or any part thereof. '*** '■ '•] KKi roi{ ciiitisT cuiHcir c. matk. :3().> October 2S, 1881, which reversed a ju(l«>;iiieiU in favor of defendant Hhoda E. Maek, entered uj)(>n a deeision of the court on trial at Speeial Term, and direeted judj^nient for i>hiinti(r for the relit-f demanded in the comjdaint. ( Keported helow. 'i.') Ilun, 418.) This action was brou^^dit to restrain defendants from ohstructinj,' the light and air from the windows of plaintifT's church edifice, adjoining a lot owned hy said defendant, Khoda E. Mack. Plaintiff was formerly owner of said lot, wliieh was subject to a mortgage given to one Hell. It conveyed the same to defendant, John Mack, subject to the mortgage, which the grantee assumed and agreed to pay. By the deed an easement was reserved of light and air to the grantor's church so long as its premises were used for church pur- poses. !Mack conveyed to a third jjcrson, who, on the same day, conveyed to Khoda E., wife of said John ^lack. Ilcr deed was made subject to the Bell mortgage, but contained no assumption of the same by her. The holder of the mortgage, at the request of defendants herein, foreclosed the mortgage by suit ; plaintilf was made a party defendant therein. Judgment of foreclosure in the ordinary form was entered, and upon the sale under it Mr-. Mack became the purchaser and received the referee's deed. Mrs. Mack thereafter erected a fence upon her lot, which cut off the light from the basement windows of ])laintifr's church. E. C. Boarduian for ajtpellant. Wheeler II. Peckham for respondent. Finch, J. It is conceded that a purchase under the foreclosure of the Bell mortgage woidd have given to a stranger to the title an ownership discharged of the plaint ifT'?i easement. That the same result attends the i)urchase by ]\Irs. ilack, notwithstanding her relation to the property, follows from the reason upon which the conceded rule is founded. The statute provides that the deed given in pursuance of a sale on foreclosure shall vest in the punhaser '* the same estate (and no other or greater) that would have vested in the mortgagee if the ecjuity of redem|)tion had been foreclo.sed." and further declares that such deeds shall be as valid as if executed by the mortgagor and mortgagee. The construc-tion (o l»e put upon these two provisions was early settled in this court {finiinnrd v. Cooper, 10 X. Y. :j:)H ; Parker \. The lioch. tf Sf/ranis,- p. P. Co.. 17 t(/. *^87). In the last of these cases it was said that where leffal title is concerned, a mortgage, which for nuiny other purposes is n mere chose in action, is a conv(>yance of the land ; that the interest remaining in the mortgagor is an caves the title conveyed by the mortgage. It was added that such was precisely the effect of a strict foreclosure, and that in construing the statute its two clau.'ses were to be read in harniotiv. It was. therefore, decided that 30G COMMON LAW RELATIONS. [CIIAP. I Avhen the act says the master's deed " shall have the same validity as if executed by the mortgagor, it is not to be taken that the purchaser is to be considered as holding under the mortgagor by title subsequent to the mortgage in a sense which would subject him to the effect of the mortgagor's acts intermediate the mortgage and the foreclosure." While it is clearly the modern doctrine that the mortgagee has by virtue of his mortgage no estate in or title to the land, or the right of possession before or after the mortgage debt becomes due {Ten EycJc v. Craig, 62 N. Y. 421), and only acquires such title by purchase upon the foreclosure sale, yet the character and extent of his title so acquired is described in the statute by a reference to the old rule and the old practice, when the mortgagor's right could be fitly termed an equity of redemption which could be foreclosed, leaving an absolute estate in the mortgagee. The effect of the foreclosure deed, therefore, as determined by the statute, is to vest in the purchaser the entire interest and estate of mortgagor and mortgagee as it existed at the date of the mortgage, and un- affected by the subsequent incumbrances and conveyances of the mortgagor. And thus, while the plaintiff corporation held title to the Mack lot, the}^ held it subject to the Bell mortgage and to the absolute title into which that mortgage might ripen by a foreclosure and sale. "When they sold to Mack, reserving an easement in the lot for light and air to their adjoining windows, they held their easement, and Mack held his ownership, still subject to the Bell mortgage and the absolute title into which it might be turned. Mack had assumed the payment of the Bell mortgage, but conveyed through a third person to his wife, subject to that mortgage, but without any liability for its payment assumed by her. [Jpon its foreclosure she became the purchaser and took the deed. That vested in her, under the statute provision, the title of the mortgagor and mortgagee unaffected by the intermediate acts of the mortgagor and those succeeding to his interest, unless there be something in her position which subjects her to a different rule. The statute allowed her to be a purchaser, and in determining the effect of the foreclosure deed its terms draw no distinction among purchasers. It does not discriminate. Whoever may law- fully purchase becomes the purchaser whose title is described and determined, and we have no warrant in the facts to take ]\Irs. Mack out of the statutory protection. The argument of the General Term and of the learned counsel for the respondent on this appeal were both aimed at the result of converting her purchase into a mere payment and discharge of the mortgage lien, and her deed into a release of the incumbrance. The General Term reached the result by a disregard of the first clause of the statute declaring the effect of the deed, and what seems to us -><•■ i-l HKcTolt riiiMsT ilIlIMII r. MACK. ."WT a ini>inti'r|»ri-tatit)ii of tin- ^^'(•()lul rlaiisi'. In l)ri(.'f. tlu' reasoning was that (lie di'cd was to Ix- t'»|uival('nt to one niadr hy tlu* inort- ira«ror and niortga<^c'i'; that tlir mortgagor had already conveyed and his title, intinnheri'd liy an after constituted easement, liad readu'd Mrs. Mack; that she could not be said to purchase what .»he already had: that so her deed was only equivalent to one made liy the mortgagt'c, and he having no title, but merely a lien, the • redosure deed oj)erated only as a release to Mrs. Mack, however M miglit oj)erate as to a stranger. We deem this reasoning defective in two resj)ects. It construes the statute to transfer the mortgagor's title as it stood, not at the date of his mortgage, but burdened with its after incund)rances and limitations, imj)osed by him or his grantees ; and it assumes what is not true, that Mrs. Mack already had the entiic title of the mortgagor, and so could take nothing from him but only the right of the mortgagee. The mortgagor had the absolute title incumbered only by the mortgage. That title lu' transferred to the church, but when the latter conveyed to Mack it reserved an easement or servitude^, and so parted with less than it received from the mortgagor. This title Mrs. Mack took, and therefore did not get the entire interest which the mortgagor him- self had. There was something which she had not got, which by a foreclosure of the Kell mortgage would ])ass, and which it was |)(»ssible for her to purchase. A furtlier ground is stated which is based upon a theory that Mrs. Mack by virtue of her ownershij) of the lot came under some •ligation to pay off the mortgage, and so could not in equity assert a title founded upon a breach of that obligation. Cases are cited in other States which hold that the mortgagor owes to his mortgagee the duty of paying ta.xes upon the land and cannot by neglecting 'heir payment and causing a sale ami then becoming a jiurchaser. It off the lien of the mortgagee. If the purchase had been made i»y Mr. Mack, who had assumed the payment of the mortgage, the •piestion would have arisen. Hut Mrs. Mack owed no duty of j)ay- iiient either to the mortgagee or to the ])laintilT. She assumed no MU'h obligatictn. She violated no duty and incurred no |)ersonal liability by omitting to pay ofT the incumbrance. It was her right and |)rivilege not to do so, and in the omission she did no wrong of which either party could lawfully comjilain. Slu- had the right • leave the mortgagee to his remedy, and when he asserte*! it. the i.iw allowed her to become the purcha.ser. and made no distinction between her rights and those of a stranger to the title. It was urged that this view of the case left the plaintitT without iiiy power to save its easement, since on the sale Mrs. Mack (^mld "•afely outl)id all othiTS and beyond the mortgage debt. Rut th<' plaintilT sliould not have waited until th(» sale. When brought into 308 COMMON LAW RELATIONS. [CIIAP. I. court as a defendant, and certain to be bound by the decree, it should have sought to modify the decree and, showing the peril of its easement and offering to bid the full amount of the mortgage debt and costs upon a sale subject to the servitude, it should have asked that the sale be so made. The mortgagee could not object since his debt would be paid in full and he had no greater right ; and Mrs. Mack could have asserted no equity to have the sale so made as to free her from the easement. But Avhen no limitation or condition is imposed by the decree, and no duty of payment rests on the purchaser, the statute determines the estate which passes by the foreclosure deed. The judgment of the General Term should be reversed and that of the Special Term affirmed, Avith costs. All concur. Judgment accordingbj. CHAPPELL V. JARDINE. Supreme Court or Errors of Connecticut, 1884, (51 Conn. Gl.) Suit for a foreclosure; brouglit to the Superior Court. The defendants demurred to the complaint; the court (Andrews, J.) overruled the demurrer and passed a decree of foreclosure. The defendants appealed to this court. The case is sufficiently stated in the opinion. J. M. Thayer and C. F. Thayer for the appellants. J. Halsey and IF. A. Briscoe for the appellee. Park, C. J. This is a suit for the foreclosure of certain mort- gaged premises, constituting an island, known as Eam Island, in Long Island Sound. The complaint alleges that the land mort- gaged at the time the deed was given lay in the town of Southhold, Suffolk County, in the State of New York, and it is averred that the mortgage was recorded in the office of the clerk of Suffolk County in that State. It is further alleged that Eam Island, by the recent establishment of the boundary line between the State of New York and this State, has become a part of the town of Stonington in this State. The complaint is demurred to, so that the averment stands admitted that the island was, when the mortgage was made, a part of the State of New York. We have heretofore held (Elphiclc v. Hoffman, 49 Conn. 331) that the boundary agreed upon 1iy tbo joint commission of the two -"■ ' 1 ClIArrKl.L V. JAUDINi:. 300 Statfsi and t'slal)lislR'(l hv the Ic^'islativc acc<'|itanc(' of Ixtth State-, was to be re^artled as |)resumal)ly a desi^^Miaf ion and establisliment fif the pre-exist in;,' hounchirv line which had heeonie lost, and not as the establishment of a new line, leaving the matter open to proof in >-pocial cases. If we should apply that rule heri', and consider the i-land in (juestion as having been legally a part of this State when llie nu)rtgage was made, we should at once eiu-ounter an(»ther (|ues- tion of a serious nature. There can be no question tiiat whatever has been tlie dr jure jurisdiction over the island, it has been for many years within the dc facto jurisdiction of the State of Xew York; and we should be comj»elled to determine the legal effect upon this nuirtgage of that dr fnrlo jurisdiction. We have thought it as well, therefore, to take the case as the ]>arties have themselves presented it. the plaintiff by the averments of his complaint and the defendants by the admissions of their (Iciuurrer, and regard the island in question as having been within tin- State of Xew York when the mortgage was made, and after- irds brouglit witliin this State by the establishment of the bound- ary line. Indeed, as the proceeding is in error, we cannot properly govern ourselves by anything but the record as it comes before us. And in treating the island as within the State of Xew York when '111' mortgage was made we are regarding the contract and the j]\U of the parties under it, precisely as they themselves under- ">(i(j(', 2 Day, 151; Ronlh v. SmUh,!) Conn. 130; Chambcrlin v. Thuinpsoii, 10 id. 241; Porter v. Seclei/, 13 id. ."ifil ; Smith V. Vincent, 1.") i\\v\\ a decree jtroiluce upon a mortgage likt' the one under consideration, where the legal title remains in tin* mortgagor, and nothing but a pledgee's interest is in the mortgagiv, • ven after the del)t becomes due? It could only extingui.sh the right of redem|)tion, if it could do that. It could not give the mortgagee the right of possession of the property, for the mortgagor has still the legal title, which carries with it the right of possession. It would re(piire another proceeding in ccjuity, to say the least, to dispo.>Jsess him of that title, and vest it in the mortgagee. Hence It is clear that full n-dress cann plaintiff in thi- IToceeding. Mut the plaintiff has a lim on the proptMty in the nature of a jiirdge to secure payment of the mortgage debt. And although our remedy of strict foreclosure may ncit be adapted to give n^lress to the plaintifT through the medium of such a lien, still a court of <'<|uitv (ill) dcvivi' a niodi' tb;it will be apjiropriato ; for it wouM 512 COMMON LAW RELATIONS. [CIIAP. I. be strange if a lawful lien upon property to secure a debt could not be enforced according to its tenor by a court of chancery. It is said that every wrong has its remedy; so it may be said that every case requiring equitable relief has its corresponding mode of redress. We have no doubt that a court of equity has the power to subject the property in question to the pa3anent of this debt, upon a proper complaint adapted to the purpose. When personal property is pledged to secure the payment of a debt, it may be taken and sold, that payment may be made, after giving the pledgor a reasonable opportunity for redemption. So here, we think a similar course might be taken with this property. Such a course would fall in with the original intent of the parties, and with the civil code and mode of procedure of the State of New York. Modes of redress in that State have of course no force in this State, but such a mode of procedure seems to be adapted to a case of this character. . And we further think that on an amended complaint, setting forth all the essential facts, and praying that if there shall be a default in redeeming the property during such time as the court shall allow for redemption, then the right of redemption shall be forever foreclosed, and the legal title and possession of the property be decreed in the mortgagee, such course might be taken. We think either of the modes suggested might be pursued; but inasmuch as the course which has been taken leaves the legal title and possession of the property in the mortgagor, we think the court erred in holding the complaint sufficient, and in passing the decree thereon. There is error in the judgment appealed from, and it is reversed, and the case remanded. In this opinion the other judges concurred. DoLLTVER v. St. Joseph Insurance Co., 188 Mass. 315 (1880). A mortgagor of real property insured the same under a policy, Avlierein he represented himself as having "the entire, unconditional and sole ownership" of the property. It was held that there was no misrepresentation. SouLE, J. It has long been settled in this Commonwealth that, as to all the world except the mortgagee, a mortgagor is the owner of the mortgaged lands, at least till the mortgagee has entered for possession {WiUiiigton v. Gale, 7 Mass. 138; Waliham BanJc v. WaJlham, 10 Met. 334; White v. Whitney, 3 Met. 81; Ewer v. Uohhs, 5 Met. 1; Henry's case, 4 Cush. 257; Howard v. Robinson, T) Cush. 119; Buff urn v. Boivditch Ins. Co., 10 Cush. 540; Farns- u'orih V. Boston, 126 Mass. 1). This being the law, and the "" " 1 S.MAIill.i: C. UII.I.IA.MS. ol.] mortgagees not being in |)osscssioii of ihr promises, the plaintifT's assignor might well he (h'scrihcd in a policy of insurance as the joint tenancy nor tenancy in common of the mortgagor and the mort- gagees. All the characteristics of such tenancies are lacking in their relations to the property. • CIIAPTKH I. (Cnti/inurf/.) »SKrri«i\ 11. 1 '<>ssi;>>i<>\. SMAirrij'; \. wiudAMs. C'ol |{T Ol Kl\(i> liKNCII. it;i) I. On a trial at bar the case upon evidence was: a man made a mortgage for years to A., who without the mortgagor's joining assigned it to B., who assigned to I'., under whom the jjlaintiir in ejectment claimed; and it was objected by Levinz, that though In, iidndtted the first mortgagee might well assign witiiout making any entry or joining the mortgagor, who is but tenant at will to the mortgagee, and his possession as such is but the possession of his mortgagee, yet the assignment «»f the lirst nmrtgagee d«'termined lh«> lease at will, and the mortgagor thereby became tenant at sufTer- anec, and his continuance in po.sscssion divested the term and turned it to a right, .so that it coidd not be assignable without R.'s • ntry on the mortgagor's joining; that it was at least a divesting of the term at the election of the assignee according to liluntler and ' Coinpiuo Tilniirii v. Jirnnr. 2 flroonl. (>[«>.) 1.12 (lS22t. 314 COMMON LAAV RELATIONS. [CIIAP. I. Daw's case, 1 Cro. 305. And B. the assignee had made his election and brought an ejectment against the mortgagor, which admitted his being out of possession ; and they shewed the record itself, wherein the assignee was lessor of the plaintiff. Sed per Holt, C. J. Upon executing the deed of mortgage, the mortgagor, by the cov- enant to enjoy till default of payment, is tenant at will, and the assignments of the mortgagees could only make the mortgagor tenant at sufferance, but his continuing in possession could never make a disseisin, nor divesting of the term; otherwise if the mort- gagor had died and his heir had entered, for the heir was never tenant at will, but his first entry was tortious ; or if the mortgagee had entered upon the mortgagor and the mortgagor had re-entered^ for the mortgagee's entry had been a determination of the will, and the re-entry of the mortgagor had been merely tortious. And as to the bringing an ejectment, it was said, that could not admit an actual divesting, so as to turn the term to a right, for that was not brought to recover the mortgage-term but the actual possession only, for the recovery of which the assignee of the first mortgage had no other way but this, or to make a forcible entry, which the law forbids ; nor does the assignee appear a party to the record, hut only a lessor of the plaintiff, so that this record can be no evidence or estoppel against him, and the court will take notice that an ejectment is only a fictitious proceeding for recovering the posses- sion which cannot well otherwise be obtained; and the entry laid in the declaration or confessed by the defendant, is not an entry that is real, for it shall neither avoid a fine, nor be sufficient evi- dence to support trespass for the mean profits.^ KEECH V. HALL. Court of King's Bench, 1778. (1 Douglas, 21.) Ejectment tried at Guildhall before Buller, Justice, and verdict for the plaintiff. After a motion for a new trial, or leave to enter up judgment of nonsuit, and cause shown, the court took time to consider; and now Lord Mansfield stated the case and gave the opinion of the court, as follows : Lord Mansfield. This is an ejectment brought for a warehouse- in the city by a mortgagee against a lessee under a lease in writing for seven years, made after the date of the mortgage by the mort- ' nail V. Doc (1. Surtces, 5 B. & Aid. 087 (1822), accord. St"-<'- 111 KEF'CII C. HALL, 3 1 •"> ;:ii;,'or, who had contimu'd in possession. The lease was at a rack- rent. The nu)rt<,'a^ee had no notice of the lea.se, nor the lcs.see any notice of the mortpige. The defendant otTered to attorn to the mortj;aj,'ee before the ejectment was brought. The plaintiff is willing to svilTer the defendant to redeem. There was no notice to (juit; so that, though the writti-n lease should be bad, if the lesstt; is to be considereil as tenant from year to year, the plaintilT must lail in this action. The question, therefore, for the court to decide IS whether, by the agreement understood between mortgagors and mortgagees, which is that the latter shall receive interest and the former keep possession, the mortgagee has given an implied author- ity to the mortgagor to let from year to year at a rack-rent ; or whether he nuiy not' treat the defendant as a trespasser, disseisor and wrongdoer. Xo case has been cited where this question has been agitated, much less decided. The only case at all like the present, is one that was tried before me on the home circuit (lielchier v. Collinf!) ; but there the mortgagee was privy to the lease, and afterwards, by a knavish trick, wanted to turn the tenant out. I do nut wonder that such a case has not occurred before. Where the lease is not a beneficial lease, it is for the interest of the mortgagee to continue the tenant; and where it is, the tenant may put himsell" in the place of the mortgagor, and either redeem himself or get a friend to do it. The idea that the question may be more proper for a court of e([uity goes upon a mistake. It emphatically belongs to a court of law, in opposition to a court of equity : for a lessee at a rack-rent is a j)urchasor for a valuable consideration, and in every case between purchasors for a valuable consideration, a court of equity must follow, not lead, the law. On full considera- tion, we are all clearly of opinion that there is no inference of fraud r consent against the mortgagee to prevent him from consi(U-r- ing the les.see as a wrongdoer. It is rightly admitted that if the mortgagee had encouraged the tenant to lay out money he could not maintain this action; but here the question turns upon the agreement between the mortgagor and mortgagee; when the mort- gagor is left in possession, the true inference to be drawn is an agreenu'ut that he shall possess the premises at will in the strictest sen.-ie, an, a eonveyance by the reversioner was void without the attornment of the tenant (Co. Liit. .'10!), a, b), which was neeessary to sujiply the place of livery o( seisin. Since that statute I admit that attornment is no lunger necessary to give effeet to the deed; i)ut it does not follow from thence that a grantee has now a right to di>train before he turns his title into actual possession. The mortgagor (according to a hit.* case {Kerch v. Ilall. supra. M. ID, (ieo. 3. p. iM |) is tenant at wdl to the mortgagee, and has a right to the rents and profits due befon- his will is determined. Nothing in this case can amount to u deter- mination of the will, before the demand of the rent on In-half of the mortgagee, and the whole of that for which the distress was made 318 COMMON LAW RELATIONS. [CHAP. I. became duo before the demand. If the mortgagor himself had been in possession, he coukl not have been turned out by force ; the mortgagee must have brought an ejectment. The assignees had called upon the plaintiff for the rent, as well as Gallimore, and how could he take upon himself to decide between them ? The mortgagee should have brought an ejectment, when any objection there might have been to the title could have been discussed. It does not appear from the case that the interest in arrear had ever been demanded of the mortgagor, and there is a tacit agreement that the mortgagor shall continue in possession and receive the rents till default is made in paying the interest. 2. The notice is irregular, and, on that account, the distress cannot be justified. By the common law, the goods could not be sold. The power to sell was introduced by the statute of William and Mary (3 W. & M. sess. 1, cap. 5, § 3), but it is thereby required, that notice shall be given thereof " with the cause of taking," &c. These requisites are in the nature of conditions precedent, and, if not complied with, the proceedings are illegal. It is true, this irregularity, since the statute of 11 Geo. 2, cap. 19, § 19, does not make the defendants trespassers ah initio, but the action of trespass is still left by that statute, for special damages incurred in consequence of the irregularity. Lord Mansfield ob- served that the plaintiff was precluded by the case from going for special damag'es arising from any supposed irregularity in the sale, no svich special damages being found, and the question stated being only whether the distress was justifiable; and Buller, Justice, said that it was not necessary by the statute of William & Mary, to set forth in the notice at what time the rent became due. Bower for the defendants. If the law of attornment remained still the same as it was at common law, the conversation stated to have taken place between the plaintiff and Harwar would amount to an attornment ; and, when there has been an attornment, its operation is not restrained to the time when it was made : it relates back to the time of the conveyance, and makes part of the same title, like a feoffment and livery, or a fine or recovery, and the deed declaring the uses (Long v. Ileming, 1 Anders. 356 ; s. c. Cro. El. 209). Now, however, any doubts there might have been on this subject are entirely removed by the statute of Queen Anne, the words of which are very explicit, viz. (4 Anne, c. IG, § 9), "that all grants or conveyances of any manors, rents, reversions, or remainders, sliall 1)0 as good and effectual to all intents and pur- poses, without any attornment of the tenants, as if their attornment had been had and made." The proviso in the same statute (§10) which says that the tenant sliall not be prejudiced by the payment of any rent lo the granlor before he shall have received notice of sF.r. II.] MOSS i. GAl.LI.MUKi:. 310 ilic ^'rant, shows tliat it was meant that all the rent which iiad nut lurn paid at tiie time of the notice should he payahle to the grantee, 'i'he iii()rt;,Mj,M)r is called a ti-nant at will to the mortga^'ee. That may he true in some respects, hut it is more correct to consider him as acting for tlir mortgagee in the receij)t of the rents as a trustee, subject to have his authority for that purpose put an end to, at whatever time the mortgagee pleases. It is said, the proper method for the mortgagee to have followed would liave heen to have hrought an ejectment, hut it is only a very late practice to allow a mort- iragee to get into the possession of the rents by an ejectment against a tenant under a lease prior to the mortgage (U7ti7c v. Hawkins. A/z/z/v/. M. i;», Geo. 3, p. 23, Note 7). The interest, it is said, is not stated to have been demanded; but the case states tiiat, at the lime of the notice and distress, more than the amount of tlie rent in arrear was due. It is said, the tenant could not decide between ihc mortgagor (or, which is the same thing, his assignees), and the mortgagee; but that is no excuse. He would have had the same ililliculty in the ease of an absolute sale; a mortgage in fee being, at law, a com))lete sale, and only differing from it in respect of the «t|uity of redemption, which is a mere equitable interest. The court lold him it was unnecessary for him to say anything "11 the other point. LoHD M.vNSFiELD. I think this case, in its consequences, very material. It is the case of lands let for years and afterwards mort- _ag('d. and considerable doubts, in such cases, have arisen in respect lo the mortgagee, when the tenant colludes with the mortgagor; for, the lease protecting the possession of such a tenant, he cannot be turned out by the mortgagee. Of late years the courts have gone -o far as to permit the mortgagee to proceed by ejectment, if he has -ivcn notice to the tenant that he does not intend to disturb his |.ossession, but only reciuires the rent to be paid to him. and not to the mortgagor. This, however, is entangled with dilliculties. The question here is, whether the mortgagee was or was not entitled to the rent in arrear. Before the statute of Queen Anne, attornment was necessary, on the i»rinci|)le of notice to the ti'uant ; l)ut. wlu'ii It took place, it certainly had relation back to the grant and, like other relative acts, they were to be taken together. Thus livery of M'isin, though made afterwards, relates to the time of the feolTment. Since the statute, the conveyance is eom])lete without attornment, but tiicre is a i)rovision. that the tenant shall not be iirejudict d for any act done by him. as hohling under the grantor, till he ba- llad notice of the deed. Therefore the payment of rent before such notice is good. With this protection he is to be considered, by forc«' of the statute, as having attorned at the time of the <'xeeution of th«' grant : and. here, the tenant has sulTered no injury. No rent ha> 320 COMMOX LAW RELATIONS. [CIIAI'. I. I been demanded which was paid before he knew of the mortgage. He had the rent in question still in his hands, and was bound to pay it according to the legal title. But, having notice from the assignees and also from the mortgagee, he dares to prefer the former, or keeps both parties at arm's length. In the case of execution it is uniformly held that if you act after notice, you do it at your peril. He did not offer to pay one of the parties on receiving an indemnity. As between the assignees and the mortgagee, let us see who is entitled to the rent. The assignees stand exactly in the place of the bankrupt. Now, a mortgagor is not properly tenant at will to the mortgagee, for he is not to pay him rent. He is so only quodam modo. Nothing is more apt to confound than a simile. When the court, or counsel, call a mortgagor a tenant at will, it is barely a comparison. He is like a tenant at will. The mortgagor receives the rent by a tacit agreement with the mortgagee, but the mortgagee may put an end to this agreement when he pleases. He has the legal title to the rent, and the tenant, in the present case, cannot be damnified, for the mortgagor can never oblige him to pay over again the rent, which has been levied by this distress. I therefore think the distress well justified; and I consider this remedy as a very proper additional advantage to mortgagees, to prevent collusion between the tenant and the mortgagor. AsHiiURST, Justice. The statute of Queen Anne has rendered attornment unnecessary in all cases, and the only question here arises upon the circumstance of the notice of the mortgage not having been given till after the rent distrained for became due. Where the mortgagor is himself the occupier of the estate, he may be considered as tenant at will ; but he cannot be so considered, if there is an undertenant ; for there can be no such thing as an under- tenant to a tenant at will. The demise itself would amount to a determination of the will. There being in this case a tenant in possession, the mortgagor is, therefore, only a receiver of the rent for the mortgagee, who may, at any time, countermand the implied authority, by giving notice not to pay the rent to him any longer. BuLLER, Justice. There is in this case a plea of the general issue, Avhich is given by statute (11 Geo. 2, c. 19, § 21), but if the justifica- tion appeared upon the record in a special plea, the distress must be held to be legal. Before the act of Queen Anne, in a special justification, attornment must have been pleaded. But since that statute, it is never averred in a declaration in covenant, nor pleaded in an avowry. In the case of Keech v. Ilall, referred to by Mr. Wood, the court did not consider the mortgagor as tenant at will to all purposes. If my memory do not fail me, my lord distinguished mortgagors from tenants at will in a very material circumstance, namely, that a mortgagor would not be entitled to emblements. f*^:<■• "1 l'AUTl£llJ(Ji: f. Ui;i{L. iJ'vl Exprcssiuns used in particular cases are to be uiulerstood with rela- tion to the subjeet-inatti'r then before the court. The postca to be delivered to the defendants.' PAKTRIDGK v. BERK. CoLUT OF KiNc's BKN'cir, 1822. (.5 B. cl- .!/se and oc<'upati»rant, all the rent unpaid in his hanct, sue for the rent. Here it is whether the tenant of the mortgagor could not, l)y his own a be«'n n'-enacted here. The former does not relate to this case, but the latter has an important and il.risive bearing upon it. The 2Sth section of the statute concerning 324: COMMON LAW RELATIONS. [CH.vp. I. distresses, rents, and the renewal of leases (1 X. K. L. -A^o), aftei- reciting that the possession of estates is rendered precarious by the frequent and fraudulent practice of tenants attorning to strangers,, by which means landlords and lessors are turned out of possession,, and put to the difficulty and expense of recovering possession by suits at law, enacts that every such attornment shall be null and void, and the possession of the landlords or lessors shall not be deemed to be, in any wise, changed by any such attornment ; with a proviso that nothing therein contained should extend to vacate or affect any attornment made pursuant to and in consequence of any judgment at law, or decree or order of a court of equity, or made with the privity and consent of the landlord or lessor, or to any mortgagee after the mortgage is become forfeited. The mischief which the statute was intended to remedy was the attornment by tenants to strangers claiming title ; and, without the proviso, the construction of the enacting part of the statute would have admitted of no doubt. But, to remove every doubt, the legisla- ture have declared wdio were not strangers, and to whom the tenant might lawfully attorn; he may attorn to a mortgagee after the mortgage is forfeited. The reason of this is obvious. The mort- gagee, as between him and the mortgagor, has the right of entry, and is entitled to the possession of the premises. If, then, the- tenant wdll do voluntarily what the law will coerce him to do, yield up the possession to the mortgagee, it is not an act injurious to- the just rights of the mortgagor, nor disloyal towards him. Indeed, the rights of the tenant also require that he should be allowed to do so ; for, if he refuses to attorn, he at once subjects himself to eviction and the payment of costs. The statute makes no difference between a tenant to the mortgagor, who becomes so before or after the execution of the mortgage. It applies to every tenant of the mortgagor, without reference to the time when he became tenant. The reason is the same in both cases, and they are both embraced by the proviso of the statutes ; and neither of them are within the mischiefs intended by the enacting part of the statute. Judgment reversed, and a venire de novo to be awarded in the court below.i ^ Magill v. Hinsdale, G Conn. 464 (1827), accord. Compare McKirchT V. Haicley, IG Johns. (N. Y.) 289 (1819), and see Uogsctt v. Ellis, 17 Mich- 351 (18G8), contra. ^" • "1 SULULliS c. VANSKM.i;. 325 SOUDERS V. XANSICKU: SrPHKMi: CoritT of JinR-ATnn-: or Xi:\v .h;itsi;v_, l.s.'o. (;{ lliiht. \n:\ (:^s(;|.) >>axton and Vroom for tlir j)laintilT. U'(/// for the defendant. The Chief .Fustice havin<; heen coneerned as founsel in the cause ht lore he eaine upon the l)eneh, <;ave no opinion. Tlie opinion of the court was delivered hy FoiJD, J. This writ of error lnMn«,'s up ,\ jud^'iiient of the inferior I 'iirt of Conimon Pleas for the county of Hunterdon, in an action <>n the case hy Vansickle and (Jarrison against Joshua Souders for the enjoyment of certain jjremises hy their permission from May. 1821, to April, 1822. The case was that one John Holmes, the j>rior owner, had mortgajjed the premises in 1817 to Samuel and Joseph Drake for the payment of a sum of money, and after remaining several years in ])ossession, had conveyed his remaining interest in the ])remises to Maxwell and Conover. These men filtered and put Joshua Souders in possession as their tenant. Hi this state of thing^s the sheritf levied on Maxwell's right in the premises hy virtue of an execution against him, and struck it olT at puhlic sale, the 11th of May, 1821, to Vansickle and CJarrison; oji the 21st of July following he made out to them a deed of con- \eyance. As soon as the right was struck otf to Vansickle and l!arri.>;on, and before they got a deed, Joshua Souders, the tenant, attorned to them as his landlords and agreed to j)ay theni a stipu- lated rent. Shortly afterward Sanuiel and Hiday Drake conceived that as mortgagees they were the persons entitled to have the rent ; wiiereujyon tlu-y served notice of their mortgage on Souders, the tenant, forhid him to pay the rent to Vansiikle and (iarrison. his immediate landlords, and recpiired him to pay it to them as holders of the mortgage. This Souders not only agreed to do, hut afterward paid it accordingly to the mortgagees on receiving from them an indemnity. The mortgagees, on liling a hill against lltdmes. the mortgagor, and making \'ansiekle and (Jarrison j)arties thereto, obtained a decree on the loth of Oetolter, 1S21. foreclosing the equity of redemption against all thnr of tluni in the Court of Chancery. On the trial of the cause X'ansickh' and (iarrison i>rove«l thf iHcupation of the premises hy Souders, \inder their j>ermission, and ^'i< agreement to pay them rent ; and then restetl their cause. ^ uders thereupon offered to prove the mortgage, the notice of it rved (»n him liy tlie mortgagees. (luMr ilemand upon him for the 326 COMMON LAW RELATIONS. [CHAP. I. rent, and his actual payment of it to them. He insisted that ho was bound by law, under such circumstances, to pay to the mort- gagees, and therefore the payment was a good defence against his landlords. The court being of a different opinion overruled his defence. Whether the mortgagees after such notice or demand could have sued Souders or distrained his goods for the rent, is the main point in dispute. It was fully settled on satisfactory principles, in the case of Moss V. Gallimore, Doug. 269, that a tenant under a lease made prior to the mortgage may be sued or distrained upon by the mortgagee for rent, after notice not to pay it to the landlord. The lease in that case was a few months older than the mortgage ; consequently the rent was an incident of the estate ; in other words it was a part of the property at the time of the grant, and passed by it to the mortgagee. The mortgagor was estopped by his own deed from claiming rent that he had conveyed away; the mortgagee was the assignee of the rent, and might take it to himself whenever he saw proper. No injury is done in such case to the tenant, who is to pay to the lessor or his assigns, and can pay but once. Moreover it is the duty of a tenant at common law to attorn to the grant of his landlord whenever he makes one. He was compellable to do s!> till the statute rendered the form of it unnecessary. Since the statute, the court are to consider him as having attorned at tho time of the execution of the grant. To attorn is to acknowledge the grantee (that is the mortgagee) as landlord under whom he holds the estate. On this, a liability to him for rent is a matter of course. But in this case Souders was no tenant at the date of the mortgage nor till many years afterward ; he never held under the mortgagor or grantor, nor stood in the relation of a tenant to him ; his rent could not have been conveyed by the.mortgage as incident to or a part of the estate, because his rent did not exist at the date of the mortgage. As it has no resemblance whatever, therefore, to the case of Moss and Gallimore, and stands wide of the principle contained in that decision, it cannot be governed by it. I admit that some authors, treating of mortgagors remaining in possession and making leases subsequent to the mortgage, say that in such case the mortgagee has his option either to treat such tenants as wrongdoers and turn them out by ejectment, or to recover rent from them by distress or action, after giving notice of the mortgage and making a demand of the rent. See Powell on Mortgages, 66, 67, 68 ; and Bacon's Ab. tit. IMortgage, c. note e. Tin fortunately these authors do not cite a case that turned on this point, nor have I been able to find one ; yet cases must have been very frequent and familiar if such were the law. \ mortgage!^ ''^:«•• "1 SOUDEKS r. VANSK'KI.K. 3*^7 would seldom hriiij; an (jfcUiicMt, whit-li is the common w.iv, if l)y distraining' the tenant he could <,'et into possession of the rent; for he would not oidy ohtain thereby the rent towards his interest, hut j,'et into ])ossession also. The only case cited hy those authors is that of Jiirch v. Writjhl. 1 Term. Kep. .'JTS ; but that was the ca.-e of one who had been a tenant linni year to year of the mortgagor from before the date of the mortgage till many years after it. Huller, Justice, said, " I consider him as holding all that time under a demise made before the conveyance to the plaintiff; for if tenant from year to year holds for four or live years, either lie or his landlord may declare on the demise as having been made for such a number of years, and so it was expressly laid down by Holt. (\ .T., in LajQ V. Slrndir'uh-. Salk. 414." But their position is not more destitute of cases to support it, than it is to my mind of principle. IIow could Souders attorn to the mortgage at the time it was made, when he was no tenant at that time nor till three or four years afterward? IIow can the court consid(>r him as having attorned at that time without an absurdity? Could Souders' rent have been part and parcel of the estate when Holmes conveyed it, at which time there was no such rent in being? And Holmes had no such rent to convey. It is a maxim, according to Co. Lit. lib. 3. sec. ')7y\, that no man sliall attorn to a grant l)ut he who is immediately privy to the grantor; therefore Souders could not attorn to a grant of Holmes, for he was not his lessee, he held no part of the estate, and there was no relation or privity between them. As a mortgagor remains in jiossession only at the will of the mortgagee, and in the meantime receives the rent and j)ays it over to keep down the interest of the mortgage, he was once accidentally likened to an agent of the mortgagee; fnun thence an inference was hastily drawn that if the agent at any tinu^ made a lease the mortgagee as principal might have the benefit of it. Hut a njort- gagor in pos.session is no agent; for according to a long train of decisions he cannot l)e made to account either in law or equity for the jirofits h(^ may have received from (he estate; the idea of an agency was thereff)n> instantly exploded. In fine, no jirinciple presents it.self to my mind on which a mortgagee who is neith«'r party nor privy to a ha.se can claim the benefit of it against the will of the lessor and lesse«' and in contravention of the covenant therein, that the lessee shall pay the rent to the les.sor. The (|Ue>- tion now under consideration came Jip in the Su|)reme Court of the State of Xew York directly in the ease of MrKirrhrr v. Ifnirleif. H> John. 28(5, and there the court held unanimously that where the lease is subsequent to the date of the mortgage, a mortgagee an neith(>r distrain nor briiiir an action for rent aandlord and Tenant, 330, too numerous to be cited. There seem to be some exceptions to this rule, where a tenant has been ejected or turned out of possession by title paramount, and where the lease shews that the title will expire at a certain time or on a certain event, as in consequence of the lessor being only an executor during the minority of A.; but this case comes under none of those excep- tions. It would form the i)lain precedent of a tenant occupying by permission till the end of his term, and then evading the pay- ment of rent by denying the landlord's title for the very time that the tenant held under liim. On the whole, the matters ofTered in evidence would not have amounted to a legal di'fence. and were properly overruled. I am therefore of opinion that the judgment of the court below ought to be atrirmed. Judgment affirmed.^ Xew York Rk.vl PitorKRTV Law, g 19 J. AHurnnintf hi/ irmiul. I lie attornment of a tenant to a stranger is absolutely void, and does not in any way alTct ( the possession of the li.ndlord unless made either: '"Tlii.s <'nsr wax rov«>r>r(l liy tlio Court nf Krrnr«, N'ovoinlxr (orni. 1S32" llaM. N. .1. l)i>j., Ttnant. 10. Ami sc- I'tirv v. Smilh, 1 (;iorn Ch. .'>l«l il83,S), and Sumlnson v. I'rirr, 1 Znl)r. (».'{7 (lS4t»). ic<'o>riiizinp the efll- rarv of ultm imu-nt (if Irimnt to iiiiirltraj;c«'. uiulor tlio statute ((Jon. Stat. flSOC] !!)•_»(). § -20. 330 COMMOX LAW RELATIONS. [CIIAP. I. 1. With the consent of the landlord; or, 2. Pursuant to or in consequence of a judgment, order, or decree of a court of competent jurisdiction ; or, 3. To a mortgagee, after the mortgage has become forfeited. ^ Maine Rev. Stat. (1883), chap. 90, § 2. A mortgagee, or person claiming under him, may enter on the premises, or recover possession thereof, before or after breach of condition, when there is no agreement to the contrary; but in such case, if the mortgage- is afterwards redeemed, the amount of the clear rents and profits from the time of taking possession shall be accounted for and deducted from the sum due on the mortgage. Mass. Pub. Stat. (1882), chap. 181, § 10. Nothing contained in this chapter shall prevent a mortgagee or any person claiming under him from entering on the premises or from recovering jiossession thereof before breach of the condition of the mortgage,, when there is no agreement to the contrary. Vermont Stat., § 1498. Every mortgagor shall, until condition broken, have, as against the mortgagee, the legal right of possession to the mortgaged premises, unless it is otherwise stipulated in the mortgage deed. 'To the same effect are New Jersey Gen. Stat. (1896), p. 1920, § 20, and Missouri Rev. Stat. (1889), § 6373. " It is claimed that the attornment to defendant is valid under section 2013 of the Code, which is as follows: 'The attornment of a tenant to a stranger is void, unless made with the consent of the landlord, or pursuant to or in consequence of a judgment at law or in equity, or to a mortgagee after the mortgage has been forfeited.' It is claimed that the mortgage to Hamilton was forfeited by the non-payment, at maturity, of the note se- cured, and that thereupon the tenant in possession had the right to attorn and transfer the constructive possession to defendant. This cannot be the meaning of this section. Under such a construction all the decisions of this court liolding that the legal title and right to possession are in the mort- gagor until after foreclosure and expiration of the year for redemption, could be evaded and nullified in all cases where the mortgaged property is in possession of a tenant. The decisions relied upon by appellant were based upon the common law idea of a mortgage, under which, in default of payment at the time named, the mortgagee was entitled to possession of the- mortgaged premises, and might maintain an action of ejectment therefor. We are satisfied that under this section there can be no valid attornment until after foreclosure and expiration of the period of redemption, where the property is sold subject t© redemption." — Per Day, J., in Mills v. Ham- ilton, 49 la. 108 (1878). See also Mills v. Beaton, 52 la. 215 (1879), ami Code (1897), § 2990, in whi h the ambiguity is removed. Tlie similar provision of the Wisconsin statute ( R. S. [1871] 1165, § 1), apparently interpreted in accordance with Jones v. Clark, has also been repealed. Ann. Stat. (1889), § 2182. M<'- II 1 stom; c. i'\ I 1 1 it-^ov. :VM S. V. C'oDi: I'lV. I'uoc. Action to rcrovrr nut prttprrttj. 5; I l!lS. A mortfja<;(v, or his assi<;n(r or other rcpn'scntativc, cannot main- tain siith an art ion, to ncovcr tlir niortgagt'd premises. STONI-: V. i'.\'r'ri:i{sox. Supreme Jiduial ContT of Massachusetts, 1837. (1!) I'iik. ITd.) Assumpsit for rent from A])ril 1st, 183.'), to .Fanuary 1st, IS.'.C. On a case stated it ai)peari'(l, that one Kni;,dit, hein<( the owner of the premises, suhject to a mort^'a^e t(» one French, executed a k-ase of the same to the defendant, on the 1st of April, 183."), for three years, at a certain rent ])er annum, jiayalik' (piarterly; that the defendant ]>aid Kni',dit a ])art of the rent in advance; that in May, 183.'), Kni the niortgason v. Crrliorr. ') l*iek. I."»l. G. Parker, for the defendant, cited as to the rent paid in advance, St. 4 & T) Anne, c. Ki; Slurilij v. AriKiiid. 3 T. K. .'»lili; Ftirlrif v. Thompson, 15 Mass. U. 18; and as to the entry l>y the m<>rt^M;ree, Fitrhhurg Manuf. Corp. v. Mclvrn. 1.') Mass. U. "..MiS ; l!rssor to whom |)ayment was made, and is a <;oo(I har to the claim of th»» plaintilfs, his assi;,'nees. 'IMie case of Furlcij v. Thompson, l.l Mas<. K. IS, is decisive on this jiart of the case. It has heen ar> iK'uotiahlo 333 COMMON LAW RELATIONS. [CHAP. I. securities applied to the assignments of leases; but these assign- ments are governed by the well-known rule of caveat emptor.^ In respect to the other portion of the rent claimed, it is quite <'lear that the defendant was bound to pay it to French, who entered under a mortgage made previously to the lease, and ordered the rent to be paid to him. It is objected that this entry was not a good entry for condition broken, because no notice was given to the plaintiffs. But it is immaterial whether it was a good entry for the purpose of foreclosure or not ; for the entry was lawful, and the mortgagee thereby became possessed of the premises, and might have expelled the defendant if he had not agreed to pay rent to him. This was eqiiivalent to an actual and complete ouster or eviction, as was decided in Fitchburg Manuf. Corp. v. Melven, 15 Mass. E. 2G8, and in Smith v. Shepard, 15 Pick. 147. Such an ouster or eviction by a person having a paramount title is a good defence to an action for rent by the lessor or those claiming under him. Plaintiffs nonsuit.- KIMBALL V. LOCKWOOD. Supreme Court of Ehode Island, 1859. (C) 7?. I. 138.) Debt for rent of a shop in High Street, Providence, wherein the plaintiff claimed $150, for the last three quarters of the year elapsing between March 1, 1858, and March 1, 1859, under a lease parol by him made to the defendants. The case was submitted to the court, under the general issue, in fact and law; and it appeared that the late Henry Matthewson, being the owner of the leased premises, in his lifetime mortgaged them in fee to his son, Henry C. Matthewson, and upon his death tliey, with other real estate, came into the possession of the plaintiff, 'See Farley v. Thompson, 15 Mass. 18 (1818), accord. De Nicholls v. fi(iundcr.ossession (Erans v. Elliot, 9 Ad. i*;- Ell. 159; The Manchester Hospital anJ I.ifr Ins. Cn, v ^yilson. 10 Met. 12(1). The mortgage, however, ci>iivcys liic title to possession I'j ih-.' 334 COMMON LAW RELATIONS. [CHAP. I. mortgagee, and, indeed, when, as in this case, forfeited, the whole title at law; and, unless some statute forbid, which none here does, the tenant of the mortgagor may attorn to the mortgagee, and by thus placing him in possession of the mortgaged premises entitle him to the rents thereof. There is no disloyalty to his landlord in such attornment by the tenant, since thereby he only recognizes a title which his landlord has granted (Jones v. Clarh, 20 Johns. 51). In Evans v. Elliot, supra. Lord Denman seems to agree that the tenant's attornment will create a privity between himself and the mortgagee, or, as he expresses it, " is at least necessary" to create the relation of tenant and landlord between them ; although he decides that the attornment will not relate back to a notice before given by the mortgagee to the tenant, but creates the privity and right to rent only from the time when it is actually made. As attornment is nothing more than the consent of the tenant to the grant of the seignory, or, in other words, to become tenant of the new lord (Co. Lit. 309 a; Butler's note, 272), and the tenants in this case, by promising to pay and actually paying the rent to the mortgagee, thus attorned to, and became tenants to him, it follows that they rightfully paid to him the subsequently accruing rent, and cannot be compelled to pay it over again to the plaintiff. eTudgment must therefore be rendered for the defendants, for their costs.^ . HUBBELL V. MOULSOK Court of Appeals of New York, 1873. (53 N. Y. 225.) Appeal from judgment of the General Term oi the Supreme Court in the fourth judicial department in favor of defendants, entered upon an order denying motion for a new trial and directing a judgment on verdict. This action was ejectment to recover possession of the undivided lialf of a lot of land situate in Brighton, Monroe County. The facts appear sufficiently in the opinion. The court directed a verdict in favor of defendants, which was rendered accordingly. ' Htcdman v. Gassett, 18 Vt. 34G (184G), accord. That neither entry by tlie mortgagee nor attornment of the tenant is necessary to entitle the mort- },r:igee to "intercept" the rents, see Marx v. Marx, 51 Ala. 222 (1874); Comer v. Hhechan, 74 Ala. 4ry2 ( 188,3). But compare Dralford v. Turk, 75 Ala. 339 (1883), and see Bartlctt v. Hitchcock, 10 Bradw. (111.) 87 (1881), contra. •■" • "1 iintiiii I ;■ \i(»ri.s()v. 3;J5 lv\( I'jjiions were onli'icd lnaiii m \\\r {\v^[ iii>t;m(c ;il (icncral Tfrni. Fraiitis Kcniaii for tlio appellant. Paymont of the mortga^o or tendtT of the amount due diseliarges the lien of a mortgagee (.5 K. S., 3d ed., 5i)!), 850; 4 Kent's Com., 11th cd., JO!), note 4; Eihcnrds v. Farmers' Ins. Co., -2\ Wend. -I(i7; s. c. in error, :?<) iil. 041 ; Ariwlt v. Post, (i JliU, (J.-); Kurlr'uihl v. ('(uhj. 2\ X. V. :{|;'.; Wariiiij V. Smith, 2 Barb. Cli. 11!». i:?-")). After payment or tender f the amount due an aetion of t'jeetinent will lie ('-*1 Wend. 4tJT ; <; /(/. 541; G Hill. i\r>). W. F. Co(jsircll for the respondents. Defendants were mort- gagees in possession, and an aetion of ejectment could not be maintained against them {Van Duyue v. Thayrc, 14 Wend. 233; rhiife V. Eilcij, 15 id. 248; Chase v. Peck. 21 X. Y. 581 ; Hubhcll 'I al. V. Siblri/. Ms). AxDiunvs, J. The plaintiffs claim title under Alfred Ilubbell, tlie mortgagor, to the undivided half of premises mortgaged by him to Hiram Sibley, December 1, 1846, to secure the payment of $7,0(»0. The action is ejectment, and it was necessary for the jilaintilFs, in nrdi-r to recover under their complaint, to show that they were Mtitled, as against the defendants, to the possession of the premises .a the time of the commencement of the action. The defendants are the grantees of Sibley, the mortgagee, under a deed dated .'une 7, 1840. and are in possession, claiming under that deed. They stand, by reason of that conveyance, in privity with the mort- gagee, and their right to the possession is the right of the mortgagee, and the right of the plaintifTs dejjcnds upon the same principles as if Sibley was in possession and the action had been brought against him {■/(iclson v. Mueller, 10 J. II. 47!>; Jiirhson v. Jimrrn, 7 Cow. 13 ; Robinson v. Pijan, 25 X. Y. 320). The plaintitts on the ! ial offered to ])rove that the mortgage debt had been paid by the nceipt by Sibley, before the commencement of the action, of rents and |)ro(its from the land sullicient to satisfy it. The evidenci' was «'\(lu(led. If the mortgage' was in law subsisting and unsatislii-d when the action was commenced, then it cannot be maintained, as the authorities are decisive that ejectment will not lie by a mort- gagor against a mortgagee in jjossession (Van Diitfue v. Thut/rr, 14 Wend. 233; Phi/fe v. Rih;/. 15 Wend. 248; 'Pell v. 11 mar, 15 X. '^'. 13!t). Leaving out of view the alleged title under the stilt ute foreclosure, the (piestion ari.ses. whether the receipt by a mortgagee in jwssession of rents and profits suflieient to .'satisfy the mortgage debt, does ipso facto extinguish it and discharge thf lien of the mortgage. If it does not. then tlie «'vidence was j)roj>('rly < \cluded. If admitted, it would not have shown a riirht in the 336 COMMON LAW RELATIONS. [CHAP. I. plaintiffs to the possession of the premises when the action was brought. It is the settled doctrine in this State that a mortgagee has by virtue of his mortgage a lien only, and not an estate in the land mortgaged (Runyan v. Mersereau, 11 J. E. 537; Jackson v. Craft, 18 id. 110; Jackson v. Bronson, 19 id. 325; Kortright v. Cady, 21 K Y. 343; Stoddard v. Hart, 23 id. 560). In harmony with this view it was held in Kortright v. Cady that a tender of the mortgage debt after it became due discharged the lien of the mort- gage and prevented a subsequent foreclosure. And it was held in Edwards v. The Fireman's Fire Ins. and Loan Co., 21 Wend. 467, 26 id. 541, that upon a tender after default by a mortgagor of the mortgage debt, ejectment would lie in his favor upon the refusal of the mortgagee to surrender the possession. But while no title in a strict sense vests in the mortgagee of land until foreclosure, yet his interest is, in some cases, treated and regarded as a title, for the purpose of protecting and enforcing the equities between parties. An instance of this is found in Mickles v. Townsend, 18 N. Y. 575, where it was so held for the purpose of applying the doctrine of estoppel by deed against a person claiming as assignee of a mortgage which existed at the time of his prior conveyance of the mortgaged premises with warranty, but Avhich was assigned to him afterward. And in Van Dyne v. Thayre, 19 Wend. 162, the release of the equity of redemption by the mortgagor to the mortgagee was held to inure as an enlargement of the estate of the mortgagee so as to prevent the plaintiff's recovering dower at law, in disregard of the equity of the defendant to have the mortgage first satisfied out of the land (Cowen, J., 21 Wend. 485). It is easy to see that where the English doctrine prevails, that the mortgage conveys a legal title to the mortgaged premises, the right of the mortgagor to an account of the rents and profits of the land received by the mortgagee is purely and exclusively of equi- table cognizance. At law, the mortgagee is the owner of the estate, and takes the rents and profits in that character. In equity, the mortgagor is regarded as the owner until foreclosure, and his right to an account is incident to his right of redemption (2 Wash, on Real Property, 161, 205; Seavcr \. Durant, 39 Vt. 103; Parson v. ^Yelles, 17 Mass. 419). But the necessity to resort to an accounting in equity, in order to have the rents and profits applied to the satisfaction of the mortgage, is not obviated by the fact that here the mortgagor retains the legal title. The mortgagee in possession takes the rents and profits in the quasi character of trustee or bailiff of the mortgagor (2 Pow. on Mort., 946 a; 2 Wash. 205). They are applied in equity as an equitable set-off to the amount due on sKc. II. 1 iirniti:!.!. r. moi i.son. 3;JT the iM()rtg;i;;t' dchl (Riirkmnn v. .l.-f/or. Pnifjo, 517). The law • loi's not apply them as rtroivi-d to the payment of the mort- ;,Mge. It depends upon the result of an accounting upon equitabh; jjrinciplcs, whi-thcr any part of the rents and profits received ^hall i)e so iij>plie(l. Tlu' mortgagee is entitled to have them applied, in the first instance, to reimburse him for taxes and necessary repairs made upon the ])remises; for sums paid hy him upon prior incum- hrances upon the estate, in order to protect the title, and for co>t< in defending it ; and if he has made i)ermanent improvements uj)on the land in the belief that he was the absolute owner, the increast-fl value by reason thereof may be allowed him. So he may be charged with rents and profits he might have received, if his failure to recover them is attributable to his fraud or willful default {2 Powell on Mort., 057. note; 1 Kent, ISo; 2 Wash. 218; Cameron v. Irwin, 5 Hill, 272; Micl-les v. Dillaije, 17 X. Y. 80). In many cu^es complicated equities must be determined and adjusted before it can be ascertained what part, if any, of the rents and profits received is to be applied upon the mortgage debt. In the absence of an agreement between the parties there is no legal satisfaction of tin* mortgage by the receipt of rents and profits by a mortgagee in possession to an amount suflicicnt to satisfy it, and his character as mortgagee in possession is not divested until they are applied by the judgment of the court in satisfaction of the mortgage. These considerations lead to an allirmance of the judgment without <'onsidering the question of the validity of the statute foreclosure. The plaintiffs claim to recover upon the allegation of a right to the j)osscssion of the premises when the action was commenced. The defendants were in possession, claiming under the mortgagro whoso mortgage was outstanding and unsatisfied. The action i> not for a redemption or for an accounting, and the plaintitTs are not in the attitude of resisting an attempt by the mortgagee t<^ • M force the mortgage. The judgment should be allirmed, with costs. All concur. •Judijment nffirnirii.^ 338 COMMON LAW RELATIONS. [CHAP. I. KING V. HOUSATONIC EAILEOAD COMPANY. Supreme Court of Errors of Connecticut, 1877. (45 Conn. 336.) Scire facias upon a process of foreign attachment, brought to the Superior Court in Fairfield County, and tried to the court on the general issue with notice, before Beardsley, J. A. S. Treat, with whom was R. Averill, for the plaintiff in error. H. B. Harrison and If. K. Secley for defendants in error. Hovey, J. The proceedings below were upon a scire facias to recover certain rents due from the defendants as lessees of the New York, Housatonic & Northern Railroad Company. The lease reserving the rents was executed on the 36th day of February, 1873, and was for the term of five years from the 1st day of March then next, when the defendants entered into possession under the lease. Subsequently, on or about the first day of October, 1873, the lessors, being the owners of the leased premises, mortgaged the same, with other property situate in the State of New York, to secure the payment of certain bonds of the mortgagors, amounting to the sum of two million dollars, to David S. Dunscomb and Erastus F. Mead, as trustees for those who might become holders of the bonds. The principal of the bonds was made payable on the first day of October, 1893, and the interest semi-annually on the first day of April and the first day of October in each year, upon the presenta- tion and surrender of the interest warrants or coupons which were annexed to the bonds. And the mortgage expressly authorized the mortgagees, after six months' default in the payment of interest, to enter into and take possession of the property mortgaged and receive the rents, income and profits thereof. Soon after the execution of the mortgage the bonds passed into the hands of bona fide holders for value, and still remain outstanding and unpaid. The mort- gagors having made default in the payment of interest more than six months prior to the 15th day of March, 1875, and interest to a large amount being then due and unpaid, the mortgagees on that day gave notice thereof to the defendants and demanded of them the rents then due and thereafter to become due under their lease. Five days afterwards the plaintiff commenced a suit by foreign attachment against the mortgagors, the New York, Housatonic and Northern Eailroad Company, and attached the rents then due, amounting to the sum of $3,315.60. In that suit the plaintiff recovered judgment, took out execution, placed the execution in the hands of a proper officer, and tlie officer, by virtue of the execution. «f"»"- ll-l KIX(i /•. II(»1>A1(»M( It. i;. ( u. '.iA f (111 the '?;](] (lay of DtM'('iiil)(.'r, IST."), nuulc (Iciiiand of the present • li'fcndanls of tlu' sums contaiiu'd in tlie exiriition and of any estate of the Xew York, Ilousatonie and Xorthern Kailroad 0)ni|mny in llicir hands, but the defendants refused to conijdy with the demand. And on the 21st day of Feltruary. ISTC, the suit upon which the proeeedin;j:s beK)w were had was hrou,<,dit. Th(> court l)elow rendered judirment in favor of the defendants; and the (piestion is whether in so doing the court erred. It is a wi'll-.selth'd jirinciple of the common hiw tha< the i;rant (.f the reversion of an estate expectant on the delt-rminalion of a lea«' lor years, passes to the grantee tlie rents reserved in the lease as incident to the reversion (Co. Litt. 151, l.'i'J; 2 Bl. Comm. KH; 1 Kent, 354). The consent of the tenant, expressed hy what wa> ' alK'd his attornment, was, however, necessary to the perfection • f the grant in Knghind, until the fourth year of the reign of (^leen Anne; but in that year a statute was passed which made the irrant efTectual without attornment. And since that time notice f the grant to the tenant has been sulTicient to entitle tlie grantc !i» demand and recover the rents {llirclt v. Wrlijlit, 1 T. 1!. ".si; Luiitlcy v. lluihjson, 1(! East, 90). Where the grant is by way of mortgage, the mortgagee, though ' iititled to the rents as incident to the reversion, may take them or lit at his election. If he elects not to take them, as he generally n; .• Tnnl v. Ilimf. Kxch. M). And its '•undness, in view of the relations of a mortgagor and mortgagee "f a reversicni to each other and to a tenant in ])ossession \inder I lea.se j)rior to the mortgage, cannot well be (piestioned. In com- menting upon the decision, the learned English editor of Smith's l-«'nding Cases observes that it " is upon a point which seems so < lear in principle that, were it not for its g(>neral importance, it would, perhajis. be matter of sur|)ris(> that any case should have been deemed recpiisite to establish it" (1 Smith's I^ead. Va>i. (lO.?). It is true, as suggested by counsel for the plaintiff, that the court. in making that dtnision. was governed by the provisions of the 340 COMMON LAW RELATIONS. [CHAl'. I. statute of Anne. But the principle embodied in that statute, and enforced in the case of Moss v. GalUmore, has been adopted by the courts of last resort in many of our sister States (4 Kent, 165), and was expressly sanctioned and approved by this court in the case of Baldwin v. Walker, 21 Conn. 168. In that case one Stod- dard, being the owner of an undivided half of certain real estate, leased it to the defendant for a term of years and afterwards mort- gaged it to the plaintiff. The defendant had notice of the mortgage, but refused to pay to the plaintiff the rent due under the lease, and the plaintifE sued in an action of covenant to recover it, and judgment was rendered in his favor. The case then came to this court upon a motion for a new trial, and also upon a motion in error. Both motions were unsuccessful, and the judgment below was affirmed. Church, C. J., in giving the opinion of the court, after referring to the lease, and declaring that as between Stoddard, the lessor, and the defendant the lease must be treated as an effective one and as leaving, when made, a reversion in Stoddard, says : '' By his mortgage to the plaintiff this reversion, as a subsisting legal interest, was conveyed or assigned to the plaintiff, unless he elected to treat it as void. This he has not done, but claims, as he may, his right as mortgagee or assignee to the rent incident to such rever- sion;" citing 2 Cruise's Dig. Ill; Moss v. Gallimore, Doug. 279; 2 Swift Dig. 179; Fitchhurg Manuf'g Co. v. Melvin, 15 Mass. 268. The learned judge then observes that, " if the lease had been exe- cuted after the mortgage to the plaintiff, he could not as mortgagee, perhaps, have any remedy for the recovery of this rent, without attornment, for want of legal priority." That case is decisive of the one at bar and fully sustains the court below in the judgment which it rendered in favor of the defendants. The judgment must, therefore, be affirmed. In this opinion the other judges concurred.^ Teal V.Walker, 111 U. S. 242(1884). Mr. Justice Woods (247). The decicion of the question raised by the demurrer to the complaint is not affected by the stipulation contained in the defeasance of August 19th, 1874, that Goldsmith and Teal should, on -default made in the payment of the principal of Goldsmith's note, and on the demand of Hewett, surrender the mortgaged premises td "■Baldioin v. Walker, 21 Conn. 108 (1851) ; Ahhott v. Uanfton, 24 N. J. Law, 493 (1854) ; Russell v. Allen, 2 Allen (Mass.) 42 (1801), and Mirkk V. Hoppin, 118 Mass. 582 (1875), accord. So, after forfeiture, McKircher V. Haivley, 16 Johns. (N. Y.) 289 (1819), semble. But compare Myers v. White, 1 Rawle (Penn.) 355 (1829) (semble) ,conira. >" ".1 TKAI. C. W.Vr.KKK. 341 hi 111. If tliis was a valid and bindin<( undcrtakinp;, it did not < lianj^'e tlie rights of thi- parties. Without any such stipuhiticjn, lli'W«.'tt, unh'ss it was otherwise provided hy statute, was entitled, ai least on default in the payment of the note of Goldsmith, to the l»ossession of the mortgaged premises {Kecch v. Hall, 1 Doug. 21 ; Ji'ockncll V. Bracllci/. 2 Conn. 1; Smith v. Johns, 3 Gray, 517; Jackson V. Dubois, 4 Johns. 21(5; Furbush v. Goodwin^ 29 N. II. ;5v*l ; Howard v. Hoiujhion, (> 1 Me. 445; Den ex dcm. Harl v. Stockton, 7 Ilalst. 322; Ely v. M'Guire, 2 Ohio, 223; vol. 1 and 2.' .'tl Ed. 372). The rights of the parties are, therefore, the same ;is if the defeasance contained no contraft for the delivery of the possession. We believe that the rule is without e.\ee|)tion that the mortgagee is not entitled to demand of the owner of the equity of redemption the rents and profits of the mortgaged premises until he takes actual possession. In the ea.se of Moss v. (ialliniore, 1 Doug. 270, l.iird Mansfield held that a mortgagee, after giving notice of his mortgage to a tenant in possession holding under a lease older than the mortgage, is entitled to the rent in arrear at the time of the notice, as well as to that which accrues afterwards. This ruling has iieen justified on the ground that the mortgagor, having con- veyed his estate to the mortgagee, the tenants of the former became the tenants of the latter, which enabled him, by giving notice to iheiii of his mortgage, to place himself to every intent in the same .situation towards them as the mortgagor previously occupied (Rau'son v. Eicke, 7 Ad. & Kl. 451; Burrowcs v. Gradin. 1 Dowl. A' Lowndes, 213). Where, however, the lease is subsequent to the mortgage, the rule is well settled in this country, that, as no rever- - i>n V(»sts in the mortgagee, and no privity of estate or contract is ivated between him and the lessee, he cannot proceed, either by xlislress or action, for the recovery of the rent (Mai/o v. Shattuck, 1 I Pick. 533; Watts v. Coffin. 11 Johns. 495; McKirchn- v. Hawleij. Hi id. 289; Sanderson v. Price, 1 Zabr. G37 ; Price v. Smith. 1 (ircen's ("h. fX. J.] 51(;). The case of Moss v. Gallimorc has never been held to ajiply to ; mortgagor or the vendir of his equity of redemi)tion. Ij(piity that a mortgage is a mere security for a debt, and establishes absolutely the rule that the mortgage is not entitled to the rents and jirofits until he gets jiossession under a decree of foreclosure. I'or if a mortgage is not a conveyance, and the mort- gagee is not entitled to possession, his claim to the rents is without support. This is recognized by the Supn>me Court of On'-ron a< 344 COMMON LAW RELATIONS. [CIIAP. I. the effect of a mortgage in that State. In Besser v. Hawthorn, 3 Oregon, 129, at 133, it was declared: "Our system has so changed this class of contracts that the mortgagor retains the right of possession and the legal title." See, also, Anderson v. Baxter, 4 Oregon, 105 ; Roberts v. Sutherlin, id. 219. The case of the defendant in error cannot be aided by the stipula- tion in the defeasance of August 19th, 1874, exacted by the mort- gagee, that Goldsmith and Teal would, upon default in the payment of the note secured by the mortgage, deliver to Hewett, the trustee, the possession of the mortgaged premises. That contract was contrary to the public policy of the State of Oregon, as expressed in the statute just cited, and was not binding on the mortgagor or his vendee, and, although not expressly prohibited by law, yet, like all contracts opposed to the public policy of the State, it cannot be enforced (Railroad Company v. Lochwood, 17 Wall.- 357; BanJc of Kentuclcij v. Adams Express Company, 93 U. S. 174; Marshall V. Baltimore £• Ohio Railroad Company, 16 How. 314; Meguire v. Conrine, 101 U. S. 108). CHAPTP:R I. (Continued.) Sectiox III. Dower and Curtesy. NASH V. PEESTON. Court of King's Bench, 1631. (3 Cro. Car. 190.) A bill in chancery was referred to Jones, Justice, and myself [Croke, J.] to consider whether one should be relieved against dower demanded, &c. The ease appeared to be that J. S., being seised in fee, by inden- ture inrolled, bargains and sells to the husband for one hundred and twenty pounds, in consideration that he shall re-demise it to him and his wife for their lives, rendering a peppercorn; and with a condition that if he paid the hundred and twenty pounds at the end of twenty years the bargain and sale shall be void. He re- demised it accordingly, and dies ; his wife brings dower. The question was, whether the plaintiff shall be relieved against this title of dower? We conceived it to be against equity and the agreement of the husband at the time of the purchase, that she should have it against the lessees; for it was intended that they should have it re-demised ^^'■- '"I N()i;i. r. .n:vo\. 315 iiiunediatc'ly to ihi'iu as si»uii as tlioy parted with it; and it is but in nature of a mortgae is only owner as a charge or incumbrance, and intitb'd to hold as a pledge, and as to the inheritance desceniled and real '•state in the land. th(^ mortgag(M» is a trustee for the mortgag<^r till tlie ei^uity of redemption is foreclosed. Secondly. The n<>\t consideration is what is re-►«•■ III] Tni s r. Ninsov. ni!> liy c-iirtosy, which my L«»ril Cnwjtcr (Ifrrcfd a(i{ an'equity of redemptioH on a mortgage in fee. and that therefore a husband ought not to be tenant by the curtesy of an <'f|uity (»f redemption, this proves too much; for it has been determined that a wife sliall not be endowed of a trust estate, yet that husband shall be tenant by the curtesy of a trust estate. The argument from dower to the case of a tenant by the curtesy fails in this casr. TVrhaps it may be hard to find out a sufficient reason how it came to be so determined in the one case and not in the other, but it is safe to follow former precedents and what an- settled and estal)- lished, and if such precedents should be departi'»l from, I hold it fit rather that the wife should be allowed her dower of a trust estate, and not that a tenancy by curtesy of a trust estate should be taken away. It may be refusing to allow the wife dower of a trust estate was because she could not have it at law, and that it was foundetl "11 the maxim of cquitas sc(jiii(iir legem; but whatever the rea.son I'f such refusal was, the husband is allowed to have a tenancy by the curtesy of a trust estate, nay, even of money directed to be laid out in land, though not actually laid out. as in the case of Sirret- applr before cited. . . . For these reasons, upon the best consideration (although I form my judgment with great deference, when I difTer in oj)inion from other great persons that have gone before me), I am of opinion that the defendant Inglish is intitled to be tenant by the curtesy of the mortgaged ])remises in question, and the consequence of that is that that part of the decree of his Honour, the Master of the Roll-, whereby it is adjudged that the said defendant is not tenant by the curtesy, must be reversed (MS. Rej). Hill. Vac. 11, IJeo. 2). TiTi's V. XiKi.sox, 5 Johns. Ch. l.")-.' (IN'JI). The |)etition ••f Catherine Nielson was presented, claiming dower out of the pr'>- eeds of the sale of an equity of redemption in certain mortgaged i'remises. The opinion was, in part, as follows: TiiK ('ii.vNCKLLOH [Kent]. The claim of the widow mu-t be admitted, according to a series of decisions in the c(Uirts of this ^tate. In England dower is considered as a mere legal right and quity follows the law and will not create the right whore it does aot subsist at law. It i^ on this jirinciple, according to T.ord 350 COMMOX LAW RELATIONS. [CHAP. I. Eedesdale (2 Sch. and Lef. 388), that a court of equity will not allow dower of an equity of redemption reserved upon a mortgage in fee, though there may be dower of an equity of redemption upon a mortgage for a term of years, because in that case the law gives dower subject to the term. The justice, however, of allowing dower of an equitable estate seems to have been very generally felt and acknowledged in the English courts of equity. But we have notliing to do at present with the English adjudications on the subject, for, as our courts of law do now allow dower in certain cases of an equity of redemption, this court, according to the doctrine referred to, ought to follow the law, and also allow dower out of the proceeds of the equity of redemption, and which proceeds have in this case been placed before the court. . . . The case of Coles v. Coles, 15 Johns. Eep. 319, went a step still further, and held that, where a person seised of land in fee mort- gages it, and afterwards marries, his widow was entitled to doAver out of that equity of redemption, against the purchaser of that equity, though the mortgage was still subsisting. Here was a final and full establishment in our courts of law of the principle, not admitted in the English courts of law, that a wife could be endowed of an equity of redemption arising upon a mortgage in fee, and this court ought to follow the rule of law. It ought to do so, accord- ing to the rule and practice of the courts of equity in England in the like case, and because the doctrine recognizing the legal title of the mortgagor before foreclosure first originated in this court, and was confirmed in the Court of Appeals, and, finally, because it is a most just and reasonable doctrine, and has been so acknowl- edged throughout the history of the cases.^ STOW V. TIFFT. Supreme Court of Judicature of New York, 1818. (15 Johns. 458.) This was an action of dower, brought to recover dower in two lots in Douglas patent, in the town of Bolton, in the county of Warren. The tenant pleaded tic iinques scisie que dower, and 7ie ■iinques accouple in loyal matrimonie. The cause was tried before Mr. J. Yates, at the Warren circuit, in June. 1817. The marriage of the demandant, and the death of her husband ' This is the general rule in the I'nited States • but see Htelle v. Carroll, 12 Peters, 201 (18.38). ^K ■• I" 1 STOW 1'. TIFFT. 351 in Dt'cenibor, 1804, were proved. Timothy Stow, the liusband of llie deniundant, purchased the premises in (juestion during the roverture, and paid part of tlie consideration money; and to secure the payment of the rcsiihie, executed, at tlie tim<' of receiving the <<)nveyanee, a mortgage of the same premises to the grantor; after liis death the hind was soUl under a power contained in the mort- gage, and was j)urchased bv a person from whom the tenant derived his titk'. A verdict was found for the demanchmt, subject to the opinion of the court, on a case containing tlie above facts. Weston for the plaintiff. Cowen, contra. Si'ENCEK, J., delivered the opinion of tiie court. The demandant's right to recover her dower dej)ends on the nature of her husband's seisin. Timothy Stow, her husband, purchased the premises in • piestion after his marriage with the plaintiff, and paid part of the <-onsideration money; and for securing the residue, he, at the time of receiving his conveyance, executed to the grantor a mortgage; of tlie same premises. After his death the premises were sold under a power contained in the mortgage, and the defendant liolds under that sale. The question to bo decided is whether there was such a seisin of the husband of the demandant as to entitle her to dower. This depends on the single ])oint whether the seisin of the husband was an instantaneous seisin or not. If it was an instantaneous seisin, then, according to all the authorities, the wife is not endowable. This general position is met witii in all our books, that the husband's .^eisin for an instant does not entitle the wife to dower. This is excmi)liiied by the case of Arncotts v. Cathe- nrk, Cro. Jac. G15. There the husband, who was seisetl in special tail, made a deed of feofTment to the use of himself for life, and after to the use of his son in tail, and made a letter of attorney to make livery. Before livery he took the demandant to wife, and after livery was made to those uses the husband died, and the <|uestion was, wiiether the wife was entitled to dower; and it was adjudged that she was not, for that the livery did not gain to the luisl)and any new estate, but being eodcm in.sdtntt drawn out of him. he gained no seisin whereof his wife was dowable; for that having no estate before the feofTment whereof tlie wife was dow- al)le. he gained none by the feoffment of which his wife could l>e ^•ndowed. Three cases were there put in which the wife would not ite entitled to dower: as where a tenant for life or a joint tt'uant makes a feofTment ; so where a married man took a fine and by the MUie fine rendered the land to another in tail, his wife shall not l)e ndowed ther-of. Ixn-ause, although he took it in ftv. yet it i-» m^iantlv out of him; so if ;i feofTment be made to one and his 353 COMMOX LAW RELATIONS. [chap. i. heirs, to the use of another and his heirs, the wife of the trustee shall not be endowed, for he was the mere instrument and had but an instantaneous seisin (2 Co. 77). The case of Nash v. Preston, Cro. Car. 190, would seem, at first view, to be opposed to the proposition that a deed to the purchaser and a mortgage given back by him to the grantor at tlie same time, would not entitle the wife of the purchaser to her dower ; yet it is observable that the principle is admitted that an instantaneous seisin of the husband does not entitle the wife to dower. Croke admits that if a husband take a fine sur cognisance de droit come ceo and render arrear, although it was once the husband's, yet his wife shall not have dower, for it is in him and out of him quasi uno flatu and by one and the same act. That case does not state that the redemise was made at the same time with the bargain and sale, and I presume it was not. That case, therefore, does not bear on the general principle. I am authorized to say, by the decision of this court in Jackson V. Dunsbagh, 1 Johns. Cas. 95, that where two instruments are executed at the same time between the same parties relative to the same subject matter, they are to be taken in connection, as forming together the several parts of one agreement. I entirely agree in the opinion expressed by Ch. J. Parsons in the case of Holhrool: V. Finney, 4 Mass. Rep. 569, that where a deed is given by the vendor of an estate, who takes back a mortgage to secure the pur- chase money at the same time that he executes the deed, that there the deed and the mortgage are to be considered as parts of the same contract, as taking effect at the same instant, and as constituting but one act; in the same manner as a deed of defeasance forms, with the principal deed to which it refers, but one contract, although it be by a distinct and separate instrument. The substance of a conveyance where land is mortgaged at the same time the deed is given, is this. The bargainor sells the land to the bargainee on condition that he pays the price at the stipu- lated time, and if he does not that the bargainor shall be reseised of it, free of the mortgage ; and whether this contract is contained in one and the same instrument, as it well may be, or in distinct instruments executed at the same instant, can make no possible difference. It is true that courts of equity have interposed to relieve the mortgagor against the accident of his nonpayment of the price, at the stipulated period. It is also true that courts of law have considered the interest of the mortgagor as liable to be sold on execution. This, however, does not interfere with the question as to how the eontract between the original parties is to be viewed as between themselves when the equity of redemption is gone and forfeited. SK<". III.] STOW r. TIFFT. :J"»;i The opinion which the court has formed receives decisive suji- j)ort from the declaratory act of the '^Htli sess. ch. 00. It recites tliat wliereas doubts have arisen whethiT mortga<;es tjiven to secure the j)urcha>>je money of hind .^old and conveyed at the time of the execution of such mortgages, are to be preferred to judgments previously obtained against the mortgagors, for the removal whereof it is enacted and declared that whenever lands are sold and conveyed and a mortgage is given by the purciiaser at the same time to secure the payment of the j)urchase money, such mortgagi* shall be preferred to any previous judgment which may have been obtained against such purchaser. This statute conveys the sense of the legislature that the seisin of the mortgagor, under the circumstances statt-d in the act, was a seisin for an instant only ; for it cannot be doubted that a judg- ment will attach on lands of which the judgment debtor becomes seised at any time posterior to the judgment; and nothing could prevent a judgment creating a lien on the subsequently acquireil lands of the judgment debtor but the circumstance that his seisin. in the given case, was instantaneous. Surely, then, the analogous case of dower cannot stand on a hetter footing than a judgment unsatisfied. As a declaratory act, this statute is entitled to high respect; and it fortifies and suj)ports the position that the demand- ant's husband acquired, by the deed to him, a seisin, which he parted with eo instanli he ac({uired it, and that his wife is not endowable of the premises. The court are very well satisfied that the law is so, for it would be extremely inequitalde in most cases to claim dower on such purchases. We are, therefore, of opinion that there must be judgment for the defendant. Thompson, Ch. J., dis.sented. The demandant, as the widow of Timothy Stow, deeeased. claims her dower in lands )>uroliased by her late husl)and after their intermarriage. He jniid jiart of the consideration money and, for securing the residue, mortgaged the lands. After his death, the mortgaged premises were sold pur'^umt to the statute, and j>urehased by tiie person under whom the defend- ant claims; and the only question is whether the imsl)and was so seised as to entith' his wife to dower. In the case of Hitchcock v. Harrington, G Johns. Hep. 240, this point was stated, but not decided by the court. It has long been considered the settled law in this State, that a mortgage is a men' security for money, and the mortgagor is to he deemed seised, not- withstanding the mortgage, as to all persons except the mortgagee and his representatives. The seisin of the husband, in this case, cannot be considered that mere instantanrnus seisin which the books speak of as jiot being sulhcient to entitle the wife to dower. Those are cases where the husband is a mere conduit pipe, or 354 COMMON LAW RELATIONS. [CHAP. I. instrument of conveyance. This is evidently the meaning of Lord Coke, where the rule is laid down (Co. Lit. 31 6). It is more fully illustrated by Sir Wm. Blackstone, in his Commentaries (vol. 2, 131), where it is said that the seisin of the husband, for a transi- tory instant only, when the same act which gives him the estate conveys it also out of him, as where by a fine land is granted to a man and he immediately renders it back by the same fine, such a seisin will not entitle his wife to dower, for the land was merely in transitu and never rested in the husband, his grant and render being one continued act. But if the land abides in him for tho interval of but a single moment, the wife shall be endowed thereof. Where a title is conveyed to a person and he gives back a mort- gage, the fee is certainly vested in him, substantially and bene- ficially, and not nominally; otherwise the mortgage back would convey no title. The case of Nash v. Preston, Cro. Car. 190, is very much in point, to show that the widow is entitled to her dower. There was a bargain and sale of land to the husband, under an agreement that the bargainee was to redemise it to the bargainor and his wife, during their lives. The bargainee redemised and died, and his widow was considered entitled to dower. For, say the court, by the bargain and sale the land is vested in the husband, and thereby the wife is entitled to her dower. This question of instantaneous seisin is well considered by Gwillim, in a note to the late edition of Bacon, 2 Bac. Ab. 371, note. It is there said that the proposition that in the case of an instantaneous seisin the wife shall not be endowed, though laid down broadly by Coke, is by no means general ; he confines it to cases where the husband is a mere instrument of passing the estate. Tho transitory seisin gained by such an instrumentality is not enough to entitle the Avife to dower; ])ut Avhen the land abides in the husband for a single moment, as is said by Sir Wm. Blackstone, or, as a later writer explains it (Preston on Estates, tit. Dower), when he has a seisin for an instant beneficially for his own use, the title to dower shall arise in favour of his wife. The case of IIolhrooTc v. Finney, 4 Mass- Rep. 566, has been cited and relied upon as in point against the claim of dower. Whatever respect may be due to the opinion of Ch. J. Parsons, he certainly stands unsupported by any adjudged cases to be found in the English books, or by any elementary writer when fairly explained. In none of the cases referred to by him in his opinion was the husband ever beneficially seised for an instant ; and the distinction which he attempts to make between the case of Nash and Preston and the one before him, is certainly not well founded. In the case of Nash and Preston, the redemising was a part of the original agreement ; yet the wife of the bargainee was held entitled to dower. So in IlolbrooJc and Finney, the deed >*'•«•• "'1 , STOW C. TIKIT. 35J ;iji(l iiiortfrafro wore oxcoiitcMl in jtursiiancc of a provious a^ccment to till' saiiu' cirect made hi'twccii the parties. Thf two cases, there- fore, in this respect are alike. Ch. .1. Parsons seems fully to admit the law as laid down in Xdsh and I'rrsluti. and it is a little ditlieult to understand what he means \)\ .saying that the giving the deed and taking the mortgage hack constitute hut one aet, unless the two deeds, heing j)arts of the same contract, are hut one act. But whatever importance may be attached to this circumstance, the argument cannot be applied to the case before us, becau.sc it formed no part of the original agreement that a mortgage was to be given back. I do not see how our statute to j)revent judgments having a preference to mortgages given to secure the purchase money, can in any manner affect this question. It is true that the first act (soss. 28, ch. !»!)) contained a recital purjjorting that doubts had iiri.nornlIy are accord: Thomas v. llansnn, 44 lowii, IVi] ilH7(l) ; pvpn wtieie llic Tnortj;a;;o is iiimlo to ii third jiorson : Clark v. Mun- r<"\ 14 Mas.s. 351 (1S17) ; Jours v. I'arkcr. CA Wis. 218 (ISSl). 356 COMMON LAW RELATIONS. [CUAP. U POPKm V. BUMSTEAD. Supreme Judicial Court of Massachusetts, 1813. {S Mass. 491.) This was a writ of dower, to which the tenant pleaded in bar that] Thomas Popkin, husband of the demandant, in his lifetime, viz. oi the 30th of April, 1806, mortgaged the premises, in which the sale Mary demands her dower, to one Thomas Capen for the payment] of 3000 dollars, and that the demandant in and by the mortgagoj deed, for a valuable consideration, released to the said Capen alLJ her right of dower in the mortgaged premises, and did thereby lawfully bar and exclude herself from all her right of dower thereinj forever; that Capen entered and became seized; that on the 9th of November, 1807 (the said Thomas Popkin having before that time died intestate), John D. Dyer was appointed administrator oi said Popkin's estate, and, having obtained license to sell the real^ estate of his intestate for the payment of his debts, sold the equity of redemption to Abel Wheelock, by whom the same was conveyed] to Bumstead the tenant; that he, the said Bumstead, on the 19th of^ Sept., 1810, paid to Capen, the mortgagee, the whole sum due by the mortgage, the same never having been paid by the mortgagor or his administrator; and that the said Thomas Popkin was never seizec of the premises, or any part thereof, since the execution of the sait mortgage deed. To this plea the demandant, after oyer of the several conveyances mentioned therein,^ replies that on the 19th of September, 1810,, before she demanded her dower, and more than one month before the commencement of this action, the said Capen, the mortgagee^ then having the sole right and interest in the said mortgage deed,j did personally repair to the office of the register of deeds for the county of Suffolk, where the said mortgage deed was recorded, having received satisfaction and payment of all the sums due on the mortgage, and did then and there, in the margin of the record of said mortgage deed, acknowledge that he had received full satisfaction and payment for the premises therein mortgaged, and did quitclaim all his right, title and interest therein, and did then and there desire that the said record might be discharged, and did then and there sign said discharge and acknowledgment; and said ' The deeds from Dyer to Wheelock and from him to Bumstead purport a conveyance of tlie land, " subject to a mortgage made thereon by said deceased, and other rights claimed — viz., dower by the widow of said Thomas Popkin deceased." — Rep. -K-. Ill.l I'ol'KIN r. m MSTKAD. 357 iiiortgngo (locil was thereupon cancelled and discharged according to the law in that case made and provided. To this replication the tenant demurs generally, and the y this court in the county of Esse.x, Xovcnd)er term. 1'('03. Thurston, for the demandant, agreed that the relea.'^e hy her, set iorth in the plea, would har her as respects the mortgagee, and as long as the mortgage deed was in force. But the release of the dower was conditional, as well as the principal conveyance, and the di.-jcharge of the mortgage hy the mortgagee or his assigns was a fulfdment of the condition and a cancelling of the mortgage (see Stat. 1703, c. 37, § G). The tenant's claim is as the assignee of the administrator of the mortgagor; as such his right was to redeem the land hy paying the money due and thus extinguishing the mortgage. This he did, and at the same time annulled the effect of the demandant's release of her right of dower, which was collateral and co-cxtensive with the mortgage. But if the tenant were considered as the assignee of the mortgagee, still the demand- ant has a right to redeem (Finch's Free, in Chan. 137, 133; 2 P. Will. 71G; 1 Eq. Ca. Abr. 219, 220). Neither does it appear that the tenant ever entered under the mortgage. The tenant, however, was not the assignee of the mortgagee. The conveyances under which alone the tenant claims both rt'cognize the claim of dower now set up by the demandant. He jjurchascd the land subject to it, and he paid a consideration accordingly. In fact, he redeemed as the assignee of Dyer, the administrator of the mortgagor; and if Dyer had j)aid the mort- gage, would it be contended that the demandant's claim would not have revived? The tenant resists that claim against all equity, since by the terms of his own purcha.>^e it was reserved; and if his plea is supported, great injustice is done to the demandant. By the court. It has been contended for thi' demandant, upon the facts exhibited by the pleadings in this ca.^', that her titl»> to dower has revived and is as if she had never released it in the deed of mortgage. It would Ix? singular if, when the tenant had paid the money due on the mortgage, and supposed that he had thus perfected his estate by extinguishing the only inctnnbrnncN' he knew to exist upon it, he should by that act revive the claim of the 358 COMMON LAW RELATIONS. [CHAP. I. demandant, which she had before solemnly renounced under her hand and seal, and which, as he was under no obligation, it cannot be presumed he meant to do. But the facts produce no such absurdity. When the tenant purchased the equity of redemption, it belonged to him to pay the money due on the mortgage, and thus rid his estate of that incum- brance. Having all the equitable interest in himself, wlien he had paid the money due by the mortgage the legal estate followed the equitable interest, and he became seized of the whole fee simple. If this were not the plain legal operation of the transaction, the law would construe the discharge of the mortgage by the mortgagee a release of the legal estate by him to the tenant, who had become lawfully possessed of the equitable interest, and from whom the consideration for that discharge flowed, rather than such a mischief should follow. Replication adjudged bed. EATON V. SIMONDS. Supreme Judicial Court of Massachusetts, 1833. (14 Pick. 98.) This was a bill in equity to redeem certain mortgaged real estate in Boston. The bill alleged, that the complainant was, on May 16, 1805, married to Nathan Eaton of Boston ; that during the coverture ho became seised of the premises, and on October 23, 1819, mortgaged them to Lucy Eidgway, in order to secure the re-payment of the sum of $1000 borrowed of her and which was payable in two years with interest ; that the complainant became a party to the convey- ance, so far as related to her right of dower; that on or about April 26, 1823, the sum so borrowed not having been fully repaid, the equity of redemption was attached by a deputy sheriff upon an execution issued on a judgment recovered against the mortgager, and by virtue of such execution was sold by auction to the respond- ent; that the respondent, having on May 26, 1823, obtained a conveyance thereof from the deputy sheriff, took possession of the premises, and has ever since continued to take the rents and profits thereof; that on or about January 3, 1824, the respondent obtained an assignment of the mortgage from Lucy Eidgway; that on August 31, 1828, the mortgager died; that upon his death, the complainant became entitled to dower in the premises, subject only to such mortgage, and had lawful right to redeem upon tendering SKC. III.] EATON r. SIMUNDS. 35!> payment of the amount due thereon; that on April 3, 18*^9, tht? comphiinant demanded of the respondent an aeeount of the rfum due on the mortgage and of tlie rents and profits, in order that she might nuike sueh tender, but that the respond(nit had unreasonably refused to render any account whatever; that although the respond- ent entered into possession of the jiremises under the purchase of the ecpiity, yet he never made known that he had taken j)ossession, in the presence of two credible witnesses, for a breach of the condi- tion of the mortgage and for the purpose of foreclosing, and that no notice was ever given to her of any intention on his part to make such entry; that the respondent sometimes pretends that in Xovember, 1811, Xathan ]']aton mortgaged the premises to William Eaton, to secure the payment of divers promissory notes payable by Xathan to William, and that afterwards, three of the notes remaining unpaid, the same were assigned together with the mortgage to (Jeorge Blake, Esq., a counsellor of tliis Court, and that the complainant, by joining in such mortgage and thereby relinquishing her right of dower, is now barred therefrom, as well as from any right of redeeming the premises; but the complainant charges that all the sums due upon sucli mortgage were paid by Xathan Eaton, and that afterwards Blake discharged the same in the margin of the record in the registry of deeds, and that the mortgage was thereby extinguished. Wherefore the complainant prays that the respondent may state the amount of the mortgage to Hidgway and of the sums paid thereon ; that an account may be taken of the rents and profits, and if it shall appear that they have been more than suflicient to satisfy the principal and interest of sudi mortgage, that the residue, or her just proportion thereof, may be paid over to tiie eomjilainant ; that the complainant may be permitted to redeem the jiremises, and have her dower set out therein, she hereby offering to pay such sum as shall be due to the respondent ; that he may be ordered to deliver up possession of the premises to the complainant; and that she may have such other lid further relief, ^c. The answer denies that the mortgager was so seised of the estate - is alleged in the bill, or that the complainant has any right to redeem the same, and alleges that on Xovemlier 7. 1811, William Eaton sold and conveyed the premises in fee to Xathan Eaton, antl that the mortgage to William, which is referred to in the bill, was made at the same time to secure the payment of a portion of the purchase money; that Xathan Eaton died without ever having paid or tendered to the re-^pondeiit the sutu paid by him on the purrha>e of the equity of redcinjition, amounting to $1T*)0 with interest, or in any manner redeemed or attempted to redwm such equity, and without ever having paid or satisfitMl the sums secured by either of 360 COMMON LAW RELATIONS. [CHAP. I. the mortgages, or procured them, in any manner, to be discharged; that on July 23, 1823, it was agreed between Blake and the respond- ent that Blake should transfer to the respondent the notes and mortgage so assigned to Blake by William Eaton, and that the respondent should pay to Blake the principal and interest due thereon, amounting to $722.68; that on the same day the respond- ent, having paid this sum in pursuance of this agreement, expected and claimed an assignment of the notes and mortgage, but that Blake declared that any assignment thereof would be unnecessary, inasmuch as the respondent had purchased the equity of redemp- tion; that thereupon Blake discharged the mortgage so assigned to liim, upon the margin of the record in the registry of deeds, for the benefit of the respondent ; and that neither Nathan Eaton, nor any one in his behalf, ever paid such sum to Blake, or any part thereof, or in any manner caused such mortgage to be so discharged; that the several notes aforesaid, and the interest accrued thereon, still remain due to the respondent ; and that by reason of all these facts, purchases, &c., and the lapse of time after the purchase of the equity of redemption and before the death of jSTathan Eaton, the respondent had an absolute and irredeemable estate in the premises.^ The court ordered that, on the coming in of the answer, the cause should be referred to one of the masters in chancery, to examine and state the amount due on the mortgages, with the circumstances appearing on record or otherwise, in relation to the discharge or assignment of them or either of them, the amount of the rents and profits which have been or might have been made of the premises, and the amount laid out in necessary repairs and betterments by the respondent since he came to the possession thereof. On June 8, 1830, the master made his report. Wilde, J., delivered the opinion of the court. This case comes before us on exceptions taken by both parties to the report of the master; but the principal question depends upon the facts appear- ing by the bill and answer. The question is, whether the plaintiff is entitled to dower in the estate described in the bill; and if so, upon what terms she may enforce her claim in a court of equity. That she has an equitable claim of dower is fully settled by the decision in the case of Gibson v. Crehore, 5 Pick. 146. It was decided in that case, and so it had been frequently held before, that a widow is dowable of an equity. And although she cannot main- tain an action at law against the mortgagee or his assignee, after having joined her husband in a mortgage, relinquishing her rightj of dower, yet if the mortgage is not foreclosed a court of equity willj interpose and allow her to redeem. ' A portion of the case, not relevant to the main question, is omittedJ sr.c. III.] j;ah)n v. mmonds. 361 Tlie question then is reduted to this, namely, whether the plain- ttlT, to entitle herst-lf to dower, is obliged to redeem, or to eontribute iier share to redeem, both of the mortgages mentioned in the bill. The plaintilT admits in iicr bill that she is l)oiind to redeem the mortgage to Lucy Kidgway, that mortgage having been regularly assigned to the defendant. But she denies her liability to redeem the other mortgage, gi\en to William Eaton, because this mortgage, as she avers, has been paid and discharged, and is no longer an existing incumbrance on the premises. The answer admits that this mortgage was assigned to Ueorge lilake, Esq., and that the roducing the edect of a merger, or the extinguishment of the mortgage. Perhaps this might be so, if the discharge could be iinsidered as an assignment of the mortgage. The general principle is that when the purchaser of a right to redeem takes an assignment, this shall or shall not operate as an extinguishment of the mortgage, according as the interest of the party taking the assignment may be, and according to the real intent of the parties (Gibson v. Crehore, 3 Pick. -182). But Chief .lust ice Savage remarks, in the ease of Coatcs v. Cheever, 1 Cowen, HIO, "that the spirit of the cases seems to be this; that where the tenant in possession enters by virtue of a j)urchase from the mort- gager, then the subsetiueiit purchase of the mortgage by him is an extinguishment." And that case was decided upon that principle. The same principle is laid down in James v. Morcy, 2 Cowen, 301, and in other ca.ses (Forbvs v. Moffall, 18 Ves. 390; Gardner v. \slor. •^ Johns. Ch. P. r)3). The rule at law is inflexible, that \liere a greater and a less estate meet and coincide in the same nerson, in one and the same right, without any intermediate estate, tljo less estate is immediately annihilated or merged; and the same rule applies to the union of the legal estate with tlu' e<|uilable interest, l^wt this riile is not inllexii>le with courts of ecjuity. but will di'pend on the inti'nlinn and interest of the pcrvon in whom the estates unite. In the j)re.>Jent case, however, the doctrine^ of merger is not applic- il>le, for the estate in the mortgage of William Eaton was never -signed to the defendant, an^t', the defenchml has moved the court to rectify the minutes of the decree, on the suggestion that no excep- tion was taken to tlie report of the master, in which the mortgage to William I^aton is stated as a sul)sisting and valid mortgage. We were somewhat surprised at this suggestion, heeause not only was there sueh an exception in the cojjy furnished to the court, but it appears from the plaintiff's bill that .she denied, in the outset, tiiat this mortgage was a subsisting mortgage, which she was bound to redeem; and it hardly can be sui)posed that her counsel would waive so important an exception. How the fact was, however, does not appear, for the counsel do not agree, and we do not think it important to inquire further, for if the plaintiff's counsel did omit to tile the exception to the master's report in season, we think the question as to the discharge of the mortgage, and whether or not it could be considered as assigned to the defenchint, was open f<>r the consideration of the court ujjon the bill and answer. The answer expressly admits all the facts which have any bearing upon that question; and although the master was authorized to examine and state the facts and circumstances appearing on record or otherwise, in relation to the discharge or assignment of the mortgages mentioned in the bill, yet he was not empowered to decide upon those facts, except incidentally by stating an account of the sum due on the mortgages, with an account of the rents and profits and the repairs, &c. The reference was nuide out of the ordinary course and before the answer was filed, for the purpose of expediting tiie final decision of the cause ; but it was not intendeil to authorize the master to di'cide the (piestion whether the fir>t mortgage was discharged or not, but to report facts. This then, we think, was an open question, and was, as it still seems to us, rightly decided. We have, however, examined the ca.ses cited by tlu defendant, bur do not find that they impugn, in any respeet, our former decision, exee]tling jierhaps the case of I'ltpkin v. lininalcail . 8 Mass. It. 101 ; and that is distinguished from this, in an impor- tant partieular. 'i'he defemlant in that ease had purchased of the administrator of thf mortgager, and thereby a((|uired the same rights which the administrator would have iiad if he hail paid olT the mortgage for the benefit of the heirs, 'i'he mortgage was paid off after the death of the mortgager, when tlu* widow's right of dower had become perfect, and it might therefore be supposed iiat she was not entitled to dower without contributing her share f the redi-mjition money, and that the case came within the 'rinciple laiil dowTi in (tihsnn v. Creliorr. that where several are interested in an ecpiity of redemption and one only is willing to redeem, he must pay the whole mortgage debt ; and in such case 364 COMMON LAW RELATIONS. [CHAP. I. he is, in a court of equity, considered as assignee of the mortgage and as standing, after such redemi^tion, in the place of the mort- gagee in relation to the other owners of the equity. Unless the case of Pophin v. Bumstead can be supported on some such distinction, it is difficult to perceive any legal or equitable ground on which it can stand. It is difficult also to say how that case could be decided on rules of equity, it being an action at law; but unless the principle of contribution does apply, the case seems opposed to the whole current of the authorities. In the present case, the plaintiff clearly was not bound to con- tribute to the redemption of the first mortgage when it was paid off and discharged. That was done during the life of the husband, and clearly the wife then was not bound to contribute, and the husband was not bound to repay the mortgage debt, unless he saw fit to redeem the equity. The defendant therefore redeemed in his own right. He bought the equity subject to these mortgages, and there seems to be nothing inequitable in holding him bound to redeem them. In the case of Sivaine v. Ferine, 5 Johns. Ch. E. 482, it is decided by Chancellor Kent that, if the heirs pay a mortgage, the wife shall contribute as to the amount paid by the heirs, but that, as far as the husband had reduced the mortgage in his lifetime, that was doubt- less so far a reduction for the benefit of the wife as well as himself. The same rule will hold where payment is made by the assignee of the husband during his lifetime ; and this is decisive in the present case. Motion to vary the minutes overruled} VAX DYNE V. THAYRE. Supreme Court of Judicature of New York, 1838. (19 Wend. 1G2.) This was an action of ejectment for dower, tried at the Yates circuit in November, 183G, before the lion. Daniel Moseley, one of the circuit judges. - 'I"'he plaintiff claimed to recover dower in the premises in ques- ' See Snoic v. Stcrcns, 15 Mass. 278 (1818) ; McCahe v. Sicap, 14 Allen CMass.) 188 (1867) ; Carter v. floodin, 3 Oh. St. 75 (1853), and compare Uroum V. Lapham, 3 Cush. (Mass.) 551 (1849). •' Only so much of tlie case and opinion as liave to do witli llie question of dower are liore given. ^^■<■• '" ] VAN DYNE f. TIIAVHK. oGj tion, as tho widow of Dennis Viin Dyne, witli wlioni she inlt.M- niarricd in lH2t. On tlio l.")tli December, 181H, the premi.■^ert in which dower was chiinied were conveyed to her husband by one Morris >Seely; her husband took possession and remained in until 1829, when he quit, leaving a person in possession as his tenant ; her husband died in 1832. The defence set up was thai Van Dvnc, on taking iiis deed, executed a mortgage of the premises in question to one George D. Stewart, as part consideration of the purchase, conditioned for the payment of $2,512 in instalments, the last instalment falling due in June, 1824; that the possession of the premises had been surrendered by the mortgagor in his lifetime to the heirs of George D. Stewart, and that the present defendant held under them. . . . The question of fact principally controverted was in relation to a release of the equity of redemption alleged by the plaintiff to have been executed l)y her husband to the heir> of Stewart in consideration of a discharge from the mortgage debt ; whereby she contended that the mortgage was extinguished, thai the heirs of Stewart were in possession as purchasers and not under the mortgage, and that consequently she was dowable. On the other hand, it was strenuously insisted by the heirs of Stewart that sucli release had not been executed. The court, as will be seen in tho opinion pronounced in this case, assume that such release was executed by the husband of the plaintiff. The judge charged th<.' jury that it was immaterial whether the heirs of Stewart entered under a deed or not, if they entered claiming under tiie subsisting lieu of the mortgage; and instructed them that if they were satisfied that the alleged mortgage had been executed by Van Dyne, that the same had become forfeited, that the defendant was in possession under Stewart's heirs, and that the defendant was entitled to a verdict. The plaintiff excepted to the charge. The jury found for the defendant, and the plaintiff now moved for a new trial ou a case made. J. A. Spencer for the jjlaintiff. //. ]|V//r."1 VAN dvm: r. tiiavki:. 3t)7 the (.'quily of :viU'iiij)tion is cnlirely subordinate to that title." Accordingly when this cause was here before, the deed from \'an Dvne to Stewart's lieirs bein^ out of person (like that of the estate of mortgagor and mortgagee in this instance) extinguishes, or. aj» the ])hra.5 only l)y a liill in I'ljuiiy, .iii«l l>y jmying ht-r duo proportion of the debt, that she can avail lur-<'lf of her right/' &e. The chief justice mentions a still stronger and more decisive case from 8 Mass. R. J91, Popkin v. Bumstead, whicli I will also state in his words: " The assignee of the mortgagor paid the debt to the mortgagee, and tiie latter entered a discharge of tii- mortgage on record; but the widow was held not entitled at law t«» her dower, because it would be to defeat the very purpose of the payment by the assignee, which was to give assurance to his own title." In Coatcs v. Chccver, 1 Cowen, 475, the case of Collins v. Torry is recognized as holding that a purchase of the equity of redemption and entry into possession, followed by an assignment from the mortgagee to the purchaser, shall extinguish the mortgage and entitle the widow to dower; and the court followed the doctrinr to that extent without going back to look at the nature of the extin- guishment. The case there adjudged is not like the one now before us, but it certainly shows Collins v. Torry as well as itself to Im- in conflict with the cases decided by the Supreme Court of Massa- chusetts, which appear to me to contain the true doctrine. Tli'- more Collins v. 'Torry, on which Coatcs v. Cheever was founded, shall be considered, the more, I venture to say, it will be found to have been without full consideration. In truth, there is no merger or extinguisliment presented by that case, in any sense of the term. The legal and equitable estates never were united in the same person, unless we should hold that land descends to the personal representative. Winston, an assignee of the husband, having con- veyed the equity of redemption with warranty to the defendant, died, and his administratrix, not his heir, j)urchased and took an assignment from the executors of Fonda, the mortgagee. I admit tliis was probably done to save her husband's estate from liability on the warranty to the defendant. It is strange that an act thn- done in good faith and with intention to save the estate should have been made the very ground of a recovery against her deceased husband's grantee. If there be anything in the cases when they say that the equitable sinks into the legal estate, and the latter thereby becomes strengthened or becomes absolute, then all the cases whicli have ever been adjudged concur in princi|)le to one end: they all concede that, as against the mortgagee or his assignee, or any one claiming under him, tlu're can be no dower in an equity of redemption (4 Kent's Tomm. 4'), 3d ed. and the ca.ses thep- cited). What is the estate of the husband at law as against the mortgagee, even while in actual possession under this eipiity "i" redemption? At most he is a tenant at will, and after he shall h.w- parted with all that right by assigning his equity to the very mort- gagee, it sounds most extravagant to y the last cited case. See also Enton v. .'^iinonds, 14 Pick. OS. It follows that in any view the charge of the circuit judge was altogether unobjectionable on the part of the plaintifT. I entertain no doubt that he would have been right in putting the matter to the jury without regard to the entry being under the mortgage. The case is all which it was when here before. ;Mr. Justice Xelson then said: "I have no doubt it was competent for the heirs to set up their possession as representing the legal estate in the mortgaged ]»remises.'' I add, such a right in the heirs is made stronger — it is not necessary to say precisely how much stronger — bv the deed which the plaintiff now insists upon. A new tridi jnust be denied. EVERSOX v. .McMULLEX. CoiUT OK ArrK.VLs of Xew York, 1SS9. (113 N. y. 203.) Appeal from judgment of the (ieneral Term of the Supremo i'ourt in the third judicial dej)artment, entered upon an order made September 13, 1887, which alfirmed a final judgment in favor f plaintiff, entered upon a decision of the court confirming the report of a referee, and also nKMlilicd and ntlirmed, as modified, an interlocutory judgment. This action was brought by plaintiff, as the widow of M()ri:an E.verson, to recover dower in certain ])remises. On the trial the court held that plaintiff's dower interest should be cbargt>d with its just proportion (»f a mortgage in which she joined with her liusband. which is set forth in the opinion, and 372 COMMON LAW RELATIONS. [CHAP. I, an interlocutory judgment was entered accordingly, referring it to a referee to admeasure the dower. The General Term, on appeal from the interlocutory judgment, modified it, adjudging that the mortgage was not to be considered in the admeasurement. The material facts are stated in the opinion. Finch, J, We are required to settle on this appeal the disagree- ment between the trial court at the first hearing and the General Term, and determine which decision was correct. The property in question was owned originally by Morgan Everson, who mortgaged it to the Rondout Savings Bank for $12,000 ; his wife, who is the present plaintiff, joining with him in the mortgage to cover her inchoate right of dower. Everson died soon thereafter, and his execiitor sold the equity of redemption at public auction for one dollar. The case does not disclose the authority upon which he acted, but nobody disputes it, and the action was tried upon the assumption that a valid title existed in the purchaser. That purchaser was Coykendall, who assigned his bid to Preston, to whom the executor's deed was made. Preston took title before August, 1877, and thereupon gave a new mortgage to the savings bank upon the property for $2,000 to further secure an accumulation of interest upon the original mortgage. It appears that Preston gave a bond accompanying the mortgage, and so became personally liable for a possible deficiency, and the bank gained that additional security for its unpaid interest; but while it is said generally that the mortgage was given to pay the interest, it is not shown that the mortgagee accepted the new securities as a payment pro tanio upon the original incumbrance by any indorse- ment or equivalent action, or held them in any other way than as collateral to the original debt. In August, 1877, Preston and his wife conveyed to Crosby by a quit-claim deed, but containing a provision by which the latter assumed and agreed to pay the $2,000 mortgage given by Preston to the bank, as a part of the considera- tion for the purchase. The consideration named in the deed was $221. Preston did not on his purchase assume or become liable to pay any part of the original mortgage, but took title merely subject to its lien. When he gave his $2,000 bond and mortgage it was in aid of his own title, and not in pursuance of any duty duo to the representatives of the mortgagor. Probably his obligation was merely collateral to the primary lien, and so both he and his land became sureties for the unpaid interest; but if not, and the new mortgage was a payment of so much of the old debt, it was entirely voluntary, and he, and Crosby who took his place, stood in the attitude of sureties after paying the unpaid interest, entitling them to subrogation as against the land. Crosby thereafter conveyed a portion of the property to McMullen by a warranty deed, free ^"- '"1 KVKKsoN /•. M".\iri.i,K\. 37;} ;iiul dear of all iiuiiiiihrancv. He \va> tnabk'tl lo ilo tins \>y an arrangeiiR'nt at tlu- time, to wiiiih his grantct' and tin- bank wero liartios. The substantial point of that arran-^iMnont was a distribu- tion of the original mortgage in agreed proportions between the two parcels into whieh, by McMullen's purehase, the land was to be divided. To effect this sej)arati<)n and severance of the lien, .McMullen gave the bank a mortgage on his parcel for $.">,500 as a substitute for $1,000 of the principal of the original mortgage, and of the unpaid interest collaterally secured by the bond and mortgage of Preston, $500 of the interest liaving been paid in cash by Crosby. Tlie bank on its part formally released .McMullen's parcel from the lien of its original mgrtgage, indorsing thereon a payment of $4,000, and cancelled and discliarged the $2,000 mortgage of Preston, and Crosby was thus enabled to mak.- his •■onveyance free from incumbrance. On this state of facts the widow demanded dower in McMullen's jiarcel. The Special Term, on the first trial, held that she was bound to allow^ as against her dower a just proportion of the original mortgage and its interest, and sent tlic case to a referee to ascertain that just proportion, with a direction that the McMullen mortgage should be recognized and allowed in ascertaining tlie amount of !-uch indebtedness. The General Term, on the contrary, were of [tinion that the widow was not bound to contribute, and should iiave dower in the wliole parcel without allowance or diminution; and it is tiiat controversy which awaits our judgment. It is not dtnibtful on which side the equity exists. The widow subordinated her dower to the payment of the husbands debt. Whoever, in the room of a foreclosure by the mortgagee, pays that debt to him when under no juTsonal liability for its discharge, is entitled in ««|uity to the protection of the mortgagee's right as against the dower which it covered and charged. The purchaser from the husband acquired only the equity of redemj)tion. While, techni- illy, he took the fee, in truth he took it subject to the interest of the mortgagee carved out of it by the mortgage as a lien. Payment to the mortgagee in an equitable sen.se, is a purchase of that interest from him, and in equity the owner of the fee holds it under the mortgagee as to that interest, and under the husband only as to the "[uity of redemption. That is an answer to the doctrine invoked l»y the respondent that a release of dower is availabK' only to one who claims under the very title which was created by the convey- Mce with which the release is joined {Mttlloney v. Iloran, 19 N. Y. 18). That would be a good answer to the appellant's claim in I ourt of law. possibly, but does not govern his ease in etjuity. since ibere the truth of his holding, outside of the legal form, is under ilie mortgage to the extent of the mortgage debt. For his payment 374 com:mox law relatioxs. [chap. i. of that debt is not a duty which he owes to the husband's estate or to any one, but a transaction in his own interest, the exact and obvious purpose of which is to add the right of the mortgagee ta the right bought of the husband. The widow is left where her own voluntary act placed her. By joining in the mortgage she postponed her dower to the equity of redemption. She has that right still, and seeks to enlarge it because of a payment made not by her husband, or in performance of a duty due to him or those representing him, but by one acting wholly in his own interest and seeking to add to that as acquired from the husband the further right held by the mortgagee. The purchaser in the present ease took his land charged as surety for the husband's debt. While he, personally, was not bound to pay it, his land was held, and paying the debt of husband and wife, as represented by the mortgage, he had a right, as against them, to be subrogated to the position of the mortgagee and to stand. in equity as the purchaser and holder of his security. Thus far I have assumed that the giving of the new mortgage operated as a payment, pro tanto, of that held by the bank. That is a needless concession, because the finding in this case rebuts any intention of payment, and establishes that a severance of the original lien was all that was contemplated by the parties, and the giving of the new mortgage was meant, in its practical effect, to- serve as a transfer of so much of the original lien to the severed, parcel. Equity may look through the form of the transaction to- ascertain its substance, and so looking cannot fail to see that the new mortgage is so much of the old one in a changed form, but secures the old debt as did its predecessors. The finding is justified by the facts, and upon that basis the dower remains subject to the proportionate part of the original lien. I think these views are fully sustained by the authorities. In Swaine v. Perrinc, 5 Johns. Ch. 491, the mortgage given by the husband and wife was outstanding at his death; the equity of redemption passed to the heir who redeemed the land by paying the mortgage, and the widow who claimed dower was required to- contribute her ratable proportion of the redemption money. In PopJcin V. Bumstead, 8 Mass. 491, the husband and wife joined in a mortgage to one Capen, and after the death of the husband his administrator, under the order of the probate court, sold tbe equity of redemption to Wheelock, who conveyed it to Bumstead. The latter paid off the mortgage and it was discharged of record. The widow thereupon demanded her dower, but the court held she was barred. This case, which is very like the one at bar, was cited in Van Dyne v. Thayre, 19 Wend. 171, with apparent approval. Judge Cowen reviews many of the cases and holds that Collins v. Tornj, 7 Johns. 378, and Coates v. Cheever, 1 Cow. 475, were ^•••♦•'"•i KVKicsoN c. .M Ml i,i.i:n. .{75 dt'cidt'd wiihoul full tonsidrration. Near the close of his opinion he says: "My deduction from this and other cases, I state in the words of Chancvllor Kent ( I C'onun. A'), M ed.), the wife's dow.-r in the eciuity of ridtinption only applies in case of redemption of the incumbrance by the husband or ids representatives, and not when the equity of redemption is released to the mort;:a<,'ee or I onveyed." I am not aware that the authority of that case has been overthrown. The cases cited in behalf of the widitw eonlirm rather than ques- tion the views we have expressed. Jn Bartlelt v. MiLsUner, 28 Hun, 235, the purchaser had assumed and a^/recd to pay the m()rt^'a;,'e debt as a condition of his purchase, and, having come under that obligation, might be deemed to have paid in behalf of ihe husband or his estate. The distinction is referred to in Jones on Mortgages, vol. 1, § 866, where it is said that, if the mortgage " be redeemed by the heir or purchaser, or by any one interested in the estate who is not bound to pay the debt, to avail herself of this right she must contribute her proportion of the charge according to the value of her interest." In Runijan v. Stewart, 12 Barb. 537, the action was at law, and, while a majority of the court sustained the claim of dower, it was explicitly said that the result would be ditftTcnt in ecjuity. In that case Runyan and his wife gave a mortgage, and thereafter the luisband gave a conveyance to Baker, who assumed the payment of the mortgage. The court question the case of Popkin v. Bumstead (supra), but add that, in equity. Baker might be subrogated and liave a decree for contribution. No reference was made to the assunijjtion of the mortgage by Baker. In Jackson V. Deu'itt, 6 Cow. 316, tiiere was a release to the mortgagee and dower was denied. In Wedge v. Moore. 6 Cusli. 8, the whole argu- ment is founded upon an assumption of the mortgage debt bv the purchaser, which is argued out from the facts. In Piatt v. Jirick-. 35 llun, 127, the action was by the purchaser of the equity of redemption, who was not bound to pay tlie mortgage debt, to compel the mortgagee to assign his mortgage for the protection of the l)urchaser's title against dower, its amount having been tendered. The court lield that the assignment could be compelled ; that there was a right of subrogation; that the assignment would not work a merger, and the mortgage could be interposed against the claim of dower. Of course, the technical or formal assignment is material only as showing a transfer rather than a paym»>nt, and where no payment was intended or made, but the mortgage debt subsisted in the new mortgage given, the result must be the same. On the whole, I am satisfi(>d that where the purcha.xer of the equity of n'demption is not bound to pay the m'). (; C.B. |N-. S.J 11.-,.) Crowder, J., now delivered the judgment of the court: This was an action by the a.-signecs of a bankrupt, to recover from the defendant certain articles alleged to be part of the bank- rupt's estate. It was tried before my Brother Byles at the last Spring Assizes at Liverpool, when a verdict was found for the jtlaintiir, with liberty to move to enter a verdict for the defendant. The facts were these: Moore, the bankrupt, being the owner of a vacant plot of ground, in 1853 mortgaged it in fee to one Oswald, who, in August, 1858, sold to the defendant the mortgaged premises. Moore became bankrujit in .September, 1858. Subsecjucntly to the mortgage, and before the .sale in 1858, Moore, who had always con- tinued in possession, erected various buildings upon the plot of ground, and set up all the articles sought to be recovered in this aclion. They consisted of a steam-engine and boiler used for the ]»urpose of supi)lying with sea-water the baths which had been rting to the relaxatifin of the general rule of law in favour of trade fixtures put up by th(> tenant, '* Hut that is not the present case. Again, it is said that the propi-rty in (piestion did not pass by the mortgage ' (■> K\(li. 20.'.. 380 COMMON LAW RELATIONS. [CIIAP. I. deed. Xow. it always appeared to me that, where the owner of the inheritance affixes property to it, it becomes a fixture in the general sense of the term, and part of the freehold ; and, if the inheritance be afterwards sold or let, it goes with the freehold; and I confess I see no distinction, for this purpose, whether the deed be one of absolute conveyance, lease, or mortgage. A mortgage, therefore, made by the owner of the inheritance, will, without naming them, pass all the fixtures thereon." And, in another part of his judg- ment, he says : " Again, it is urged that, as to those articles which were attached after the execution of the mortgage deed, they could not pass to the mortgagee. But there has not been cited any author- ity, or even dictum, for such a proposition. I confess I know no case which goes so far as to determine, or even to intimate an opinion, that, where a mortgagor in possession alters the premises by addition or otherwise, the mortgagee shall not take the benefit of such alteration. I can find no distinction, therefore, substan- tially, between those which were affixed before and those affixed after the date of the mortgage deed. In that point of view also,. I am of opinion that all the fixtures alike passed to the mortgagee. There is also a very elaborate and learned judgment of Mr. Com- missioner Holroyd, reported in 2 Mont., D. & De G. 443 (1841), in which the whole subject is fully considered, and a similar opinion very clearly expressed. To the same purport are the decisions in the Court of Review, Ex imrtc Broadwood, 1 Mont., D. & De G. 631 (1841) ; Ex parte Price, 2 Mont., D. & De G. 518 (1842) ; Ex parte Bentley, 2 Mont., D. & De G. 591 (1842) ; Ex parte Cotton, 2 Mont., D. & De G. 725 (1842), and Ex parte Tagart, 1 De Gex, 531 (1847). . . . We think, therefore, that, when the mortgagor (who was the real owner of the inheritance) after the date of the mortgage annexed the fixtures in question for a permanent purpose and for the better enjoyment of his estate, he thereby made them part of the freehold which had been vested by the mortgage deed in the mortgagee ; and that, consequently, the plaintiffs, who are assignees of the mort- gagor, cannot maintain the present action. The verdict, therefore, must be entered for the defendant. Rule absolute} ' Winslow V. Merchants' Insurance Co., 4 Met. (Mass.) 300 (1842) ; Rob- erts V. Dauphin Bank, 19 Pa. St. 71 (1852) ; Foote v. Oooch, 96 N. C. 265 (1887) ; McFadden v. Alle7i, 134 N. Y. 489 (1892), accord. So are the cases generally. But see Clore v. Lambert, 78 Ky. 224 (1879), contra. Kfi . IV.] CLAKV r. «)\\ i;N. 381 ('i.Ai;^ \. ()\\i:n. SLTKEME JlDKIAI. Col i;i <>l M \ssA( II I >i: 1 Ts. I Slid. ( l."» dm I/. .")•.*•.'. ) Action of lort liy llu' assij^quH- in iiiMilvciicy (tf Ilciii.iii D. Bur^'- hardt, for tlu* conversion of four walcr-wliccls. with the shafts, couplings and other machinery connected with them. At the trial in the suju'rior court the plaintiff introduced evidence of the follow- ing fads : In 18.J1 lUirgliardi contracted with .lolm K. I'otter. who tluii owned certain real estate in Harrington, to furnish the water-wheeln and machinery, and to set them up in wheel-jnts to he prepared hv I'otter on the premises, for the sum of .^.■{..'jOO, of which ^oOO was paid at once, and the halanee was to be paid on the completion of the work, in notes secured i)y a mortgage of the property, or hy a mechanic's lien. In the latter part of IHo I, Burghardt, in pursuance 'f this contract, constructed the wIkm-Is in ([uestion. which were matle >( cast-iron and placed in pairs upon cast-iron shafts, and set them up in penstocks and a ilumc. the frame of which reste(l on a stone foundation built hy Potter in all res])ects like the foundation <»f a building. The wheels were intended for the purpose of driving a j)ai)er-niill on the premises; they were outside of th<' paper-mill building, but the mill could not be used without them. In January, 1855, before the completion of the wheels and liv- tures, the mill was destroyed by fire; I'otter failed and al)andone j)aid at the time nf making the contract ; never delivered the wheels, except in so far a-; setting them uj) as above described aniounicd to a delivery; lU'Vrr ofTered to return the money wliich he had received, and never called on I'otter for any j)aymcnt. When the contract was made the prem- ises were subject to certain mortgages, which were afterwards assigned to the defendants, who had previously hail notice that Burghardt claimed to own the wheels and machinery, and wh<». a vear after the fire, took ])ossession of tin* premises, which wen- in iho ondition in which the lire had left them, to foreclose the mortgage-;, ind afterwards purchased the equity of redemption. rpon this evidence Putnam, .1., ruled that, the wheels having been placed on the premises after the execution of the mortgage^, the action could not be niaintainrd. 'i'he plaint itT then olTend t > show that, by tiie agreement between l^urgbardt and Poller, tl ■• wheels were to remain the property of the former tmlil complete I and paynitMit fi>r them secured by mortgage; but the judge ru!' 1 388 COMMON LAW KELATIONS. [CIIAP. I. tliat, even if ^hat were proved, the plaintiff could not maintain his .action, and directed a verdict for the defendants, which was re- turned, and the plaintiff alleged exceptions. Hoar, J. It is conceded in the argument of the plaintiff's counsel, that the mill-wheels, for the value of which this action was brought, must be considered, as between mortgagor and mortgagee, fixtures belonging to the realty. They were essential to the operation of the mill, and were intended, when completed and paid for, to be perma- nently attached to the land. If the mortgagor had himself annexed them to the freehold, there could be no doubt that the mortgagee would hold them under his mortgage, and that they could not be severed without his consent (WmsJoiv v. Merchants' Ins. Co., 4 Met. 306). But it is contended that the mortgagor being in possession, and having agreed with Burghardt that the wheels should remain tlie personal property of the builder until they were completed and provision made for paying for them, the wheels, having been set up under this agreement, could not be claimed and held by the mort- gagee. If this position were tenable, it would follow that the mortgagor could convey to another a right in the mortgaged premises greater than he could exercise himself. But it is well settled that, although the mortgagor, for some purposes, and as to all persons except the mortgagee, may be regarded as the absolute owner of the land, yet the title of the mortgagee is in all respects to be treated as para- njount. The mortgagor cannot make a lease which will be valid against the mortgagee; and if the mortgagee enter, neither the mortgagor nor his lessee will be entitled to emblements (Pow. Mortg., c. 7 ; Keech v. Hall,, 1 Doug. 21 ; Lane v. King. 8 Wend. 584 ; Mayo V. Fletcher, 14 Pick. 525). And we think it is not in the power of the mortgagor, by any agreement made with a third person after the execution of the mortgage, to give to such person the right to hold anything to be attached to the freehold, which as between mortgagor and mortgagee would become a part of the realty. The entry of the mortgagee would entitle him to the full enjoyment of the premises, with all the additions and improvements made by the mortgagor or by his authority. Whether a person putting a building upon land by license of the mortgagor, under such circumstances that it would remain his personal property as against the mortgagor, would be allowed in equity to maintain a bill to redeem, if the mortgagee should enter, is a question involving very different considerations. A tenant under a lease may redeem, to protect his interest (Rev. Sts., c. 107, § 13; Bacon v. Bowdoin, 22 Pick. 401). It has been suggested that the defendants cannot avail themselves of their title as mortgagees, because they acquired the title of the •^Kr. IV. 1 Cliiri'lA /•. MoltKISON. 383 inortgagor also, and tluTcforc tlic morlgnges are to be regarded as paid or merged. But it has been often deeided that the purchaser purtenances should eon- tin\ie to be the property of defendants in error, until they slioubl receive the mortgage securities on the chattels and on the real estate. On .\pril 15, 1S57, the.se securities were delivered, the machinerv having I)een acce|)led. They W(>re properly filed and re((MJ Mass. 2-2H (1S!»0) ; H,iss Fnumlit/ Works v. (hit- Irntinr. '.>!) Iiid. .'".•J.'i (1SS4) : runninijhitm v. CiiiitoH, 9G Cln. 48'.) (185>5). nrconl. 384 COMMON L.\.W RELATIONS. [CII.VP. 1. menced a foreclosure suit^ making defendants in error parties with the other persons interested in the land. A decree was obtained December 31, 1858, for the amount of $820, then due ; and June 25, 1860, a further decree was obtained for installments subsequent to the first decree. Before the first decree, and in October, 1857, about two weeks after the foreclosure suit was commenced, Hiscock as- signed $3,800.4-1 of the mortgage money to one William P. Morloy, who was not a party to the bill. August 24, 1858, and before any decree, Morley assigned to Crippen (the defendant below, and plaintiff in error), informing Crippen that he had no interest in the machinery. December 31, 1859, Hiscock assigned the remaining interest in the mortgage to Crippen. Prior to July 26, 1858, and before Crippen obtained any interest in the mortgage, the machinery was taken down and stored in the mill building. One Laman then became owner of the property and machinery mortgaged, and, in Crippen's presence, promised to pay the Hiscock mortgage and the claim of defendants in error. Laman subsequently put up the machinery again in the mill. October 4, 1860, Crippen bid in the lands on the foreclosure sale, and the sale was confirmed October 30th. He took possession of everything, and subsequently took down the machinery, using a part in another mill, and storing the rest. In November, 1860, a demand was made for the machinery by defendants in error, at the mill. In February, 1861, a further de- mand was made at Crippen's barn, where some of the property was then stored. He made no reply whatever to either demand. The Circuit Court gave judgment against Crippen for a conversion. The rules which apply to personal property after it has been put to any use in connection with land are not uniformly agreed on, and any attempt to harmonize all the authorities would be idle. We must, in all these cases, adopt such conclusions as appear most in accordance with the general doctrines of the law. At the common law, personal property, as a general rule, never lost its identity in realty, unless so closely incorporated with it that it could not be separated without injury to the freehold. And evfn under the peculiar preference given by the English law to trade over agricultural improvements, buildings erected for farming uses, although resting upon foundations of masonry, were not con- sidered as real estate as against the tenant, if capable of being removed without injury. In Wanshrough v. Maton, 4 Ad. & El. 884,. it was held expressly that a barn resting upon a masonry foundation and capable of removal, was no part of the freehold, and was there- fore, in all respects, the chattel of the tenant who built it. This case is based upon a former decision in Rex v. Ollei/, 1 B. & Ad, 161, where the question did not arise between landlord and tenant, but was decided upon the nature of the property itself. There a person ''^•''- '^1 CHiri'KN c MoKKisoy. 385 owning lanil upon wliitli was a windmill, consisting,' of a wooden mill and its niacliint-ry, resting upon, but not fastened to, a brick foundation, leased the land and the mill to a tenant. The rental value of the whole property was thirty pounds, of which more than twenty pounds represented the rent of (he mill. It was held that the mill was no i)art of the realty, and that the tenant could not U- regarded, therefore, as holding a tenement of the value of ten pounds. In regard to erections made by tenants for purposes of trade or manufacture, an exception was early raised in their favor, allowing them to remove erections made for those purposes, although actually annexed to the freehold in a substantial way. But inasmuch as these erections had, during the tenancy, become actual parts of the free- hold, it was usually necessary for the tenant to remove them before restoring the possession to the landlord, as he could not afterwards enter upon and remove that which had become part of the land ; although, during his possession, he was not liable for such waste as would arise by such removal of what he had himself erected. If. however, the estate of the tenant was indeterminate, the property in the improvements was not divested by the lapse of the tenancy, and they might be removed afterwards (Bennett v. Nichols, 12 Mich. R. 22 ; Onhbony v. Jones, 19 X. Y. 234 ; Taylor. Landl. and Ten., g 552 ; Van Ness v. Pacard, 2 Pet. 137; Penton v. Rohnrt, 2 East R. 88). And in Holmes v. Trempcr, 20 J. R. 29, it was held that if a tenant, after his term expired, entered upon the land and removed a cider mill, although he was liable in trespass for the entry, he was not liable in replevin for the ])roperty, because the property was not relinquished by his giving up possession of the land, unless such was his design. A similar rule was laid down in Lmrrencr v. Knni). 1 Duer R. 3G3. There can be no dispute l)ut thai, in this country and in England, many cases have been deeided (and we are not disposed to question their propriety) which hold that personal chattels, although sever- able without material injury to the freehold, may yet pass as realty if apparently suitable and actually designed to be permanently attached to the land. These cases are many of them founded upon the change of business, whereby motive j)ower, which formerlv depended on the freehold itself by the imj)rovement of water privileges, has now become dependent on steam engines, which are l)er.sonal chattels. The doctrine that held all the machinery of a water-mill to be fixtures was based upon the idea that it was all designed to obtain the b(>ne(lcial u.se of the realty. This jirinciple cannot strictly apply to steam machinery, where everything is •ally dependent on that which is in its natiire personal; and it is not surprising that in seeking to apply old rules to new circum- 386 ' COMMON LAW KELATIOXS. [cilAr. L stances, courts should not have always been consistent. Mills and factories are generall}' set up as entireties for the purpose of grind- ing, sawing and manufacturing; and 3'et, according to the current of modern decisions, the ultimate purpose is disregarded ; and while the steam engine, which is but an incident to the main purpose, and which is often removed and replaced without disturbing the rest, is presumed to be realty, the looms and other permanent machinery, for the accommodation of which the building was chiefly erected, l. it was ludd that rails huilt into a fence, with the untlerstanding that they might be removed. y another. In this case, also, the owner of the rails was allowed to recover against the purchaser of the land for nverting them the year after ho purchased. There seems to be iio limitation concerning the kind of severable chattel which may be owned l)y one person upon another's land. See Dame v. Dame. ,^S X. ir. h\): Lamnstn- v. Eve, 5 (*. B. (x. s.) 717; Duck v. liradilyU, 13 Price, l."),")-. Tvappcs v. Ilnrler, 2 ('. & M. 153; Rogers x.WoocWitri/, 1") Piek. K. i:>(;; Smilli v. Benson, 1 Hill R. 170; r.nsscn V. Eirhnnh, 1 Fairf. 131 : Van Xess v. Pacard. 2 Pet. 137. The ca.se of Ford v. Cobb, '.?0 X'. Y. 314, in some of its principal atures. resembles the case now before us. Salt kettles and grates iid arch fronts were purcha.sed to be set up in brick arches, and rhattel mortgage was given Itack reciting these facts, and was duly recorded. The land was then sold to a jnirchaser without notice. It was held that the kettles nevi-r became realty, and that the chattel mortgage title must pn-vail. The case of Godard v. Oonld. 11 Barb. S. ('. R. (>(i2, was entirely similar in principle. There are cases in some States, particularly in Massachusetts, uhich are not consistent with these decisions. But when we con- sider the original common law doctrine, re(|uiring an actual incor- poration into the freehold, and tlu' jjcculiar rules of policy which have since allowed articles which are personal in their nature to l)e annexed by construction, we think that Y\\\i' is the safest which allows personal! V to conlinne as supi'l. The cases in Xew York old distinctly that the chattel doi^s not (Case to be a chattel, and ''>es not therefore pass to a Jtnna fide j)urcha.ser of the land. T\\U - in accordance with thc^ usual rub> contxrning separate chattels, 388 COMMON LAW RELATIONS. [CHAl-. I. a bona fide purchaser having no claim against Ihc true owner. Whether this rule should be universal is not material in the case before us, for there has been no bona fide purchase, and therefore it is not necessary to express an opinion on it. The machinery was not put up when the original mortgage was given, and Crippeu,, when he first obtained his assignment from Morlcy, was informed there was no claim on the machinery. He could not divest himself of the force of this notice. It is claimed, however, that, by the rules of law, fixtures made after a mortgage belong to the mortgagee, and that the mortgagor has not such an estate as will authorize any one to make an agree- ment with him touching the use of the land. Under the English rule, which gives the mortgagee an immediate right of possession, the mortgagor cannot give others a right he does not possess him- self ; and should he erect improvements which could not be severed without injury, they must undoubtedly continue on the premises. Improvements made by him would be presumed to be made for the benefit of the inheritance. But we think those cases which make this presumption absolute, not only as against him, but as against other owners of chattels placing them on the premises, go beyond reason, and divest property without any necessity or propriety, when its nature has not, in fact, been changed {Waterfall v. Peni- stone, supra). Neither do we consider the position of a mortgagor the same now as it was before the statutes forbidding possessory actions against him. Cases have been cited to us which hold that this statute only takes away a remedy, but leaves the right of possession unimpaired in the mortgagee. With great respect for the tribunals so deciding, we cannot accept this interpretation. It destroys all the value of the provision, if it allows a right of entry against the will of the mortgagor. In Miuuhj v. Munroe, 1 Mich. E. G8, it was held the statute was void as to former mortgagees; a ruling which would have been out of place, had the law not reached something more than a mere remedy. This decision has been afhrmed on numerous occasions since. In Baker v. Pierson, 5 Mich. R. 456, it was held by this court that a prior mortgagee, who, during a foreclosure suit of a subsequent mortgage, obtained possession from the mortgagor,, could not retain possession after a sale on that foreclosure. To this opinion we adhere, as in accordance with the statute. The mortgagor, therefore, until actual foreclosure, is in possession by right, and not by sufferance, and may make such arrangements for the use of the property as any other person could during his^ term. The machinery never became any part of the realty : Crippon was not misled l)y appearances, and had no right to dispose of it. It is also objected that defendants in error are barred of their -»' • IV.] CRiri'KN r. MoUltlSON'. 38'J < laiins iM'c-ausi' tlicy weio parties to the forodosun' suit. But as llicy had niorl'^'agcs on the real estate, they were j)n)|M'r d(-'feii(hints oil that ground. Wi- cannot presume the l)ill in tliat case was filed for any other ])ur])osc than a simple foreclosure. The ordinary allegations of a foreclosure suit would not authorize a decree de- . laring these chattels to belong to the realty. The decree, under ordinary circumstances, would simply allow the land to ije sold, leaving all questions concerning its appurtenances to be dispo.'^cd of as they should arise. To determine them in advance would require sju'cial averments in tin* hill (Wtirclicn'r v. Hewitt, 10 Mich. \\. I .-.:]). .Judgment should hi' allirmcd, with costs. Maiitin', Ch. J. Whatever may he the rule of the common law respecting fixtures, in the absence of any agreement of parties, it is well settled at this day that the contract of i)arties will fi.\ the < haractcr, and control the disposition of jiersonal ])ropi'rty, which, in the absence of a contract, would be held to he a fixture; in other words, the parties interested may control the legal effect of any transaction respecting such property by exj)ress agreement. Such was done in the case before us. The property which is the subject of this litigation was only erected upon the premises upon the agreement that it should be subject to a chattel mortgage for its ]turchasc price. By this the parties kept it separate from the realty, and it never became i)art of it. Such mortgage was given, and kept good up to the bringing of this suit, and all the evidence allows that all the parties through whose hands the property has been transmitted knew of such original agreement, and of the • xistence of such mortgage; and, as I think, it shows further that ihe land was purchased by all with this property excluded. Crip- pen certainly never purchased it, for he bought with full knowledge of the property, and the claims of the defendants in error to it. ilis ownershij) of the decree does not aid him, for he bought the decree with such knowledge, and could not hold it, or ilaim under it with any rights superior to those from whom he purchased. His purchase at the sale barely confirmed his title to the land, as he acquired it by purchase of the decree — notliing more. The jndtjmcnt of the court lirlow us affirmed, irith costs.^ CllRiSTiANCY, J., did not sit in this case. 'But compare Culcinan v. tilcarn.s M(g. Co., 38 Miili. 30 ^1878). 390 COMMON LAW RELATIONS. [CIIW. U BRENNAN v. WHITAKER. Supreme Court of Ohio, 1864. (15 Oh. St. 446.) Error to the district court of Lucas County. The original action was prosecuted by the Brennc.ns, plaintiffs, in the Court of Common Pleas of Lucas County, to recover from Whitaker and Phillips, defendants, damages for the alleged wrongful conversion by the defendants of two steam engine boilers, one large steam engine, a quantity of mill shafting, one drum, one balance wheel, the gearing for an upright saw, one muley saw and the gearing, and one poney engine. The facts, as they appear in the record, are substantially as follows : On the 9th of July, 1857, Farley & Ketcham, parties of the first part, executed a mortgage to the plaintiffs, parties of the second part, by which " the said parties of the first part, for and in con- sideration of the sum of $1231.51, to them in hand paid by the said parties of the second part ... do grant, bargain and sell unto the said parties of the second part, all and singular the goods and chattels hereinafter described, that is to say: The steam engine boilers now in the possession of said parties of the first part, designed to be used in their saw-mill in Oregon township, Lucas County, Ohio, being the same purchased by them of the said J. & J. Bren- nan this day, together with the engines and machinery attached to said boilers. To have and to hold all and singular the said goods and chattels hereinbefore bargained and sold, or mentioned, or intended so to be, unto the said parties of the second part forever ; said goods and chattels now remaining and continuing in the pos- session of the said parties of the first part, in said Lucas County, Ohio." The mortgage was given to secure tHc payment of the note of Farley & Ketcham to the plaintiffs, bearing the date of the mort- gage, for the sum of $1231.51, payable, with the interest, in one year, it being the amount due for the purchase money of the boilers mortgaged, and was subject to the condition that if default was made in the payment of the note according to its tenor, the plain- tiffs might " enter upon the premises of the said parties of the first part at any place or places where the said goods and chattels or any part thereof may be, and take possession thereof, whether the same shall have been attached to the freehold, and in law become •'^*'^- '^1 HKKNNAN C. WIIITAKKU. 391 ;i j)art of tlii' realty <»r not, ami tn rt'iiiovc (he saiiu' to any i»la»t? <>r jdaces they may (kviii best, and to soil and dispose of the same.** Tlie mort^'a^'t' was filed in the olVicc of the recorder of Lucas ("ounty, on the i)th of July, 18')7, and copies, witli the requisite statements, again filed hy the plaintiffs in the same place eadi year thereafter up to the time of the commencement of this action. After the execution of the mortgage, the boilers were put hy Farley & Ketcham into a saw-mill, erected by them on land of which they were the owners in f«'e. They were placed in an engini' house, built ])rincii)ally of brick, on one side of and attached to the main building of the mill. The roof of the mill extended over and formed the covering of the engine house. The boilers were placed — one end on a cast-iron frame, called the fire-front, which formed the front of the furnace, and stood upon brick, tlu' other end i>n iron stands also resting on the brick. Under the boilers were built, to suj)port them, piers of brick, and the whole was inclosed in brick arches nearly .surrounding the boilers, one end of which came up to the fire-frame, and the other was built into the end brick wall of the building. Usually the boilers are attached to the firc-fmnt and brick work by stay bolts, but the witnesses were not able t<> -ay whether that was done in this case. The boilers could not be removed without taking down the brick work around them and a part of the building to make room for them to be taken out. To take the boiU'rs out through the mill would not recpiire the walls of the building to be taken down, but they could be taken nut by removing a part of the wood work in front, or by making a hole in the lean-to or engine hou.se, at the rear end of the boilers. The engines were ])lace property had l)eon nexed by the tortious act of Farley I't Ketcham. Tlu* facts in ■^ case raise neither of ibe<»' (|ueear entering nto an examination of the aulborilic^ cilfd bearing upon them. 394 COMAION LAW RELATIONS. [cilAi-. i. Here it was not only the intention of Farley & Ketcham to annex the property to, and make it a part of, the freehold, but their so doing was according to the understanding of the parties when the mortgage to the plaintiffs was executed. In the mortgage it said the boilers are " designed to be used in their (F. & K.'s) saw-mill," and power is given the plaintiffs, on default of payment, " to take possession thereof (mortgaged property) whether the same shall be attached to the freehold and in law become a part of the realty or not." The right given to the plaintiffs by the mortgage to enter upon the premises and sever the property would, doubtless, have been effectual as between the parties. But the defendants were purchasers without notice of this agreement. The filing of chattel mortgages is made constructive notice only of incumbrances upon goods and chattels. The defendants purchased and took a convey- ance of real estate of which the property now in question was, in law, a part; and, in our opinion, it devolved upon the plaintiffs who sought to change the legal character' of the property and create incumbrances upon it, either to pursue the mode prescribed by law for incumbering the kind of estate to which it appeared to the world to belong, and for giving notice of such incumbrance, or, otherwise, take the risk of its loss in case it should be sold and conveyed as part of the real estate to a purchaser without notice. It is true that in the case of Ford v. Cohh, 20 N. Y. Rep. 344, it was held that an agreement which was evidenced by a chattel mort- gage was effectual against a subsequent purchaser of the land, without notice. But it seems to us to be the sounder rule, and more in accordance with principle, and the policy of our recording laws, to require actual severance, or notice of a binding agreement to sever, to deprive the purchaser of the right to fixtures or appur- tenances to the freehold {Fortman v. Goepper, 14 Ohio St. Rep. 565; 2 Smith's L. C. 259; Frijatt v. Sullivan Co., 5 Hill IIG; Richardson v. Copeland, 6 Gray, 536; FranMand et al. v. Moullon et al., 5 Wisconsin Rep. 1). In the case last named, the owner of a steam engine sold and assisted to annex the same to the realty, reserving a chattel mort- gage on the same for a part of the purchase money; and it was held that the chattel mortgage was inoperative as against a prior mortgagee of the real estate. The mode of annexation was very similar to that existing in the case under consideration; and the holding that the chattel mortgage was inoperative as against a prior mortgagee of the real estate, as was likewise done in Copeland V. Richardson, supra, restricts the operation of agreements to sever what would otherwise be regarded as fixtures, more than is required to be done for the decision we make in tlie present case. Whether the restriction upon the right of removal that was applied in these -" '^I iirNT r. iiAV sT.\Ti: ii;on ro. I{!>*» ,i:!(.'.N can be i)roj)iily ai>|tlH'nt executed hy Slater on September 18, 18')} : ''Whereas 1 have this day purchased of the \\,\\ State Iron t'ompany ten hundred and fifty-three tons of iron, paying therefor with the note of the Boston and New York Central K'ailroad Com- pany I for sixty-eight thousand four hundred and lifty-lixc dollars], secured by thirty of their mortgage bonds, and also secured to th«' amount of forty thousand dollars of the personal guaranty of (here followed a list of the guarantors] ; and whereas the said Boston and New York Central Hailroad Company have promised to pay to Tne five thousanil dollars per month after the Isl day of March, vD. 18r)r), out of the recei|)ts of their snitl railroad, which sun\. if • ccived by me. I intend to aj)ply to their saiil n«»te giv(>n to me lul by me sold to the Bay State Iron (\)mpany, the said five thousand dolhirs to be applic^l in part to reducing the guaranty of the said abov(>-nametill capaljlr of being ciifonrd. It is valid lit'twctii the parties, Slater ami the original corpora- iiDn, but l)inding ii|)(iu prior mortgagees and the landowners (if tliey remain entitled to jxjssession as security for their damages) bo far only as they have consented (hat the rails shall renmiu personalty. It is binding \\]mn such subseiiuent incumbrancers and grantees as had notice of it when they acquired title, but upon 110 others.^ DAVKXPoirr V. SIIAXTS. SUPKEMi: CoiItT Of \i;iiMONT, 1871. (43 17. 54G.) Petition for foreclosure of a mortgage. The petition sets forili a mortgage, executed by John (J. Shants & Co., to the petitioner, October 13, ISGO. of a mill and factory and tannery in Searsburg, with '^(M) acres of land, and three dwelling-houses thereon. "And also the factory, liun in j)rocess of erection on the site of said Searsburg tannery, with the saw-mill, water-wheels, and all the machinery and shafting in said factory," to secure a note of $1000. The ])etition then sets forth the execution by Shants & Co., and the purcha.'^e l)y the petitioner, of another mortgage on the same I>remises, except the machinery, and also sets forth that the defend- ants, other than Shants & Co.. claim an interest in said property. The petition was taken as confes.sed by all the defendants, except Henry (J. Koot, who appeared and answered, admitting the facts ^' t forth in the petition, or not denying them, except as follows: That between the 3d day of .\ugust and the v'Tth day of October. l.SCO, this defendant, by his agent, Olin Scott, sold to the said John (i. Shants it Co. various articles of machinery, consisting of a circular saw-inill and saw. and the belts to drive the same; llie gears on two water-wheels; the ujtper piece of a large water- whiH'l shaft and box to the same: the counter-shafts to two water- wheels; the drum llanges and boxes to the said ct)unter-shafts ; and one extra saw collar; upon the condition that said machinery ."hould be and remain the property of this defendant until the sanu- HJioidd be paid for by said .John (J. Shants it Co.; the whole of wiid machinery amounting in value to the sum of of $910. 8r.. which thoy agreed to j>ay this defendant for the same. .Ml of which ' I'ortrr v. PHtshurqh StrrI Co., Vll V . S. 2(57 (ISSC.t. accord. 400 COMMON LAW RELATIONS. [CHAP. I. inacliincry, excepting the gears and upper shaft to the large water- wheel, and the counter-shaft and boxes to the same, were in place in the factory mentioned in said petition at the time of the alleged execution of the mortgages set forth in said petition, and the said excepted articles have since said time been placed in said factory. That there has been paid to this defendant towards the purchase of said machinery the sum of $191 only, the remainder being still due with the interest thereon. And this defendant claims and insists that his title to ^aid machinery is paramount to that of the said John G. Shants & Co., and to that of the petitioner, and that the petitioner has no right to a foreclosure as to said machinery or any part thereof against the defendant. The petitioner replied, saying that he never at any time, until long after the execution of the several mortgages sought to be foreclosed by this petition, had any knowledge or notice, actual or constructive, of any contract or understanding between the defend- ant and the said John G. Shants & Co., by which the defendant had or claimed to have any right or claim to the saw-mill, water- wheels, and the machinery and shafting in the factory described in said mortgage ; that he did, on the 13th day of October, 18G6, in good faith, and relying upon the fact that no claims, liens or incumbrances existed of record upon any of the property or estate described in said mortgage, and upon the promise and assurance of both the members of said firm of John G. Shants & Co. that none existed in fact, loan to said firm the full sum of one thousand dollars, and took said mortgage in good faith to secure the payment thereof; that if it is true that the defendant did reserve such a lien upon the several articles named in his answer to said petition for foreclosure, as is in said answer stated, yet it is also true that the defendant well knew the purpose for which John G. Shants & Co. purchased the same, and the defendant then and afterwards con- sented that they might attach and annex said water-wheels, saw- mill, shafting and machinery to their freehold, and make the same a part of and appurtenant to said freehold, and did by his agents and workmen assist the said John G. Shants & Co. in so doing; and insists that the lien created by his said mortgage is paramount to any lien or claim of the defendant to the saw-mill, water-wheels, machinery and shafting in said factory. Stipulation. — It is hereby stipulated that this cause shall stand for hearing upon petition, answer, replication, affidavits of Olin Scott and H. W. Scott, statement of facts, and notes and mortgages set forth in the petition. The facts stated in the answer are admitted to be true, excepting as varied or qualified l)y the replication in con- nection with the affidavits and statement of facts. The facts stated "I^*'- "1 DAVKM'OHT r. SIIANTS. 1<)| in tlu' n'|)lication are admitted (o ho true, excepting as varied or (lualified by tlie allidavits and jjtatenient of facts, and excepting; that the averment respecting annexing *' to the freehold of th$ 30; Year Book, ."» lien. VII. 15; Brooke's Abr., Tit. Prop., pi. 23*; 2 Black. Com. 40} ; 2 Kent Com. 3G1 ; Cross v. Marston, 17 Vt. 533; White v. Twil- chell, 25 Vt. G20; Powers v. Dcnnison, 30 Vt. T52 ; 1 Washburn, Keal Prop., pp. 3, 542; 2 Kent, 2(;i ; 1 Leading Cases in Equity, 360-3G1 ; Davis et al. v. Bradley ei al.. 21 Vt. 5."); Winsloir v. Ins. Co., 4 Mctcalf, 306; Harris v. Ilaynes, 34 Vt. 220; 2 Smith, L. C. 211-212 etseq. The opinion of the court was delivered by IMxK, J. The bill having been taken as confessed as to all tiie defendants, except Henry (J. IJoot. and he alone defending, the only question is as to the right of the orator, under his mortgage from Shants & Co., to that portion of the property sold condition- ally by Koot to the said mortgagors. The bill, and answer of Koot, in connection with the written stipulation of the parties on file, leave no dispute as to the material facts in the case, and no time need l)e spent in repeating the facts thus agreed. It must be regarded as settled as a general rule in this Stale that a i)arty nu)y sell and deliver personal property under a condition that it shall remain the property of the vendor until the j)rice is paid; and that undi-r such contract the titU' will remain in the vendor until the condition is complied with, both as between the vendor aiul such conditional vendee, and also as lx>tween the origi- nal vendor and a hona fide purchaser without notice froni such ' Tin- aflitlavits and foniial >lat<'iiH'iit. dcaliii;; with tlir inotlo of nnnrxation of tlic lixtmcs, aro i>inittt>(l. Tlu' stalniu-iit romlmlos (liat "all tlio iiiacliiiicry niriilioncil nlM)V«', incliidiii^ tlio wator-wliorls aiuI ii|>prinla;;i»*. wore placed in th(v facloiy. wliich is n larjrt' Iwo-stnry hiiililinj;. .Ill \ !)0 ftvt. l>y .Tnlin (J. Shants A Co., for ttip purpoop of proswiitinp tho hinincss of innniifartiirin); liinibor. rhnir stfwk. «-tr.. and i-> I'onnertrd with and nttnchcU to tho l)uilding, as machinery of that character u>iially is." 402 COMMON LAW RELATIONS. [CHAP. I. conditional vendee. The only question is whether the facts of this case take it out of the general rule. The proposition of the counsel of the defendant Eoot is, that the whole property sold conditionally by Eoot to Shants & Co. was personal property as well after as before the sale, and cannot properly be claimed as fixtures or as parts of the realty. But we think as between mortgagor and mortgagee, if the title of the mortgagor were absolute, the defendant's proposition is not correct ; and that under the recent decisions in this State, on being put in place in the mill and factory, as shown in this case, it became so far annexed to the realty as to pass under a mortgage of the real estate. But still the question remains as between the mortgagee under his mortgage, and the original owner under his conditional sale to the mortgagor, which has the paramount right. First, as to that portion of the property which had been put in place in the mill and factory by the mortgagors after they thus purchased it of Eoot, and which was in the building and thus annexed at the time the orator took his mortgage : As to this prop- erty, the orator, as it appears, having advanced his money and taken his mortgage in good faith, without notice of any lien or incumbrance upon it, and from its condition having reason to suppose that the mortgagors' title to this property in question was the same as his title to the realty to which it was annexed, and of which it was apparently parcel, seems to have a strong equity in liis favor. While, on the other hand, the defendant Eoot, the unpaid vendor, who endeavored to secure himself by stipulation in the sale that he should hold the title till paid, ought not to be deprived of this security without some substantial reason. But the defendant Eoot must have understood when he sold the property to Shants & Co. that they intended to put the property to use in advance of the payment of the price ; and from the kind and nature of the property he must have expected that in its use it necessarily must be annexed to the realty substantially in the manner in which it was, and thereby become apparently parcel of the realty. What he knew or had reason to suppose and did suppose was to be done with the property he must be taken to have consented to, as he did not object. Eoot, therefore, having, by implication at least, if not expressly, consented that the property might be incorporated with the realty of Shants & Co. in the manner it was, and they thereby become clothed with the apparent title as incident to their record title to the real estate, whereby the mortgagee was misled and induced to part with his money on the credit of the property, the equity of the mortgagee is paramount to that of the conditional vendor. Justice and equity, as well as sound policy, require this limit to the rights of a conditional vendor as between him and an -'<•• IV.] Tiirr r. iiouton. 40:5 iiinoront purcliaser or inortf(n<5Ci' of real cstati' without notice wli«> iiilvances his inonov on the faith of a perfect titU-. But as to that portion of the property mentioned in the answer • l' the (.lefriidant Root and in the agreed statement of facts on lie, which had not Ijeen j)hiced in the mill or factory at the time >'f the execution of the mortgage to the orator, hut was in the yard ;iiul put in place in the factory or mill afterwards, the right of the tU'feiulanl Root is paramount to the right of the orator. That, not having heen annexed to the realty at the date of the mortgage, would not pass as incident to the realty; and the mortgage did upon the verdict of a jury. This action was l)rought to receiver damages for the alleged conversion of a boiler and engin*'. The j)laintifTs, under a written contract, numufaetured the ' ngine and boiler in (piestion, with other machinery, for Mrs. .'ane Coond)s lirown, to be put up and used in a new elevator ' RuzzcU V. rii„in,in<7s, r,l Vt. 21.1 (ISSS): ir,ir,„ v. Kmrifi. .1.1 \. 11. < (i <18r>»») : H'lVAr.-j v. IliU, ll."> Miili. X\:\ (IH!»7). arcord. .\ncl see A'rioir/- .11 V. Jdhnsoti, ,17 Mirli. 47 (1^<77), ^nd iMtising Iron Works v. Walker. "1 Miili. 109 (1892). 404 COMMON LAW RELATIONS. [CHAP. I. which Mrs. Brown was building, in the city of BuflCalo. By the terms of the contract, Mrs. Brown was to give for a portion of the purchase-price of the boiler, engine and other machinery her two promissory notes, to be secured by a mortgage on the boiler and engine. The notes and mortgages were to be executed and delivered so soon as the engine and boiler were complete in the plaintiffs* shop, ready to be put up at the elevator. The boiler and engine and other machinery were completed according to the contract ; . and while in the plaintiffs' shop the mortgage was given as provided in the contract. It was provided in the mortgage that the engine and boiler should be and remain personal property until the notes mentioned in it were fully paid, notwithstanding the manner in which they should be placed in the elevator. The mortgage recited the fact that the engine and boiler were made to be put up in the elevator of Mrs. Brown, pursuant to the agreement above men- tioned, and authorized the plaintiffs, in case of a breach of its condition, to enter the elevator and take and carry the boiler and engine away. Mrs. Brown failed to pay the second note secured by the mortgage. The boiler and engine were not put in the elevator building, but on a foundation made for them outside of the building; and a building called the engine-house was built over them after they were set up. After the mortgagor failed to pay the note, plaintiffs went to take the boiler and engine, and, finding the defendants in possession, demanded them. The de- fendants claimed to own them, and refused to let the plaintiffs have them. The defendants claimed title to the engine and boiler through three real estate mortgages, executed by Mrs. Brown before the boiler and engine were set up on the premises. These mort- gages had been foreclosed, and the premises sold under judgments obtained in the foreclosure actions, and the premises bid off by and conveyed to the defendants. The rights of the parties, by stipula- tion before sale, were not to be affected by the sales on the judg- ments in the foreclosure actions. The defendants asked the court to decide, as matter of law, that there was not any evidence of a conversion by the defendants of the boiler and engine. This tlu' court declined to do. The defendants requested the court to decide that the boiler and engine were a part of the realty, as between the parties to this action, notwithstanding the written agreement. Tbe court refused so to decide. The jury rendered a verdict in favor of the plaintiffs for the sum of $5,141.88, and judgment was entered thereon. M. A. Whitnci/ and R. W. Pccl-Jiam. Jr.. for the appellants. The engine and Ijoiler became a part of the realty, and were subject to the liens of defendants' mortgages {Potter v. Cromwell, 40 N. V. 287; Voorhees v. McGinnis, 48 id. 278; Sparls v. State BV.. "^*- '^'1 TiriT r. iioRToN'. 405 : lUack. [Iiul.] 4G0; Cdpnt v. I'rckham, Wo Conn. 88; AUonl ' . M. Co. V. (Jleason, 'M\ id. 8G). The agreement in the chattel mortgage was of no avail, unless consented to hy the mortgagee of the real estate (5 Am. L. Reg. [s. s.] 329, 330; LeJand v. Gassett, IMg. (Vt. Hep. I 335; s. c, 17 Vt. 403; Preston v. nn(j(js, 1«] iV/. ViA ; V'a/j .Vr*-,s- v. PacarJ, 2 Peters, 137 ; Walmslei/ v. Milne, G Jur. 1 K. s.] r^5; s. C, 7 C. B. [x. s. ] 115; Grady's Law of Fixtures, 153: 4 Mete. 310; Butler v. Parker, 7 id.-i2; Lane v. King, JS Wend. 584; Shepard v. Philbrick, 2 Den. 174; (7i7/^// v. Bakom, G Barb. 370). Under a mortgage on the land alone, all fixtures < rected ])rior or subsequent to the mortgage are embraced (7 C. B. [K. s.] 135, and cases cited; 4 Deae. & C'h. 703; 4 E. D. S. 474; 2 Barn. & C. 9G ; 2 Adol. & El. 157; 19 Barb. 317; 6 id. 370; 15 Mass. 159; 7 Mete. 40; 8 Wend. 584 ; '.' Don. 174; 2 Sandf. Ch. 359). Juhn Hanson for the respondents. PlaintiiVs liad a right to fix the character of the property in the engine and boiler by the agree- ment in the chattel mortgage {Ford v. Cobb. 20 X. Y. 344, 349; Palter v. Cornicell, 40 id. 287, 394, 295; Voorhees v. McGinnis. IG Barb. 242, 24G; s. c, 48 X. Y. 278, 286). FoLOER, J. It is well settled that chattels may be annexed to the real oi^tate ami still retain their character as p(>rsonal property. See Voorhees v. McGinnis. 48 X. Y. 278. and cases there cited. Of the various circumstances which nuiy determine whether in any case this character is or is not retained, the intention with which they are annexed is one; and if the intention is that they shall not by annexation become a part of the freehold, as a general rule they will not. The limitation to this is where the subject or mode r annexation is such as that the attributes of personal property mnot be predicated of the thing in controversy (Ford v. Cobb. ." X. Y. 31 1), as where the property coidd not be removed without Tactically destroying it, or where it or part of it is essential to the ipport of that to which it is attached (id.). It may in this case be conceded that if then^ were no fact in it lit the placing upon the j)remises of the engine and boilers in the lanner in which they were attached tlu-reto. tlu'y would have 'come fixtures, and would pass as a jiart of the realty. lUit the uTcement of the then owner of the land and the plaintifT is \press, that they should l>c ami remain jn'rsonal proj)erty until iie notes given therefor were paid; and by the same agreement ower was given to the plaint ilTs to enter upon the ])remises in ' rtain contingencies and to take and carry them away. While here is no doubt but that the intention of the owner of the land was that the engine and boilers should ultimately become a part of 'le rciilty and l)e permanently alVixed to it, this was subordinate ■106 COMMON LAW RELATIOXS. [chap. I. to the prior intention expressed by the agreement. That fully shows her intention and the intention of the plaintilfs that the act of annexing them to the freehold should not change or take away the character of them as chattels until the price of them had been fully paid. And as parties may by their agreement, expressing their intention so to do, preserve and continue the character of tlie chattels as personal property, there can be no doubt but that as between themselves the agreement in this case was fully sufficient to that end. But it is contended that where in the solution of this question the intention is a criterion, it must be the intention of all those who are interested in the lands; and that here the defendants, prior mortgagees of the real estate, were interested, and have not ex- pressed nor shown such intention. It is not to be denied that, as a general rule, all fixtures put upon the land by the owner thereof, whether before or after the execution of a mortgage upon it, become subject to the lien thereof. Yet I do not think that the prior mortgagee of the realty can interpose before foreclosure and sale to prevent the carrying out of such an agreement as that in this case. Had the mortgagees taken their mortgage upon the lands after the boilers and engine had been placed thereon under this agreement, they would have had no right to prevent the removal of them by the plaintiffs on the happening of the contin- gencies contemplated by it. The rights of a subsequent mortgagee are no greater than those of a subsequent grantee; and he, it is held, cannot claim the chattels thus annexed, and must seek his remedy for their removal by virtue of such an agreement upon the covenants in his conveyance of the lands (Mott v. Palmer, 1 N. Y. 564; and see Ford v. Cohh, supra). A prior mortgagee who certainly has not been induced to enter into his relation to the lands by the presence thereon of the chattels in dispute subsequently annexed thereto has no greater right than a subsequent mortgagee. Neither could claim as subject to the lien of his mortgage personal propert}' brought on to the premises with permission of the owner of the lands and not at all affixed thereto. Nor can either claim personal property as so subject from the mere fact of the affixing, where by the express agreement of the owner of the fee and the owner of the chattel its character a? personal property was not to be changed, but was to continue, and it to be subject to a right of removal by the owner of the chattel on failure of performance of conditions. The language of the authorities is that the chattel in such case is personal property, for which an action of trover for the conversion of it may be main- tained (Smith V. Benson, 1 Hill, 176; Mott v. Palmer, supra: Farrar v. Cliauffetete, 5 Den. 527; Ford v. Col)h, supra). SK*^'- JV] Tll-IT 1. liDUTON. 407 Anotlier consideration iiiakos it clear, I tliink, that in this case the absence of a concurrent inti'ntion on the ])art of tlie prior mortgagees is of no weiglit. As above stated, as a general rule, all fixtures put up(»n lands by the owner thereof beconu' a part thereof and subject to the lien of a prior mortgage; but sometimes it is doubtful if they have been so annexed as to so become. And then, it is said, the (piestion may be decided by the presumed intent of the party making tlie annexation of the chattels {Winsloir v. Mcr. Ins. Co., 4 Mete. 30G). The law makes a presumption in the case of any one making such annexation, and it is different as the interest of the person in the land is difTerent, that is, whether it is tem- porary or permanent. The law presumes that because the interest of a tenant in the land is temporary, that he alTixes for himself with a view to his own enjoyment during his term, and not to enhance the value of the estate; hence, it permits annexations made by him to be detached during his term, if done without injury to the freehold and in agreement with known usages. The law pre- sumes that because the interest of the vendor of real estate who is the owner of it has been permanent, that he has made annexations for himself, to be sure, but with a view to a lasting enjoyment of his estate and for its continued enhancement in value. So the mortgagor of land is the owner of it, and has a permanent interest therein, and the law presumes that improvements which he makes thereon by the annexation of chattels he makes for him.sclf for prolonged enjoyment and to enhance permanently the value of his estate {Winslow v. Mcr. Ins. Co., supra). These are presumptions of the intention of the tenant alone, the vendor alone, and of the mortgagor alone; nor are they ordinarily concerned at all with the relation to the lands, or with the ])uri)ose of the landlord or the vendee or the mortgagee; though there may be cases in which the intention of both parties may be of elTect, as where a mortgagee has loaned money with the understanding that it shall be applied to enhance the value of the estate by the addition of chattels in .such manner. And they are but presuni|)tions, which in all ca.ses mav be entirely done away with l)y the facts (Lancusttr v. Eve, T) ("'. H. \s. s.l'717). So in Elliott v. Bishop. 10 E.xch. 49G ; s. C. in error, 11 Exch. 113, it is recognized that the express agreement of a tenant may prevent him from the exercise of his right to detach his annexations, which is the same as to say that his agree- ment having shown that it was not his intention to remove them, the presumption of contrary purpose which would otherwise arise is repelled. So in Poller v. Cromwell. 40 X. Y. '.^ST, and cases state, was sufficient to that effect without any concurring intention of the defendants as prior mortgagees. Though the defendants became the purchasers of the land on the foreclosure of the mortgages, and were the owners of it in fee, and probably in actual possession of it, and of the boilers and engines annexed to it, before this action was brought or demand made of them for these chattels, yet they are to be considered in this case only as prior mortgagees of it. Such is the effect of the stipulation made by them that the ^sale upon the decrees should not in any manner change the legal rights of the plaintiffs in this action ; but for this it would have been necessary to have determined the effect upon the rights of the parties of the sale on foreclosure and the change of title and possession of the lands, and the applica- tion to that state of facts of the principle laid down in Lane v. King, 8 Wend. 584", and kindred cases. It appears that the boilers and engine cannot be removed without some injury to the walls built up about them, and which are a part of the real estate ; yet this fact will not debar the plaintiffs. The chattels have not become a part of the building; the removal of them will not take away or destroy that which is essential to the support of the main building or other part of the real estate to which they were attached ; nor will it destroy or of necessity injure the chattels themselves ; nor will the injury to the walls about them 1)0 irreat in extent or amount. So that the limitation hereinbefore stated does not apply. It is proper to add that the English case cited and much relied ii])on by iho defendants has not been overlooked {Walmsley v. I I •''^:«'- '^-l TIIIT /•. IIOIITON. ■!<):> Milne, : ('. H. |n. >. | li:,). 1 i|(, uui ^rallar from il lliat tli.- ilceision was placed »i|)()ii the jjround (as llu* d.'ft'iulants claim) Ihal till' mort^iiixcc of tln' land did not expect or understand that the chattels aiiiiexi'd were reniovahle or to he removed. 'J'he oj)in- ion of the court irccms sumnud up in the concluding sentence: ** We think, therefore, that when ihe morl;xa;,'or (who was the real owner of the iidieritance) alter the date of the moit;;aj;e annexed the lixturi's in (picstion for a ]»ermanent purpose and for the hetter enjoyment of his estate, he therein- uuule them a part of the frec- liold which had hem vested hy the mortjjafre deed in the mort- pipee." It is to he home in mind, too, that in En<(land and in Massachusetts the rights of ;i niorljxagee of land in the mortgaged premises arc greater than in this State, lie is regarded as the owner and the mortgagor in the light of a ti-nanl. So that things annexed to the land heconie fixtures upon the land of the mort- gagee, as it were. See case last cited, i)age ]X]: liiilh-r v. ['luir, 7 Mete. -10. The judgment should he allirnieil. with costs to the resj)ondents. All concur. Jiidf/mcnt affirmed} ^ Ouffus V. Iloirnril Fiinificr Co., S App. I). (X. V.) .■>i»7 ( ISDli) ; Kmes V. Entcs, 10 Kans. :U-l (1872); Cochnin v. riint, 57 N. II. r>14 (1H77); l*irst Xational liauk v. Elmore, 52 Iowa, 541 (1879) ; Campbrlt v. Roddij, 44 N. J. Eq. 244 (18HS) ; linnkky v. Forhncr, 117 liul. 17U (ISSS) ; War- ren V. LiddcU, 110 Ala. 232 ( 1895) -. tri7/i.v v. Muugcr Machinr Co.. l.J Tex. < iv. .\pp. 077 (1890), accord. And coinparc Mcl'itddcn v. Allrn, 134 N. V. 489 (1892), and Urannon v. Vuuyhun, 00 Ark. 87 (1898;. 110 COMMON LAW RELATIONS. [CHAP. U CHAPTER I. {Continued). Section V. Waste and Repair. KING V. SMITH. High Court of Chancery, 1843. (2 Hare, 239.) W. Smith conveyed and surrendered certain freehold and copy- hold estates to the use of J. Reid and his heirs, by way of mortgage, to secure £2700 and interest. W. Smith, by his will, gave all his real and personal estate to the defendant, S. Smith (who was also his heir-at-law, customary heir, and sole executor), "in hopes that he might be able to pay his (the testators) just debts, and find a surplus for his trouble." J. Reid devised his legai interest in the mortgaged premises to the plaintiffs, and appointed them his executors. The plaintiffs, by their bill, charged that the mortgaged premises were a " scanty security" for the principal and interest due, and that the plaintiffs were entitled and claimed to be specialty creditors upon the general estate of the mortgagor for the defi- ciency, and that, to ascertain the same, the mortgaged premises- ought to be sold. The bill prayed an account of the mortgage debt, a sale accordingly, and payment out of the proceeds; and if the same were insufficient, that the plaintiffs might be declared to be specialty creditors upon the estate for the deficiency; that, if necessary, the suit might be taken as being on behalf of the plain- tiffs, and all other the unsatisfied creditors of W. Smith, and the personal and real estate duly administered and applied. After appearance and before answer the plaintiffs filed their supplemental l)ill. stating that, since the original bill was filed, the defendant had felled, and was proceeding to fell and carry away large numbers of timber and timber-like trees which were growing on the mortgaged i)remises, that many of such trees were lying upon the lands, and had been advertised for sale, and praying an account of the trees felled, and of the monie? produced by the sale, and an injunction to restrain the felling and sale of trees from the mortgaged premises. Tlie plaintiffs moved for the injunction, according to the prayer. ViCE-CiiANCELLOR [Wigram]. It is now an established rule that if the security of the mortgagee is insufficient, and the court is satisfied of that fact, the mortgagor will not be allowed to do NKC. v.] KINO C. S.MI 111. ill that wlii
  • ii the iiiortga^i'd prt'iiiiscs. It has km ar^'ucd tliat if the hill Im- for a foreclosure, wlicii the mortgagee seeks to take the whoh; estate, the eourt will not prevent him [the iiiort^ja^^or |, p( luliu;; that suit, from cutting timi)er or rreeivinj; rents, or doing any otluT act iniident to the ownership: i)Ut that, if the jdaintifT suetl as a general eri'(lit(»r. the eourt would give him the relief hy injunc- tion. 'J'hat, however, is not tite distinction. The rule would be rather the other way. The plaintilT. in a foretlusure suit, asks nothing more than the estate, whilst the plainliir, in creditors' suit, -oeks the application, not only of the mortgagee! estate, but, if necessary, of the general estate also, in ])ayment of his debt. It i.s very diliieult to suppose that a mere creditor can have any such right as the argument assumes. On what principle is the executor and trustee of real estate to be restrained at the suit of a general creditor from acting according to his judgment in tin- management of the property? I think the allegation in the bill, iliat the mortgaged pri'mi>es are a scanty security for the debt, is a sulVicient foundation f"r admitting evidence of the value of the estate. ViCE-Cii.\xt'KLLOK. The ea.-es decide that a mortgagee out of possession is not of course entitled to an injunction to restrain the mortgagor from cutting timber on the mortgaged ])roperty. If the security is sullicient, the court will not grant an injunetion merely because the mortgagor cuts, or threatens to cut. timber. There must be a sj)ecial case made out befori' this eourt will inter|)o.'ie. The dillieulty I feel is in discovering what is meant by a " sullicient security." Su]ij)ose the mortgage debt, with all the expenses, to bi? £1000, and the jiroperty to l)e worth i'lO(K), that is. in one sense, a suflieient security; but no mortgagee who is well advised would lend his money unless the mortgaged j)roperty was worth one-third more than the amount lent at the tinu» of the mortgage. If the property consisted of houses, wjjicij are subject to many casualties to which land is not liable, the mortgagee would proltably re<]uir«! more. It is rather a ([uestion of prudence than of actual value. I think the question which must be tried is whetlu-r the property tin* mortgagee takes as a security is .-ullicieiit in this sensi- — that the security is worth so much more than the money advanc<'airing the value, which was the b.isi«; of the contract betwi-en the parties at tin' time if was entered into. I have read ihe atlidavit, and 1 cannot lind that either tlv> rental or income of the propcriv appears; but it seems that the substantial part of it lon-^ists of houses, whicli might make it a more serious ([uestion whether the 4\2 COMMON" LAW RELATIOXS. [CIIAP. I. court should iwrmit the mortgagor to cut the timber. The supple- mental bill, which states the circumstances with respect to the timber and prays the injunction, contains no case with reference to the insutheiency of value, nor does the plaintiff, by his affidavit, make any such case. The bill and affidavit appear to proceed on the supposition that the mortgagor has no right to cut the timber under any circumstances. In the valuation which is attempted to be shewn, I am not told the quantity of the land, or the rental; nor can I discover of what class the houses are, or whether they are tenanted or not, or what is the nature of the property generally. It is stated, on the defendant's affidavits, that he did not cut any of the trees with the intention of injuring the estate, but on the contrary he did it in the due and proper course of husbandry and management. What is meant by felling twenty-one large elm trees in due course of husbandry, I cannot comprehend. It is obvious that the defendant is using language of which he does not know the effect. There being, however, no abstract right on the part of a mortgagee to say that the mortgagor shall not cut timber, I am satisfied that there must be clearer evidence of the value before me, or I cannot grant the injunction. Let the motion stand over, with liberty to apply. If the defend- ant proceeds to cut more timber, the plaintiff can renew his application, and bring before me a case upon which I can adjudi- cate, and then the costs of this motion will l)e disposed of. I should be very reluctant to decide it without knowing what is the actual value of the security which has been accepted by the mortgagee, or whether he is really secured or not.^ Petersox y. Clark, 15 Johns. 205 (1818). Per Curiam. There can be no doubt but that the deed from Van Camp to Clark, and defeasance given back, amounted only to a mortgage, and the simple question then is, whether a mortgagee can maintain an action of waste against the mortgagor, before the forfeiture of the mortgage ; for the waste alleged to have been committed in this case was before the expiration of the time limited for the payment of the money secured by the mortgage. Indeed, the present suit was commenced before that time. Waste is an injury done to tbc ^ This represents the general rule in tliis eountry: Bradj/ v. Waldron, 2 Johns. Ch. 148 (181G); Fairhank v. Cndworih/ S3 Wis." 358 (1873): Eiinnons v. Hinderer, 24 N. J. Eq. 39 (1873) ; Triplcit v. Parmlee, 16 Neb. ((4!) (1884), (semhle) ; Moriarty v. Ashtcorth, 43 Minn. 1 (1890). That the right to an injunction to restrain waste by the mortgagor is absolute, sen \clson v. riiiajur, 30 111. 473 (1803). **'•''• ^- 1 CA.MI'HKI.I. /•. MAiOMlt. W'.i inheritaiui', iiiul the action of waste is ;:iv(n to liim who lia> tlio inheritance in expectancy, in n-maindcr, or reversion; Imt it i< exitressiy hiid down l)y HIackstone (.{ HI. Corn, 'ii')), that he who hath the ri'inainder for lifi- only i.s not entitled to sue for the wast<', since his interest may never, perhaix. eonie into pos.«;ession, and then he lias sulTereil no injury. S.i. likewise, with resjKH't to the niortga;,'ee, csi)ecially when the ni(>rl;,M;,'e Ls not forfeited, his intere-t in the land is contin;Lrent, and may he defeateil hy |)ayment of the inoney secnred hy the mortpiif.MU'd for the purchase. Such has been the well-known an claiming under him. is not less liable for an injury to the mortgagee by cutting 416 COMMON LAW KELATIOXS. [CHAP. I. down and carrying away timber and wood from the premises, than he would be by merely withholding the possession and receiving the rents and profits to his own use (Union Bank v. Emerson, 15 Mass. 159; Bro. Tr. 55, 363; 5 Rep. 13; Cro. Eliz. 784). Wc need not, however, rely on these cases, or decide on the form of action, as the parties have waived all objections to form, if any exist. But on these principles we decided the case of Smith v. Goodwin, cited for the plaintiff; and, on the same principles, we think the action maintainable, unless the alleged usage and general understanding with respect to felling trees and clearing wild lands, though mortgaged to secure payment of the purchase money, should be considered as preventing the application of those principles to a case like the present. It was urged by the defendant's counsel that such usage and general tacit understanding are equal to a license from the mortgagee to the mortgagor or his assignee, to do the acts which are charged in this action as a trespass. The facts in the case do not present this question. We have no means of knowing whether any such usage and general understanding exist. The argument of the counsel, therefore, cannot avail, as it does not apply. If such usage and understanding existed at the time of the transactions of which we have been speaking, and were considered as amounting to a license, and pleadable as such against the deed in question, they should have been disclosed in the form of a special plea, and the question arising thereon left to the decision of the jury. As the case stands, the plaintiff must have judgment for the value of the timber and costs, according to the agreement of the parties.^ COOPER v. DAVIS. Supreme Court of Errors of Connecticut, 1843. (15 Con7i. 556.) This was an action of trover to recover the value of a pair of Burr mill-stones, taken by the defendant. The cause was tried at New-Haven, January term, 1843, before Waite, J. The plaintiff claimed title to the property in question, by virtue of a sale made to him by Walter S. Thompson and Charles Cooper. ^ Pettengill v. Evans, 5 N. H. 54 (1829) ; Dorr v. Diiddcrar, 88 111. 107 (1878), accord. So in Vermont, after condition broken: Langdon v. Paul, 22 Vt. 205 (1850) ; Eagar v. Braincrd, 44 Vt. 294 (1872). SEC. v.] coori:i{ r. D.vvis. 417 Tlio defendant, wlio ailniititd tlic tiikingf claimed a right to do so, under the following eireuinslances. In October. 1HH!>, he was the owner of an oltl grist-mill, and. having purchased a tract of land for the site of a new grist-mill, he entered into a written contract with Thompson Cooper and David O. Way, to build and complete the new mill. After they had erected the building for the new mill, and before it was completed according to the contract, viz. on the iilst of February, 181U, the defendant sold and conveyed to them the whole property owned by him, belonging to the old mill and the new one, including the mill-stones in question. To secun.' the balance of the purchase-money unpaid at the time of the sale, they afterwards, on the same day, gave two promissory notes, and executed and delivered to the defendant a mortgage deed of the same property. At this time said mill-stones had been taken from the old mill and placed by the side of the new one, to be used for its conij)lction. They soon afterwards finished it, and |)ut it in operation for grinding corn and other grain, using said mill-stones for this purpose. The lower stone was set in a frame, fastened ti> the floor of the mill, and was fastened therein by means of wedges driven between the stone and frame; and in all other respects the stones were i)laced in the mill in the ni. inner in which mill-stones are usually placed in grist-mills. Cooper and Way having failed to pay one of their notes after it became due, the defendant brought his bill for a foreclosure, and, at the term of the Superior Court in January, 1842, obtainetl a decree against them, limiting the time of redemption to the first Monday of July, 1842. At the same term the defendant recovered, judgment against them in an action of cjtK-tment for the mort- gaged premises. lie afterwards took out execution on this judg- ment, and placed it in the hands of an ollicer to be executed. The officer made demand of Thorn j)son Cooper for the possession of the premises, who informed him that he lived upon them, and requested a delay of one week that he might remove his family therefrom; to which the ollicer consented. In the mean time Thom|)son Cooper repaired to the mill antl removed therefnun the mill-stones, and sold them to the plaintilT, who carried them to .1 certain shed and placed them there for safe-keeping. The defendant afterwards found them in the shed, took them away and cnnvertecl tlicm to his own use; which is the taking complained uf in the declaration. Cooper and Way, the mortgagors, continued in pos.scssion of the mill from the time of the sale made to them until after the removal of the mill-stones. Upon these facts the j)laintilT claimecl that he was entitled t'» a verdict in his favimr; that the mill-stones were not conveyed t>» the defendant by virtue of the mortgage deed and, consequently. 418 COMMON LAW RELATIONS. [CHAP. I. that he never had any interest in them ; that the mortgagors, having placed them in the mill for the purpose of carrying on their business, might lawfully remove them at any time while they continued in possession; that having so removed them they might legally sell and deliver them to the plaintiff, and the plaintiff prayed the court so to instruct the jury. The court did not so instruct them, but informed them that although the mill-stones were not conveyed to the plaintiff by virtue of the mortgage deed, yet, having been placed in the mill in the manner stated, they became annexed to the freehold, and the mortgagors had no right to remove them therefrom and convey them to the plaintiff, especially after a decree of foreclosure, and jvidg- ment in an action of ejectment against them. The jury returned a verdict in favour of the defendant, and the plaintiff moved for a new trial for a misdirection. Kimherhj, in support of the motion, contended, 1. That the defendant never acquired any title to the property in question. In the first place, the mortgage deed does not purport to convey the machinery of the mill. Secondly, it appears by the motion that these stones were not in the mill at the time of the mortgage, but were placed there by the mortgagors afterwards. Thirdly, these stones, after they were placed in the mill, continued to be personal estate, and, of course, were removable at the pleasure of the owner (Fenton v. Roberts, 2 East, 88; Ehves v. Maw, 3 East, 38; Van Ness V. Pacard, 2 Peters, 137; Cresson v. Stout, 17 Johns. R. 116; Gale V. Ward, 14 Mass. R. 352). Fourthly, at any rate, the purpose for which the stones were placed in the mill, and whether real or personal estate, were questions of fact for the jury and, as such, should have been submitted to them (Gibbons on Fixt. 6). 2. That if these raill-stones were so annexed to the building as that they became part of the realty, and thus a security for the debt, still, having been severed from the freehold whilst the mortgagors were in possession, they were unincumbered in the hands of their vendee. In the first place, the mortgagor continues the owner of the property mortgaged until foreclosure (1 Pow. Mort. 156, n. a; 4 Kent's Com. 155; 2 Sw. Dig. 165, 167; Wakcman V. Banks, 2 Conn. R. 446, 600 ; Leonard v. Bosivorth, 4 Conn. R. 423; Clark v. Beach, 6 Conn. R. 159, 163; Tobij v. Read, 9 Conn. R. 222; Peterson v. Clark, 15 Johns. R. 205; Barkhanisted v. Farmingto7i, 2 Conn. R. 605). Secondly, the mortgage is a power to take possession and hold the premises as security; and if the mortgagor, whilst in possession, would impair the security contrary to good faith, the remedy is by injunction, not because the mort- gagee is owner, but because the mortgagor is using the estate contrary to his agreement and to his good faith (2 Sw. Dig. 168, '-^«'• v.| ('()(H'i:i; c. K.vvis. 419 K".'; I Kciifs (uiii. I.')."); Tuhtj v. licihl, '.) Conn. H. 2"i5). Tlu* iinirt;.M;,'(c ciinnot sue the niortj^ni^'or for waste {I'flrrson v. Clark. !."> Johns. \{. '.'(>.'»). 'I'liirdly, the nu)rt, o,") ; Farrar S- al. v. Slachpolc, () CJreenl. 1.51 ; Goddard v. BnJstrr i(- al., (J (Jreenl. I'il ; Serg. & Watts, 11 G). ;{. That, by the recovery in the action of ejectment, all right of the mortgagors was at an end. In going upon the premises and moving the mill-stones, they were tresj)assers {llodijson mortgagors a decree for a foreclosure, and a judgment T the possession, in an action of ejectment. Hut before th«' piration of the time limited for the foreclosure, and before he id taken actual possession, the mortgagors severed the stones from '• mill and .sold them to the plaintitT. The defendant, having lerwards found them, took possession of them as his own property. 420 COMMON LAW RELATIONS. [CIIAI>. f. The question arising upon these facts was whether the phiintiif had thus acquired, as against the defendant, a valid title. Upon the trial in the court below it was supposed that, after a decree for a foreclosure had been passed, and a judgment rendered in an action of ejectment for the possession, the mortgagors might be considered as trespassers in removing the fixed machinery and disposing of it in the manner stated in the motion. The law recognized in the case of Hodgson v. Gascolgne was thought to be applicable to the present (5 B. & Aid. 81 ; 7 E. C. L. 35). It was there holden that after a landlord had recovered judgment against his tenant in an action of ejectment for the possession of the demised property, the tenant ceased to have any interest in the growing crops, and the sheriff had no right to levy an execution upon them. But, upon consideration, we are all satisfied that the principl.: laid down in that case does not apply to the present. There, tli,^ question was as to the relative rights of a landlord and tenant ; here, as to the rights of a mortgagor and mortgagee. By repeated decisions it is now fully established that a mort- gagor, before his right of redemption is foreclosed, continues the owner of the real estate mortgaged; that he is not accountable for the rents and profits, nor liable, in an action at law, for waste committed while in possession. The mortgagee has merely a lieu upon the property for the security of his debt, by virtue of which he may obtain possession, and appropriate the pledge in pay men *^ of his debt. The mortgagor has, indeed, no right by the commission of waste to render the security inadequate. But the appropriate' remedy for such conduct is by way of injunction. If the security is impaired by cutting and carrying away the wood and timber, the mortgagee has no power to seize them after they have been severed and carried away; but his duty, in such case, is to restrain the mortgagor from such acts by an injunction. These general principles are not denied. But it is claimed that the rights of the defendant have been varied by the judgment iu his favour for the possession. But we do not see that that circum- stance can make any material difference. He had not taken actual possession ; nor had his title to the property become absolute by tlit> decree. lie stood, simply, in the character of mortgagee out of possession. His further proceedings in relation to the mortgage' might at any time have been arrested by paying him his debt. His interest in the property continued to be but a lien. The mort- gagors continued in possession, and as such were the owners. TIk- mill-stones, after they had been severed from the mill, removed and sold, could not be reclaimed by the defendant by virtue of Ihn f=r.C. v.] VAX I'Kl.T i. M'lilCAU". 421 iiuiit^Myt'. Ami nllhoii<,Mi tlu' (lt'si<,Mi of the mortgagors probably uas to imi)air tlu' tlcfcudant's security, and j)r('V<'nt him from I ..Ikvting the full amount of his dobt, yet we eannot say that he i> entitled to relief in the manner in whieh he has sought it. His duty was to have protected his rights hy an application for an injunction. Tjion this ground, tiu'refore, witlmut adverting to the other uestions, which we do not consider it ni'cessary to examine, we liiink a new trial must be granted. In this opinion the other Judges concurred. Xcic trial lo he granted} VAX PKLT V. McGRAW. Court of Aitkals of Xi;\v Yohk, 1850. (4 X. Y. liu.) Van Pelt sued Southworth and .McGrawin the Court of Common I'loas of Tompkins County, and declared in case for wrongfully iid fraudulently removing rails, timber, &c. froui certain lands on hich the ])laintilT held a n\ortgage, thereby injuring his security. Ac. It was proved on the trial that in May, 1840. Almeron Baily . nd William E. Baily, being the owners of lU) acres of land in I>ryden, Tompkins Countv. executed a bond and mortgage covering tlie same to Harvey A. Rice, to secure the payment of $.')0(), one half payable in May, 1811, and one half in May, 18lv\ In August, 1842, Rice sold and a.ssigned the bond and mortgage to the plaintitT, who instituted a foreclosure suit thereon, and obtained the usual -iecree for the sale of the premi.^es in .Vugust, 184 1. The amount lien due on the mortgage, including the costs of the foreclosure Mjit, was nearly nine hundred doUars. The mortgagors were in- >lvent, and the premises were an inadcMpiate security for this sum. On the sale under the decree, which took place in October, isn, the ])remises j)nMlucc(l oidy the sun\ of $.')T."». Shortly before tlie hale and while the advertisement was running, the defendant Mc- (iraw, who had become the owner of the eipiity of redem{)tion by conveyance from the mortgagors, avowing that he would "strip ' Kircher v. Srhalk. 3i) N. .1. T.. 'M'y (1S77) : Vamlnslicr v. Knapp. JO Kans. (547 (1878); Triplrit v. I'armhr. 10 Nob. 049 (1884): Vrrtirr v. Urtz. 40 \. .7. Kq. 2.")0 (188J>). arcnrtl. Compnro liurkout v. Sicift, 27 Cal. •J33 (ISO.")), uinl Hill V. (liriu, f.l Cal. 47 (1S75). 422 COMMON LAW RELATIONS. [CIIAP. I. the land," proceeded to draw off rails, and to cut down and draw off valuable timber, &c. The premises were thereby considerably lessened in value. These acts were done by McGraw, and by Southworth aiding and assisting him, with full knowledge of the plaintiff's mortgage, and of the insolvency of the mortgagors. The defendants' counsel requested the court to charge the jury that McGraw, having the fee of the land and being in possession, had a right to take off the fences and timber, and that these acts, being lawful, could not be deemed to have been done wrongfully or fraudulently. The court charged that the acts were lawful if they did not prejudice the plaintiff's rights or impair his security, but if the defendants had impaired that security with a knowledge of the lien, then their acts were wrongful and fraudulent. The defendants' counsel also requested the court to charge that, inas- much as the plaintiff had alledged in his declaration that the defendants did the acts fraudulently and with a design to injure the plaintiff, he was bound to prove those allegations by other evidence than the mere removal of the rails and timber for their own emolument. The court refused so to charge. To the charge as delivered and to the refusal to charge as requested, the defend- ants excepted. The jury found a verdict of $150 in favor of the plaintiff. The judgment entered thereon was affirmed in the Supreme Court on error brought. The defendants appealed to this court. Pratt. J. There is no doubt but that an action on the case will lie for an injury of the character complained of in this case. It forms no objection to this action that the circumstances of the case are novel, and that no case precisely similar in all respects has previously arisen. The action is based upon very general princi- ples, and is designed to afford relief in all cases where one man is injured by the wrongful act of another, where no other remedy is provided. This injury may result from some breach of positive law, or some violation of a right or duty growing out of the relations existing between the parties (1 Cow. Treat. 3). The defendant McGraw, in this case, came into the possession of the land subject to the mortgage. The rights of the holder of the mortgage were therefore paramount to his rights, and any attempt on his part to impair the mortgage as a security was a violation of the plaintiff's rights. But the case is not new in it« circumstances. The case of Gates v. Joice, 11 John. 136, was precisely like the case at bar in principle. That action was brought by the assignee of a judgment against a person for taking down and removing a building from the land upon which the judgment was a lien. The plaintiff's security was thereby impaired. The court in that case sustained the action. The decision in that case SEC. v.] VAN I'KI.T C. .M"<;I!.V\V. l.'ft was rffi-rrt'd to and approval in Lanr v. Ilitchcut k\ 11 Jolni. '^\'.'>. and in iiardiicr v. Ucnrll, 3 Denio, 'I'.W. Nor is tlicrc any tliiiii.' in the case of Peterson v. Clark, 15 Jolin. 205, which conflicts with the principle of these eases. That was an action by a niortfja^rei' in the nsual form of an action for waste. The dechiration allfdj,'y them was a violation of the plainlilT's rights, for which an action would lie. The defendants' counsel also asked the court to cJuirge that, the 424 COMMON LAW RELATIONS. [CHAP. I. plaintiff having alledged in his dechiration that the defendants did the acts fraudulently and with a design to injure the plaintiff, he was bound to prove the allegations by evidence other than the mere act of removing the timber for the emolument of the defend- ants. The court refused so to charge, to which there was an exception. This proposition is somewhat obscure, but I understand it to mean that the plaintiff should prove that the primary motive of the defendants was to cheat the plaintiff. If the defendants knew that by taking off the timber the value of the plaintiff's mortgage as a security would be impaired, they would be legally chargeable with a design to effect that object, although their leading motive may have been their own gain. A man must be deemed to design the necessary consequences of his acts. If, therefore, he does a wrongful act, knowing that his neighbor will be thereby injured, he is liable. It is upon this principle that persons are often charge- able with the intent to defraud creditors, or to commit any other fraud. The immediate motive is oftentimes self-interest, but if the necessary consequence is a fraud upon his neighbor, the actor is legally chargeable with a design to effect that result. Upon the whole, therefore, although the charge is not quite so explicit as it should be, yet taken in connection with the propositions presented to the court, I think it was substantially correct. The judgment of the Supreme Court should be affirmed. Judgment affirmed.^ WILSON V. MALTBY. Court of Appeals of New York, 1874. (59 N. Y. 126.) Appeal from order of the General Term of the Supreme Court in the third judicial department, affirming an order of Special Term denying a motion for a new trial. This action was brought for the foreclosure of a mortgage made by the defendant, George Hubbard, and wife. Plaintiff sought to recover of defendants, C. S. Maltby and Thorn J. Houston, in case the mortgaged premises should not realize, upon sale, sufficient to ])ay the mortgage debt, the value of certain wood cut upon the ^Waterman v. Matteson, 4 R. I. 539 (1857); Jackson ads. Turrell, .-{!) N. J. L. 329 (1877), accord. Adams v. Corriston, 7 Minn. 456 (1862), contra. Compare Allison v. McCune, 15 Oh. Rep. 726 (1846). sK( . v.] WII.SOK C. MVLTBY. 4v'.» iiiortgagi'd j)roniises, tlie coini)laint alleging fraud and collusion lictwocn them and the mortgagor. Ifuhhard jmrthasfd the j)n'niiscs in (juostion, heing mostly wood- land, of jdaintitT's intcslalc, in lS(i7, sul)j\'ct to a mortgage thereon held by one Knapp, giving the mortgage in suit for part of the purehase-money. In 1871 Hubhard entered into a contract with Maltby and Houston, by which he sold to them the wood growing n llie mortgaged premises, the same to be cut by the purchaser, measured and paid for March 1, 1871. PlaintilT, learning that I he wood was being cut, calleil upon Hubbard and threatened to -lay the cutting by injunction; but, upon Hubbard agreeing to pay over the money received for the wood on the Knapp mortgage, he abandoned the intent. On the ',i7th February, ISTl, after tlie wood was all cut, ])laintifr, being apprehensive that Hubbard would not v the agreed price. The fact that the land was mortgaged when the contract was made, or when the wood was cut, did not alTect the defendants' title to the severed jjroperty. «nd although the cutting of the wood injpaired the security of the mortgage, the defend.ints were not responsible to th»' mortgagees 'or the resulting injury, unless they cut the wood knowing of the lien and with intent to injure the pbiintifT in respect to his security {Viin VrU V. }f<(!niii\ \ Coin^t 11<>). There is an additional reason in this case whv the plaint ilT i- precluded from treating the 426 COMMON LAW RELATIOXg. [ciIAr. I. act of the defendants, in cutting the wood, as tortious, or as a violation of his rights or equities. After he was informed that the defendants were cutting the wood, he took no proceeding to prevent a continuance of tlie waste, but allowed the work to proceed upon the promise of Hubbard that he would apply the money he should receive from the defendants upon the Knapp mortgage. The promise was made in December, and it was not until the following February that he notified the defendants of his claim on the premises, and at that time they had completed the work under the contract with Hubbard. This transaction operated as a license to Hubbard to sell the wood to the defendants, and estopped the plaintiff from questioning their title. The question then comes to this : Could the defendants lawfully pay their debt to Hubbard, against the protest of the plaintiff, after being iu- formed that Hubbard threatened to violate his agreement to apply the money on the prior mortgage? There can be but one answer to this question : The defendants' contract was with Hubbard alone, and tlieir debt was owing to him. The promise of Hubbard to apply the amount he should receive from the defendants on the Knapp mortgage did not make the plaintiff the assignee of the debt. It gave to the plaintiff at most a right as against Hubbard to intercept the payment upon proceedings taken, based upon evidence that he threatened to dispose of the money in violation of his agreement. We express no opinion whether such an action could be main- tained, but we think it is clear that, until prevented by the order of the court, the defendants could lawfully pay the debt to Hub- bard, and that, if they had refused, he could have maintained an action to recover it. The defendants were neither parties nor privies to the agreement between Hubbard and the plaintiff, as to the application of the fund, and they owed no legal duty to the plaintiff to defer the payment of their debt at his request. That agreement recognized Hubbard's right to receive the payment, and no legal proceedings having been taken to prevent it, the payment to him was a valid discharge of their obligation. In view of the finding of the jury, it cannot be claimed that they colluded with Hubbard in the transaction, or misled the plaintiff, or induced hiia to institute legal proceedings against Hubbard upon the promise to retain the money until an injunction should be procured. The judgment should be affirmed. All concur. Judgment affirmed.^ ^ Augier v. Agnew, 98 Pa. St. 587 (1881), accord. «KC. v.] SKAKLi: r. SAWYKH. 4>*7 SKAin.K V. SAWVKir Supreme Jiurial Coi in oi .Massachi skits, ISTf). {]■!: M'ls.^. till.) Morton, J. Tliis is an actinn ul" tdpt lV»r the convfrsioii »»f a ijiiantity of wood and tinil)c'r. It appeared at tlie trial that one Warren, Itein^ the owner of a lot of wood-land, niortgat^ed it to the plaintiff's testatf)r; and that, after the eondition of the niort[,M<;e was hroken, hut hefonr the mortgagee had taken j)osscssion, Warren eut the wood ami timber in question and sold it to the defendant. The presiding justice of the Superior Court ruled that, " if the defendant bought of the mortgagor wood and timber eut from the mortgaged prem- ises, and exereised such acts of ownership over the same as would amount to a conversion, then he would l)e liable to the mortgagofr for the value of the same, without any previous demand, and although he bought the same in good faith and without any notice "r knowledge of any claim uj)on the same." To this ruling thf d<'fendant excepted. Upon the (luestion whether, if a mortgagor commits waste by removing buildings, wood, timber, fixtures or other parts of the realty, the mortgagee out of possession can follow the property after it has been severed, and recover it or its value, there have l>een conflicting decisions in different jurisdictions. In Xew York ind Connecticut, it has been held that a mortgagee out of possession rannot maintain an action at law for waste committed by the mortgagor; and that he has no jjroperty in wood or timber cut and removed, so as to enable him to maintain trover for its convcrsittn (I'llcrsun V. Clark, 1.3 Johns. '^05 ; Cooper v. Ddvis, 15 Conn. 5.")(i). On the other hand, it has been held in Maine, Xew llamj)shirf. Vermont and Rhode Island, that tind)er, if wrongfully eut and removed by the mortgagor, remains the proj)erty of the m, that acts of liie niorlf,M<,'()r in cutting wood and timber, or otherwise severing parts of the realty, are not wrongful when from the circumstances of the case the assent of the mortgagtc may be reasonably presumed. The relation between a mortgagor and mortgagee is a very peculiar one. The mortgagee takes an estate in fee, but the sole purpose of the mortgage is to secure his debt. Usually in this State the mortgage contains a provision that the mortgagor may retain possession until condition broken. The object of this is that the mortgagor may have the use and enjoyment of his pro])erty, and it imjjlies a license to use it in the same manner as such property is ordinarily used and as will not un- reasonably impair the adequacy of the security. If a mortgage be of a dwelling-house, the mortgagor may do many acts, such as acts of repair or alteration, which may involve the removal of parts of the realty, which would not be wrongful because within the license implied from the relations of the parties. If a farmer mortgages the whole or a part of his farm, with a clause permitting him to retain possession, as was probably the case at bar, it \i within the contemplation of the parties that he is to carry on his farm in the usual manner, and a license to do so is implied. In such case, it is clear that he is entitled to take the annual crops, and wood for fuel {Woodward v. Pickett, 8 Gray, GIT). And we do not think that the implied license is necessarily limited to the annual crops, but that it extends to any acts of carrying on the farm which are usual and j)roper in the course of good husbandry. If, in carrying on similar farms, it is usual and is good husbandry to cut and carry to market wood and timber to a limited extent, a license to do this might be implied from the relation of the parties. The bill of exceptions furnishes us with so meagre and imiterfect a history of the ca.se, that we are unable to say how far thest« considerations are applicable in the case at bar. Hut the ruling of the presiding justice .seems to have been general, that the defendant would be liable if the wood and timber were cut from the mortgaged premi.'^es, and to have excluded the i)mIiiiiii : luit In" anotluT dcnl e oxtinniiistied liy any covenant or affieenient at the time of making the mort>ra>re. Rejj. TJl). ItJSO. ]\. .'i3S ; rn/« Hutniirrick v. Barton, 1 C'l>. Cu. 2\1.—Ilrp. 433 EQUITY RELATIONS. [CHAP. it. 1st. That an estate could not be a mortgage at one time and after- wards become an absolute purchase by one and the same deed. 2dly. That the mortgagee in this case had a proper remedy, and might have made his estate absolute in a legal course, viz., by exhibiting a bill to foreclose the mortgagor of the equity of redemp- tion: and they cited the case of Yieldmington and Gardiner, where mortgagor was to redeem during life only, and yet his heir admitted to the redemption ; and Sir Robert Jason's case, where an estate was to go to his wife and her heirs, unless a sufficient Jointure were settled within such a time limited in the deed; and the case of Howard and Harris. But as to that case it was answered though there was a qualified redemption, yet there was an express covenant for repayment of the mortgage money, and so it was in the power of the mortgagee to make it a mortgage at any time. But the Lord Keeper [Sir Francis North] inclined to reverse the decree, for that modus & conventio vincunt legem; and all con- ditional purchases or bargains must not be turned into mortgages : and said that where there is a condition or covenant that is good and binding in law, equity Avill not take it away. It was objected against the bill of review that they had assigned errors collected from the proofs in the cause that did not appear in the body of the decree. But the Lord Keeper observed that was occasioned by the ill way they had got of late in drawing up decrees in general without par- ticularly stating the matters of fact ; and said the plaintiff in a bill of review should not be concluded by it, unless the matter of fact were particularly stated in the decree. At last it was agreed by the counsel to wave the signing and enrolling the decree by consent, and to hear the cause again de integro. This cause coming on to be heard de integro before the Lord Keeper^ he adhered to his former opinion that there ought to be no redemption in this case; and principally because it was proved in the cause that the intent and design of the mortgagor was to make a settlement by this mortgage, and that he intended a kindness and benefit to the mortgagee in case he should not think fit to redeem this estate in his lifetime ; and that there being an express covenant that the mortgagor might redeem at any time during his life, he thought he could not in equity have been debarred of that privilege ; for by a bill to foreclose a man you shall only bar him of his equi- table title when the estate in law is become forfeited; but where he has a continuing title at law, as in this case an express proviso that **•*'■ '-J iJATlY V. SNOOK. AXV he nii^'lil rrdtciii at any tinn,- during lift.', lie tliouglil e. j)ayable with interest — $.')()() on the 18th Xovemi)er, 18.51; $')()() in one year thereafter; tlu- like sum in two years; and the balance, being $831. '>.'(;, in three years. Tin* eoinplainant soon thereafter, and in ' U(n. I.il>. ICiS.J. .\. fdl. 4SJ. Ami \]\\- ili-nii^-^ion \va-* aftcrwinii-. 1 M.iy. 1<)8!), aninncd in Pari.: .Touin. Hou-r of Lnr(l>i. 14 vol. IK/. Jioiihnm \. Srirromb. 2 \pn(. .Id.') and l!»;i. — /»'«•/>. ' Tlio facts are >uni(ient!y staled in the opinion. 434 EQUITY RELATIONS. [CHAP. II. less than a year, became embarrassed in his business, and was unable to pay Warner and his other creditors what he was owing them. He was indebted to Warner in a large sum over and above the mortgage debt, and Warner, being aware of his pecuniary difficulties, was solicitous to get his debt secured — that is, that portion of it not included in the mortgage ; and went twice from Saginaw, where he was residing, to Mt. Clemens, to see if he could not make some arrangement with complainant for that purpose. On his last visit a settlement took place between the parties, from which it appears complainant turned out property in part payment of what he was owing him, leaving a balance still due Warner of $2000. Warner, to effect the settlement, was induced to take the property at more than its value. In pursuance of this settlement, the mortgage from complainant to Warner was canceled, and the mortgaged premises were deeded back to Warner by complainant. This deed bears date on the 6th February, 1855. There is also a contract between the parties for the repurchase of the premises by complainant. This contract bears date Febru- ary 7th — the day after the deed. Were the two instruments parts of one and the same transaction, or were they separate and distinct transactions? The difference in their dates favors the latter view, but it is by no means conclusive. The bill alleges both had their origin in the settlement, and that they are parts of the same trans- action, and were intended as security for the payment of the $2000. The answer, instead of denying this in clear and explicit teims, as it should have done if it was not the truth, we think admits it. Eef erring to Warner's second visit, the answer says he (Warner) was about to return home when complainant stated to him he had a horse and buggy and a certain promissory note he would let him have if " he would release all complainant was owing him aside from the mortgage and a part of the latter, and extend the payment due on the mortgage to the 1st of December, 1855." The answer then proceeds : " That this defendant, thinking he could do no better, then and there agreed to take said note and horse and buggy and a deed of said saw-mill lot and mill, and entered into contract A" (the contract of 7th February, 1855, already spoken of), "with the design and express understanding on the part of said complain- ant and this defendant, if he (the said complainant) failed in any particular in complying with said contract A, that he (the said <:-omplainant) should have no right at law or in equity to the said lands and saw mill; and said contract A was particularly and expressly conditioned to be the same as an original contract for the conveyance of land, in which time should be material, and every requisite on the part of said complainant to be done and performed should be by him literally complied with." SM'. I] HATTY V. RN'OOK. 435 IKtc is iin adinission of coiiiplainant's easo bv tlu' answer. It atlinits the di't-d and contract arc parts of one transaction, and that lilt' olijcct of tlu'Mi was to secure the balance of coinplainant's d<-l)t 1i> Warner, ll also shows that if i(Jini)lainant failed to \n\y promptly when the debt became due, he was to forfeit all right at law and in ance or non-perfornumce of the condition of the grant by the vendor at the day. When such con- veyance was made to secure a debt, or for the |)erforinance of .some other act by tlu' vendor, ('(juity took cognizance of the transaction 'Compare Wynkonp v. Coiriny. 21 111. .'iTO (18.')0). 436 EQUITY KELATIONS. ■ [CHAP. U. and declared the conveyance a security merely for the payment of the debt or doing of the act, and on the performance thereof by the vendor, after the day had elapsed and the estate had become absolute, would decree a reconveyance of the premises. To allow the equity of redemption to be cut off by a forfeiture of it in a separate contract would be a revival of the common law doctrine, using for that purpose two instruments instead of one to effect the object. Snooks, the other defendant, to whom Warner conveyed on the 22d December, 1855, purchased with full knowledge of complain- ant's equities. He took possession soon after, and has been in possession ever since. The decree of the court below, dismissing the complainant's bill with costs, must be reversed and a decree be entered declaring the deed and contract one transaction and to be a mortgage, and that complainant is entitled to redeem; and the transcript must be remitted to the court below for further proceedings. The other justices concurred. MOONEY V. BYKNE. Court of Appeals of New York, 1900. (163 N. Y. 86.) Appeal from a judgment of the Appellate Division of the Su- preme Court in the second judicial department, entered March 20, 1897, affirming a judgment in favor of defendants, entered upon a dismissal of the complaint by the court on trial at Special Term. The nature of the action and the facts, so far as material, are stated in the opinion. Vann, J. The case made by the complaint v/as that of a mort- gagor with a right to redeem from a mortgagee or his devisees iu possession. The defendants denied that there was any mortgage, alleged an absolute conveyance from the plaintiff to one Owen Byrne, and a subsequent conveyance from the latter to a bona pd^, purchaser. They also pleaded the Statute of Limitations and specified the period of six and ten years as the limit exceeded by the plaintiff in bringing her action. The facts agreed upon by the parties and admitted by tlie plead- ings are in substance as follows: On the 14th of August, 1878, the *•" • '1 MooNKv I . uvkm;. 437 j)laintiff owncil and \\a- in jiosscssion <»f a pani-l of land in llie and ii|twards, and at the same time she was indehted to Oweu Byrne in the sum of about $:{0()0. secured by three mortgages on said premises, whieh were under ])rocess of foreclosure. In order to secure the payment of this indebtedness she conveyed the hind to said Hyrne at his request by a di'cd dated on the day hist naincil and duly recorded. " The said deed was given as security" and for no other purpose. It contained full covenants, subject to said mortgages, which, as it was declared, ••shall not merge in the fee, but shall remain valid and subsisting liens."" Said l»yrnc at the same time gave back a dcfeasanee of even date whereljy he agreed to reconvey to the plaintiff upon the j)ayment to him within one year of .said indebtedness certain advances which he agreed to make for her benefit and the costs of the foreclosure proeeedings. It was stipulated that she should be relieved from personal liability on the bonds and that no judgment for deficiency should " be claimed or entered against her in any action that may be taken upon said bonds or mortgages so long as she and all persons claiming under her shall not disi)ute or contest the title of the" .said Byrne "or his assigns to said mortgaged premises or the amounts due him on said mortgages. . . ." Said instrument also provided " that as to the agreement In' the " said Byrne '*' to reconvey said premi.ses, time is of the essence thereof, and, further, that this instrument shall not be recorded by or on hehalf of the "' plaintifT, "and that for a violation of this provision this agreement, so far as the same provides for such reconveyance, shall thereupon become utterly null and void." The defeasance was never recorded. Saitl Byrne at once took possession of the premises and remaimd in possession thereof until the 13th of June, 1881, when he conveyed to one Walker by a deed duly recorded, but "said conveyance was Juade without the consent of the plaint ilf, who had no knowledge of it until this action was begun " on the 7th of March, 180."3. Said Byrne died on the 11th of January, 1880. leaving a will by which he gave all his property, real and personal, to the defendants. His »xec\itor accounted and has been discharged, and the property of the testator has lu-en delivered to the defendants. The plaintilT claimed that the rents and profits of the |)remises n'ct'ived by ByriU' amounted to more than the ])rincipal and interest of the debt secured. She alleged in her complaint that if Byrm* luul conveyed the jtremises to any one, such conveyance was made without her knowledge or consent. She demanded an accounting as to the amount due from her. and that she might " be at lilMTty to n-deem i-aid mortgaged premi.ses upon payment of what«'ver may upon such accounting i)e found diu', which this plaintilT hereby offers to pay," 438 EQUITY RELATIONS. [CIIAP. JU and that the defendants be compelled to convey said ^jremises to her. She also demanded alternative and general relief. Said Walker, who still owns the premises, was not made a party to the action. The trial judge dismissed the complaint upon the ground that " the Statute of Limitations is a conclusive defense/' and the Appellate Division affinned, on an opinion rendered in overruling a demurrer to the answer, when the case was in the first department (15 App. Div. 624; 1 tJ. 316). The facts agreed upon show that there was a mortgage; for a deed, although absolute on its face, when given as security only, is a mortgage by operation of law {Horn v. Keteltas, 46 N. Y. 605 ; Meehan v. Forrester, 52 N. Y. 277 ; Odell v. Montross, 68 X. Y. 491) ; Barry v. Hamhurg-Brenien Fire Ins. Co., 110 X. Y. 1, 5; Kraemer V. Adelsherger, 122 N. Y. 467; Macauley v. Smith, 132 K Y. 524; 15 Am. & Eng. Encyc. 791 ; 1 R. S. 756, sec. 3; Laws 1896, ch. 547,. sec. 269). While there was no covenant to pay the debt, none was needed, for the property was worth much more than the amount of the indebtedness, and the mortgagee could safely confine his remedy to the land (1 R. S. 739). The absence of such a covenant,, the conditional release of any claim for deficiency, and the agree- ment not to record the defeasance, are of no importance in view of the express admission that the deed was given as security. The deed and defeasance were executed at the same time, and as the latter in express terms refers to the former, they must be construed the same as if both were embodied in a single instrument. When read together in the light of the admission that the object was to secure a debt, it is clear that the transaction was not a conditional sale, and that the covenant making time the essence of the contract to reconvey has no more effect than if it occurred in the defeasance clause of an ordinary mortgage. An instrument executed simply as security cannot be turned into a conditional sale by the form of a covenant to reconvey, and even if there was a doubt as to the meaning, the contract would Ije regarded as a mortgage, so as to avoid a forfeiture, which the law abhors {Matthews v. Sheehan,. 69 N. Y. 585). As was said by the Supreme Court of the United States: "It is an established doctrine that a court of equity will treat a deed, absolute in form, as a mortgage, when it is executei-l as security for a loan of money. That court looks beyond the terms of the instrument to the real transaction, and when it is shown tO' be one of security, and not of sale, it will give effect to the actual contract of the parties. ... It is also an established doctrine that an equity of redemption is inseparably connected with a mortgage ; that is to say, so long as the instrument is one of security, the borrower has, in a court of equity, a right to redeem the property '^"' I-l MOONKY V. HYHNK. -l.'}'.) ii|t()ii paynient of the loan. Tliis rij^ht cannot hv waived or aban- iloiK'd by any stipulation of the parties made at the time, even if t-nibodii'd in the ni<)r(<,M<,'e. This is a doetrine from whieb a court of etpiity never deviates" {l\ii(jh v. Davis, \)(\ V. S. W.Vi, ',VM\). The right to redeem is an essential part of a mortgage, read in by the law if not inserted by the parties. Although many attempts have been made, no form of covenant has yet been devi.sed that will cut olT the right of a mortgagor to redeem, even after the law day has long passed by {Clark v. Henry, 2 Cow. 3*^1, :VM ; Jones on Mortgages, § 1039). Even an express stipulation not to redeem does not prevent redemption, because the right is created by law. P'or the same reason an express power to sell at private sale after default is of no effect. 'Mf," said Chancellor Kent, "a freehold estate be held by way of mortgage for a debt, then it may be laid down as an invariable rule that the creditor must first obtain a decree for a sale under a bill of foreclosure. There never was an instance in which the creditor, holding land in pledge, was allowed to sell at his own will and j)leasure. It would open the door to the most shameful imposition and abuse" (Hart v. Ten Eyck, 2 Johns. Ch. G2, 100). The utmost effect claimed for the provision that tin? defeasance was not to be recorded is that it was a consent to a private sale after default. As was well said by a recent writer: ''If the instrument is in its essence a mortgage, the parties cannot by any stipulation, however express and positive, render it anything l)ut a mortgage, or dei)rive it of the essential attributes belonging to a mortgage in ecjuity. The debtor or mortgagor cannot, in the inception of the instrument, as a part of or collateral to its execu- tion, in any manner dej)rive himself of his equitable right to come in after a default in paying the money at the stipulated time, and to pay the debt and interest, and thereby to redeem the land from the lien and incumbrance of the mortgage; tiie equitable right of redemption, after a default, is preserved, remains in full force, and will be protected and enforced by a court of equity, no matter what stipulations the parties may have made in the original transaction purporting to cut off this right" (3 Pomeroy's Va\. Jur., Jj ll!).)). So Mr. Thomas says that "■ it was a bold but necessary decision of equity that a debtor could not, even by the most solemn engagements entered into at the time of the loan, preclude himself from his right to redeem" (Thomas on Mortgages, sj 0). To |)revent undue advantage through inadetpiacy of consideration, either with or without an opj)ortunity to rej)urchase, the courts are steadfast in holding that a conveyance, whatever its form, if in fact given to secure a drbt, is neither an absolute nor a conditional sale, but a mortgage, and that the grantor and grantee have merely the 1 440 EQUITY RELATIONS. [CHAP. 11. • rights and are subject only to the obligations of mortgagor and mortgagee {Lawrence v. Farmers' L. & T. Co., 13 X. Y. 200). In the case before us there was no purchase of the land by Owen Byrne, for the existing relation of debtor and creditor between himself and the plaintiff was not ended, but was continued by a contract intended to secure the old debt, together with some further advances. He had a lien on, but no estate in, the land (Thorn v. Sutherland, 123 N. Y. 236;Huhhen v. Moulson, 53 N. Y. 225, 228). She had the right to redeem and he the right to hold the land until she redeemed, or her right of redemption was cut off by the judg- ment of a court of competent jurisdiction. The continued existence of the debt is the birthmark of a mortgage, and that is involved in the concession that the land was conveyed as security. The passing of the law day did not extinguish her right, for " once a mortgage, always a mortgage " is a maxim so sound and ancient as to be a rule of property. As the deed was a mortgage when given, it did not cease to be a mortgage after the period of redemption had expired. In Macauleij v. Smith, supra, it was held that the sur- render of possession by the grantor to the grantee after the debt became due did not prevent the levy of an attachment, issued in behalf of creditors of the former, upon lands conveyed to the latter as security. The plaintiff, therefore, is a mortgagor, whose right to redeem from the mortgagee in possession has not been cut off nor cut down by any act or omission on her part. As the defendants stand in the shoes of Owen Byrne, with no rights except by way of gift iinder his will, the case is the same in principle as if he were living and flic sole defendant. After the plaintiff had established her right i:o redeem as to him what answer could he make thereto? Would it be an answer for him to say, " I have conveyed the lands away, and, tlierefore, you cannot redeem ? " While this would be a con- clusive answer in behalf of Walker, the present owner of the land, if he had been made a party and the right to redeem had been asserted against him, can Owen Byrne or his devisees say that, by his wrongful act in conveying the land, he deprived the plaintiff of the right to redeem in any form and confined her to an action for the moneys received on the sale, to which the Statute of Limita- tions would be a bar? Can a mortgagee by his own act, without a judicial sale or the consent of the mortgagor, destroy the right to redeem, which is so carefully guarded by the courts? The mort- gagee could not, by selling the mortgaged premises, change the rights of the plaintiff as against himself. As to him, she still has the right to redeem, for by his act, without her knowledge or con- sent, he could not annul his covenant to reconvey. That covenant is still in force, and the plaintiff may compel its performance, so ^^rx-.i.] MOOXEV i. ii\usi:. ni far .13 the ri^^hls of (liinl parties, a<(|uiro(l iimlor \ho Rocording Alt. will prrmit. As Owtii Hx rnc convryctl to a bona fulr purchasor. ilic plainlill" cannot follow the huul as siicli, Imt slu' is not prevented liy that wrongful act from any form of redemption now practicable. \o act of his could utterly destroy her cause of action to redeem, lie might affect its value, but he could n<»t take its life. As a .sub- -titute for a decree requiring him to n>purchase the land and • (invey it to her, which might be impossible and would be apt to involve hardshij>. she may treat the value of the land, measured in money presumed to be in his hands when her right to redeem was established, as land, and enforce the right of redemption accord- ingly. Unless we virtiuilly sanction his wrongdoing by j)ermitting him to defeat her right of redemption ab.solutely by his own act, upon showing a right to redeem she must be permitted to make the best redemption j)ossible as against him. Because he has put it out of his j)ower to render to her all she is entitled to, he cannot refuse to make the nearest approach to it that is left. A court of < 'juity, in order to bring about an equitable result, disregards forms ;ind treats money as land and land as money when reiiuired lo jirevent injustice. A mortgagee in possession uiuler a recorded deed, absolute on its face, with an unrecorded defeasance, cannot ?-ell tlie land and claim that the purchase price is money as against one who has an equitable right to insist that in legal efTect it is land. As the plaint ilf established a right to redeem. Owen ByriU' and his devisees eannot complain if, in working out the relief required by the violation of his covenant, the court does the best it can to right the wrong by treating the money as land. In order to i)revent him from making a jirofit out of his wrong, the law raises the presumjjtion that he now has the full value of the land as a separate fund in his hands, and treating it as land allows the plaintiff to redeem, the same as if it were in fact land. As against the wrongdoer and his estate it will exert all its ])ower to make the plaintiff whole. j)aying due regard to equities arising through improvements uj)on the land, so as not to give her more than she is equitably entitled to. Thus, in Mcehan v. Forrester, supra, the court, through Iv.vr.vLi.o, J., said: "The sale was shown to have l)een made without the consent of Meehan and in violation of his rights, and it tloes not appear that the plaintiif ever had notice of it. He was not bound by such a sale. He was entitled to his land on payment of the amount due to Rt-rtine or his representatives. If Bertine, by reason of his own wrongful act, had deprived himself of thr ability to restore the land to which the f)laintiff is cquitai)ly entitled. ht> or liis representatives were l)ound to account to the plaintiff, at his election, either for the proceeds of sale of the land or its value at 442 EQUITY EELATIO^^S. [CHAP. 11. the time when the plaintiff's right to such reparation was established {Hart V. Ten Eyck, 2 Johns. Ch. 117; Peahodij v. Tarhell, 2 Cush. 227, 233; May v. Le Claire, 11 Wall. 236, 237)." In that case, as in this, the only cause of action alleged or proved Avas the right to redeem; but as the premises had been wrongfully conveyed, the plaintiff, upon establishing such right, was awarded compensation on the basis of value at the time of the trial. Com- pensation was allowed as an equitable substitute for actual redemp- tion. In other words, the land which should have been conveyed was appraised by the court, and the defendant compelled to restore the amount of the appraisal, as the only method of redemption possible. The form of relief granted was a money judgment, but that was possible only because a right to redeem had been estab- lished, for without that right the relief would be limited to the proceeds of the sale {Baily v. Hornthal, 154 N". Y. 648, 661). So in the case at bar, the plaintiff established the same right, but the defendant showed that he had placed it beyond his power to recon- vey. Thereupon in rebuttal and not as a part of her cause of action, the plaintiff had the right to prove the present value of the land, so as to follow the money presumed to be in the defendant's hands, and redeem that which he had wrongfully substituted for the land, the same as if it were in fact land. Guided by the cardinal principle that the wrongdoer shall make nothing from his wrong, equity so moulds and applies its plastic remedies as to force from him the most complete restitution which his wrongful act will permit {May v. Le Claire, 78 U. S. 217; Van Dusen v. Worrell, 4 Abb. Ct. App. Doe. 473; Miller v. McGuctin, 15 Abb. [N. C] 204; Hart v. Ten EycJc, 2 Johns. Ch. 62, 108; Enos v. Sutherland^ 11 Mich. 538, 542; Budd v. Van Or.den, 33 N. J. Eq. 143; s. c, id. 564). When he cannot restore the land it will compel him to restore that which stands in his hands for the land, and will not permit him to assert that it is not land when the assertion would be profitable to himself but unjust to the one whom he wronged. He cannot escape by offering to pay what he received on selling the lands, but must pay the value at the time of the trial. He cannot cut off the right of redemption and convert it into a personal liability, for he is still a mortgagee, and subject as such to the mortgagor's rights. The fact that the injured mortgagor need not take the proceeds of the sale, but may insist on the proved value of the land, as well as the pleadings and proofs, show that this is a pure action to redeem, and must be so regarded for all purposes, including the defense of the Statute of Limitations. While the mortgagor is helpless as against his grantee, she is not helpless as against him. The defendants insist that as the plaintiff can only recover a i^y<- l) MUONKV C. IlMfNi:. 'll.'j niuncv jiul;^Mii('iil, tlu' iau>c' of iK-tioii is in llu' iiatiin- nf an accouiii- ing for moncv had and rccoivt'd, and henco that the six-year, or ai most tlio li-n-yrar Statuto of Ijiniitations is a har. Tliis is not an action, however, to reeovt-r nioncv, hut to redeem hind from a mortfxa^'e. and hut for the miscoiuliii't of the defendant wouhi have resulted simj)ly in a judgment of redemption, with an account- ing for the rents and profits of thi* hmd, after payment of tlie deht hy the phiintifT, according to her demand and offer hefore thi? commencement of the action. Tlie j)criod of limitation provided by the Code, within which an action to redeem from a mortgage may be maintained, is twenty years after breach of the condition or the non-fulfillment of the covenant therein contained (Code Civ. Pro.. s< ;{71>)- ^o far as the defendants are concerned, the plaintilT liad a right to redeem. She brought her action to redeem and established it by evidence, and was entitled to Judgment accordingly ; but as that judgment would be inefTectual because the mortgagee had sold the land, equity will simply vary its relief from a judgment of redemption in land to a judgment of redemption in moni'y repre- senting the land. If the plaintiff had not elected to redeem, but to sue for money had and received to her use, the case of Mills v. Mills, 115 X. Y. 80, relied upon by the defendants, might be an authority. In that case, however, as was stated by this court, '*all the relief asked for in the complaint is an accounting and a judg- ment for a sum of money, and no other relief was needed or possible upon the facts established. This was in no .sense an action to redeem, as there was no mortgage and nothing to redeem." The relief demanded, as aj)pears from the ai)i)eal book on file in this i-ourt. was simply a judgment ''for all moneys received by" the defendant. No claim was nuule that the two transactions, which were four years apart, constituted a mortgage, or that there was ever a right to redeem. The theory of the action was that the defendant lawfully sold the land and should account for the pro- ceeds, after deducting his own claim. Thus, the court said : " Abso- lute title to the lands was vested in the defendant, evidently with the intention that he might sell them and reind)ursc himself, an«I j)ay over any sur|)lus to his brother." The fundanu'ntal fact thai the defendant sold without right was wanting in that case, and hence the principle, which is the basis of our judgment, coubl not be applied. It is the wrongfid conveyance by the mortgagi'c in possession, under a lU'cd jd>solute (tn its faci', that enai)les a court of equity to h(»ld on to the ca.se aftiT ordinary redemption has been shown to be impossii>le, and to allow such a reilemption again>t the wrongd(»er as will jirevent him from gaining by his wrong, ani;{.) SiiAW, C. J., delivered the opinion of the court. The plaintilf has brought liis bill in equity to redeem certain mortgaged premises therein described, being parcels of real estate situated in Cambridge. He claims title as the purchaser of an ecpiity of redemption at an officer's sale, made pursuant to the statutes ])roviding for tin; seizure and sale of equities of redemption for satisfying executions. The sale to the plaintiff was made on May 4, 1833, for $3500 on an execution and judgment recovered by Ezra Trull against Kuval Makcjieace, in a suit in whith the premises had been attached on mesne process the 11th of April, 183^'. The question therefore is, whether ^lakepeace had such. an ec^uity of redemption, liable to bo taken by creditors, either in May, 1833, when it was taken in execu- tion, or in .\pril, 1S3'2, when it was attached. There is no doubt that the transaction of Sei)tenilR'r. l8v*T. con- stituted a mortgage. Makepeace conveyed to Skinner & llurd an estate in fee, consisting of sundry parcels of land; and at the same time an indenture, bearing the same date, was entered into by th»; parties, reciting the i-onveyanc-e, reciting that a debt was due from Makepeace to Skinner & llurd, and containing an agreement that Skinner & llurd should purchase in the ecjuity of redemption, then about to be sold on execution, should pay off a mortgage due t.» Dr. Shattuck, should advance further sums of money, and, upon repayment of the sums due to them, should release and reassign to Makepeace. It was further agreed that Makepeace might make sales of the lands from time to time, that Skinner & llurd would execute releases jjursuant to such sales, that they should receive the money, the jiroeeeds of such sales, and apply it to the paynu>nt of the debt, and should account for the surplus; and the whole was to be accomiilished in three years. Some small sales were made pursuant to this agreement, and in April. 1831, a large part of the debt remaining unpaid, a now arrangement was nnuli'. also by indenture. Th.- in-trumeul o£ 446 EQUITY RELATIONS. [CHAP. II. defeasance, before held by Makepeace, was surrendered and delivered np to be cancelled, and new stipulations were entered into, by which Skinner & Hurd leased the land to Makepeace for two years, at a rent about equal to the interest on the debt; and they further stipulated that, upon the payment of a certain sum by Makepeace in two years, they would convey the estate to him. The first question is whether this last agreement, surrendering and cancelling the instrument of defeasance, was an extinguishment of the equity of redemption, as between the parties, and against the creditors of the mortgager. The court are of opinion that where an absolute deed is given, accompanied by a simultaneous instrument operating by way of defeasance, and afterwards the parties, by fair mutual stipulations, agree that the defeasance shall be surrendered and cancelled, with an intent to vest the estate unconditionally in the grantee by force of the first deed, by such surrender and cancel- lation the estate becomes absolute in the mortgagee. The original conveyance stands unaffected in form and legal effect; it conveys an estate in fee; the only party who could even claim a right to deny it that operation, by engrafting a condition upon it, has volun- tarily surrendered the only legal evidence by which that claim could be supported, and is thereby estopped from setting it up. Sucli cancellation does not operate by way of transfer, nor, strictly speak- ing, by way of release working upon the estate, but rather as an estoppel arising from the voluntary surrender of the legal evidence, by which alone the claim could be supported: like the cancellation of an unregistered deed and a conveyance by the first grantor to a third person without notice. The cancellation reconveys no inter- est to the grantor, and yet taken together such cancellation and conveyance to a third person make a good title to the latter by operation of law. It gives a seisin de facto, a conveyance by deed duly registered being to many purposes equivalent to livery of seisin (Highee v. Eice, 5 Mass. R. 352). It is good against the grantor and his heirs by force of the second deed, and it is good against the first grantee and all claiming under him, by force of the registry acts {C ommonwealth v. Dudley, 10 Mass. R. 403). But the point now decided, of the effect of cancelling an instrument of defeasance, seems to be settled by authorities {Harrison v. Phillips Academy, 13 Mass. R. 456; Eice v. Eice, 4 Pick. 349). But this rule is to be taken with this qualification, that the transaction is conducted with perfect fairness and good faith, both as between the parties and as against the creditors of the mortgager, and that tlic riglits of third persons had not intervened before the completion of the transfer by the cancellation. But if these qualifications do exist, if no unfair advantage is taken of the mortgager, if by mutual agreement all beneficial and available interest of the mortgager ia ^^«• "•] TIUI.I. r. SKIN'NKK. W, laki'ii away, in a form which iiuist forever prevent luni from enfore- injr ii ri^^ht to reileem hy any le^al or equitable proceedinff, there seems to he no interest wliieh the creditor of such party can take for the satisfaction of his chiims. '2. The court are also of opinion that the agreement hy Skinner \- llurd to convey upon certain terms in two years, contained in the indenture of Ajiril, 1831, diil not oj)erate as a defeasance, so as to constitute with tlie ori<,nnal conveyance a new mortgage, l)ocause it was not executed at tlie same time with the conveyance of which it is claimed to be a defeasance, nor as part of one and the sann^ transaction, nor was so understood or intended by the parties {Kcllcran v. Brown, 4 Mass. R. 443 ; Harrison v. Phillips Academy. VI Mass. K. 45(;). Perhaps where parties by mutual agreement, intending to enlarge and extend the time of redemption, should take up an existing instrument of defeasance and at the same time execute another, connected witii the former by proper recitals and provisions, showing an intention to continue the former right of redemption on foot, in a modified form, by force of this substituted instrument of defeas- ance, such new instrument might be so construed as to relate back to the first deed and preserve the mortgage, when such construction would but support and carry into elTect the intent of the parties; of this, however, it is unnecessary to express an opinion. The instrument now relied on as a defeasance was not only not made at the same time the original deed was executed, nor at the time it took effect, nor was it either actually or constructively part of the same transaction, nor was it a case where the parties recognised it as a mortgage, or intended to construe or carry it into effect as such. 'I'he court are, therefore, of opinion that by the surrender of the defeasance the right in ecjuity was extinguished, the original mort- gagee remained seised by force of the first deed, and the new contract did not constitute a new mortgage, nor keep the existing equity of redemption in force. 3. This leads to the renuiining, and perhaps to the partii's the most important ([uestion, whether this surrender of the defea.sance and extinguishment of the equity was good against the creditors of Makepeace. This depends mainly on the questions of fact, to which nnuh evidence was taken, whether this arrangement was made witii an intent to delay, defeat or defraud the creditors of Makej)eace ; whether there was a secret trust on the jiart of the respondents to hold the same, in whole or in paii. for the benefit of the mortgager; and whether there was such a disparity between the value of the ♦•state and the amount for wiiieh it was taken as to lead to a reason- able inferiMice of any such fraiidnleiif intent. (After an examination ami summing ujt of the evidence:) 448 EQUITY RELATIONS. [CHAP. II. Upon the whole evidence the court are of opinion that the trans- action was not fraudulent, that the equity of redemption was relin- quished before the attachment, and that the complainant did not acquire a right to redeem under the officer's deed. Bill dismissed. GREEN V. BUTLER. Supreme Court of California, 1864. (26 Cal. 595.) Appeal from the District Court, Twelfth Judicial District, city and county of San Francisco. This action was brought to compel an accounting and a reconvey- ance of the property. Plaintiff claimed that the deed and defeasauce constituted a mortgage, and that Leavitt, unknown to plaintiff, had paid Butler a large portion of the sum mentioned in the defeasance before the execution of the same, and that the amount thus paid by Leavitt, and the proceeds of the property received by Butler as mortgagee in possession, had satisfied the mortgage, and that Leavitt and Butler had combined together to defraud plaintiff. The other facts are stated in the opinion of the court. By the court. Sawyer, J. A large portion of the briefs on both sides is devoted to a discussion of the evidence. But no appeal has been taken from the order denying a new trial, and the parties must be presumed to have been satisfied with the facts as found. Whether they were or not, the appeal is from the judgment alone, and, on such appeal, we cannot review the evidence. The practice is the same in all cases, whether at law or in equity (Allen v. Fennon, 27 Cal. 68). Whatever doubt there might formerly have been on this point as to cases in equity, there can be none since the passage of the Act of 1861, the first section of which provides " that no distinction as to the mode of taking or perfecting appeals, or as to the effect of them, shall be made between cases at law and cases in equity, but the provisions of the Practice Act shall apply in like manner to all cases of appeal'' (Laws 1861, p. 589). Nor did the parties, when the appeal was taken, seem to contemplate that we should re-examine the evidence. It is stipulated that certain papers on file shall constitute the state- ment on appeal (there docs not appear to have been any statement on motion for new trial), and the grounds of appeal specified in tlie statement are, substantially, that the referee erred in his con- clusions of law, and, as a consequence, that the judgment is erro- S"^^'- "J GREEN r. lU TLKK. 410 neous. No error as to tlic fads foiiiul is alleged in the staiemcnt as a ground of apjjeal. Tiie referee finds, among other faets, that prior to the 1 1th of August, 18.>l, the plaintilf was in possession of the lands described in the complaint ; that on tiiat day, for a valuable consideration, he conveyed the said lands and improvements thereon by a deed absolute on its faee to the defendant Butler; that although tiie deed was absolute on its face, it was intended as a mortgage to secure to said defendants certain moneys, due and to grow due, for erecting buildings and improvements thereon for a firm composed of plaintiff and defendant Leavitt ; that on the 2Uth of October, 18:>i, the said firm of (.Jreen & Leavitt iuid an accounting with defendant Butler, and tiiat upon said accounting it was found and agreed by all parties that said firm was indebted to said Butler for constructing said improvements in the sum of eight thousand five hundred dollars; that on said '-iOlh day of October said Butler executed and delivered to said Green & Leavitt a written defeasance, whereby he bouml himself, upon the payment by them to him on or before March 1, 1855, the said sum of eight thousand five hundred dollars, to convey by quit-claim to said (Jreen & Leavitt the said [)remises, and cove- nanted in said defeasance that if, after said 1st day of March, he should sell said premises, ho would pay over to said parties any surplus that might arise over his debt and costs ; that said defendant Butler on the 1st of February, 1855, with the consent of said plaintiff and said defendant Leavitt, entered into possession of said premises and continued in possession till the "iTlh day of February, 1855. "That on the said "•^Tth day of February, .v.i). 1855, at said city and county, the said plaintiff and the said defendant, Josepli K. Butler, had an accounting and settlement of and concerning the said plaintilFs interest in and to the land described in said com- plaint, and the improvements then thereon, and of the furniture then in said * OtH-aii House;' on which accounting and settlement the said defendant, Josi'ph F. Butler, paid to the said plaintifT the sum of two thousand dollars, in four j)romissory notes, for said plaintitT's interest in and to said land and the improvements thereon, and the furniture tlien in said house, which said notes w«'re subseijuently paid; and the said plaintiff then and there, in consid- eration of said sum of two thousand dollars, surrendered the said written defeasance to the said defendant, .Tosej)h F. Butler, for eancellation. and the same was thereby cancelled as against the said plaintifT." The only (piestion arising on the record is as to the effect upon the rights of the parties as to the relief .sought in this action, of the surrender of the defeasance to be cancelled, under the agreement 450 EQUITY RELATIO^"S. [cilAP. II. found by the referee. The principles stated in the numerous eases cited by appellant's counsel are generally admitted to be correct. But there can be no doubt that a mortgagee can make a bo7ia fide purchase of the equity of redemption — if, indeed, we may use tliese terms in the present condition of the law as to mortgages in this State — and thereby acquire an absolute title. The principle is well stated in Remsen v. Hay, 2 Edw. Ch. 535, in the following terms: " There is nothing in the policy of the law to prevent a mortgagee from acquiring an absolute ownership by purchase from the mort- gagor at any time subsequent to the taking of the mortgage, and by a fresh contract to be made between them. Courts view with jealousy and suspicion any dealings between the mortgagor and mortgagee to extinguish the equity of redemption ; but if it be fair and honest on the part of the mortgagee, the purchase will not be disturbed. The law only prohibits a mortgagee from availing him- self of a stipulation contained in the mortgage deed, or of some covenant or agreement forming part of the same transaction with the loan and the taking of the security, by which he shall attempt upon the happening of some future event or contingency to render the estate irredeemable and obtain an absolute ownership. In such cases the maxim applies of ' Once a mortgage, always a mortgage' {Henry v. Davis, 7 John. Ch. 40; Clark v. Henry, 2 Cow. 333). But it cannot interfere with the right to foreclose when the mortgage has become forfeited, nor with any fresh contract which the mort- gagor may choose to make with the mortgagee for a sale or relin- quishment of the equity of redemption and vesting the latter with an irredeemable estate." There are numerous authorities to the same effect (1 Wash. Eeal Prop., p. 496, §§ 23, 24; Dougherty v. McCoJgan, 6 Gill. & J. 275; Russell v. Southard, 12 How. 154; Adams v. McKenzie, 18 Ala. 698). Independent of authority, no argument is necessary to show that, upon principle, a mortgagor has the same capacity to contract with reference to his interest in the mortgaged property that he has in respect to any other property. Nor has section two hundred and sixty of the Practice Act, or any of the former decisions in this State relating to mortgages, placed any restriction upon the author- ity of the mortgagor to make other and further contracts affecting his title to the land subsequent to the execution of the mortgage. The language of Mr. Justice Field in McMillan v. Richards, 9 Cal 365, cited by counsel, that " the owner of a mortgage in this State can in no case become the owner of the mortgaged premises, except by purchase upon sale under judicial decree, consummated by con- veyance," must be limited to the question then under discussion. He was simply endeavoring to show that no title passed by the mortgage alone, either before or after default, or could be acquired under it ^*-*- "1 GRKFN- V. IMTLKH. lol l»v strict fori'i'losun- or in any other maimrr than hy ii sale under a decree of a court, and that in >\u-\\ case the tith" did not vest till wnsuinniatcd hy a conveyance after the i)eri(»d for redemption had spired, lie had no reference to a contract alfectin^' the title, made V the mortgagor himself subsequent to the making of the mortgage. Keference was oidy made to the ])ossil)ility of ac(piiring title through I he mortgage, independent of any further action on the part of the mortgagor. In this case, according to the linding of the referee, there \va.- a settlement between tlie ])laintifr and defendant Butler, by which the said Butler i)aid to jdaintifT for his interest in the lands and improvements in dispute and the furniture in the Ocean House, luated on the premises, the sum of two thousand dollars, and the jilaintiir, in consideration thereof, surrendered the defeasance to tlefendant Butler " for cancellation, and the same was thereby can- ■ lied as against the sai\n\\ i)aynu'nl l>ein;,' .-<> made, he covenanted that lie would, hy a sulTieient deed, release and (juit-claini to the k'ssecs or their heirs ami assi^nis, free froni all ineinni)ranee.s created hy him. all the ri;,dit and title which he tht-n liad to the j)remises or which he mi^'ht tluTcafter ac(|uire from thr United States or from any of the heirs of Jos6 Maria Villaviccncia. The lessees and their assignees insist that they are honn /nle purchasers without notice. This |)roj)osition cannot he mainlaiiifd. Thr (•(•ntract gave tiu-m the option — it did not hind them — to huy at the time specified. That time had not arrived wh(>n this hill was filed. Non constat that they would then exercise tlitir election alhrmatively and pay the stij)ulatc'd price. But this j)oint is not material. The doctrine invoked has no application where the rights of the vendee lie in an executory contract. It applies only where the legal title has been conveyed and the j)urchasc-money fully })aid {Xace v. Boijer, 30 Pennsylvania, 110; Huune v. ChUi's, 10 Peters, 177, 211). The purchaser then holds adversely to all the world, and may disclaim even the title of his vendor {Croxall v. Shcrrrd. 5 Wallace, '28!»). This contract calls for a quit-claim deed. The result would be the same if such a deed had been executed and full j)ayment made without notice of the adverse ch^im. Such a {)urchaser cannot have the immunity which the principle sought to be applied gives to those entitled to its protection (Mai/ v. Lc Chiiir, 11 id. 232 ; Oliver v. Piatt, 3 Howard, 3()3). This contract may, therefore, be laid out of view. It is no impediment to the assertion of the complainant's rights, whatever they may be. It does not in any wise affect them. The law ujjon the subject of the right to redeem where the mort- gagor has conveyed to the mortgagee the etpiity of redemption is well settled. It is characterized hy a jealous and salutary policy. Principles almost as stern are applied as those which govern where a sale by a cestui que trust to his trustee is drawn in question. To give validity to such a sale by a mortgagor it must be shown that the conduct of the mortgagee was, in all things, fair and frank, and that he paid for the jiroperty what it was worth, lie must hold out no delusive hopes ; he must exercise no undue influence ; he must take no advantage of the fears or poverty of the other party. Any indirection or ohlitpiity of conduct is fatal to his title. Kvery doul)l will be resolved against him. Where confidential relations and the means of opjjression exist, the scrutiny is severer than in cases of a different character. The form of the instruments employed is immaterial. That the mortgagor knowingly surrendered and never intt'udcd to reclaim is of no conse(|uence. If there is vice in the transaction, the law, while it will secure to the mortgagcv his debt with interest, will compel him to give back that which he has taken 45G EQUITY RELATIONS. [CHAP. IX with unclean hands. Public policy, sound morals, and the protectioix due to those whose property is thus involved, require that such should be the law {Morris v. Nixon, 1 Howard, 118; Russell v. Southard, 12 id. 139; Wakemati v. Hazleton, 3 Barbour's Chancery, 148; 4 Kent's Commentaries, 143; Holmes v. Grant, 8 Paige, 245; 3 Leading Cases in Equity, 625). The terms exacted for the loan by Eodriguez were harsh and oppressive. The condition of the widow and orphans might well have touched his kindred heart with sympathy. It seems only to have whetted his avarice. Two per cent, a month — and this, if not paid as stipulated, to be compounded — was a devouring rate of interest. It was stipulated that the further advances should bear interest at the same rate. He demanded an adjustment when, from the failure of the crops and other causes, the property was greatly depressed, and he knew the widow and her children had no means of payment. The alternatives presented were an absolute convey- ance of the property or a foreclosure and sale under the mortgage. He was anxious to procure the deed, and exulted when he got it. The debt and advances, with the interest superadded, were much less than the value of the property. The note and mortgage were executed by three of the children and the widow — the deed by the widow and five of the children. The other two children conveyed at later periods. The consideration of the conveyance by the four children not parties to the note and mortgage was such that if an absolute title passed, their deeds must be regarded as deeds of gift of their shares of a valuable estate. Dana, who took the acknowl- edgment of the deed executed by the widow and five children, testi- fies that the widow inquired whether the deed contained all the agreements between her and Rodriguez. Dana translated it to her. fShe complained that the agreements were omitted. Rodriguez in- sisted that they were in the deed, and added " that they ought not to distrust him, as he was taking all these steps for their interest." The widow and children then executed the deed. Dana, speaking of a subsequent conversation with Rodriguez on the same day, " which was altogether unsolicited," says : " He stated to me that his object in getting the Villavicencia family to execute the deed aforesaid was to secure his money, money which he had loaned or advanced to them, and save the property for the benefit of his sister and her family; while if it remained in their hands he might lose his money, and his sister and her children would lose the whole property. He said they had done wisely in trusting him, as he intended to deal justly by his sister." Rodriguez was examined as a witness. Referring to a period shortly preceding the execution of this deed, he says : " Afterwards I had with them further con- versation, and told them, I don't wish to speculate upon you, because **^*'- "1 VI 1. 1. A C UODKIGIKZ. 457 vou arc my ri-lations, and you have treated me well. If I can sell the ranch for enough to reimburse myself for my outlays as well as interest, I will return you the surplus money, if any; and, also, if 1 can sell a portion of the ranch or enougli to reimburse myself for my advance, I will do the same, and return to you the unsold portion of the nrnch; but if I have bad luck and cannot sell it, I will lose my money." Elsewhere in the same deposition he says: " I stated ;it the ranch, and ajj^ain stated to my sister afterwards, that I would return the surjilus money, but it was no obligation of mine. It may be that I said so to Charles Dana at that time." He made the same admissions to other persons who are in no wise ccmnected with this litigation. Their testimony is found in the record. It is unnecessary to extend the limits of this opinion by accumulating and commenting upon it. The widow and five of the children, all who have been examined, testify that they understood the deeds to be only security for the debt. This explains the trans- action as to those who were not parties to the note and mortgage. There is no other way of accounting for their conduct. The testi- mony of Kodriguez alone is sufficient to turn the scale against him. He cannot repudiate the assurances upon which his grantors were ip. The comi)lainant stands in the place of those from whom he f California. The rents, issues, and profits, and improvements nuide u])ou the premises must also be taken into the account. The decree is reversed, and the cause will be remanded to the circuit court with directions to enter a decree and jiroceed In conformifi/ to (his opinion.^ ' \'ntin,i V. IhthcU. 2 Kd.ii. 110 ilTC.l) : Pruiih v. /)(/ii.'*. nO U. S. 332 (1877), (ivroiil. C'oiii|iai"i' Ji'ussrll v. Soulhanl. p. l.')7. suina. 458 EQUITY RELATIONS. [CIIAP. II. PRITCHARD V. ELTON. Supreme Court of Errors of Coxnecticut, 1871. (38 Cotm. 434.) Bill in equity to redeem mortgaged property ; brought to the Superior Court for New Haven County, and reserved, on facts found, for advice. The facts are sufficiently stated in the opinion. Seymour, J. On the 10th of April, 1860, Elizur E. Pritchard mortgaged to John P. Elton certain premises in Wolcottville. The mortgage deed is in the usual form, with condition to be void upon payment according to its tenor of the mortgagor's note, payable four months after date, for $6635.73. The debt was not paid ac- cording to the condition, and still remains unpaid. Mr. Pritchard died intestate and insolvent November 30th, 1860. The petitioners are his heirs at law, and they bring this bill to redeem the mortgage. Upon all the circumstances of the case we think the petitioners are not entitled to relief; but it must be conceded that they have a prima facie case in their favor upon the face of the deeds and records. Upon the records of the town of Torrington there is a quit- claim deed of the equity of redemption from Mr. Pritchard to Mr. Elton. But it also appears that Mr. Elton refused to accept the quitclaim. On the contrary, he quitclaimed back to the heirs of Mr. Pritchard, after the latter's death, whatever interest, if any, in the premises was conveyed to him by Mr. Pritchard's quitclaim of the equity. The records of the court also show a decree of foreclosure of the equity of redemption. But to that bill for foreclosure,, brought after Mr. Pritchard's death, his heirs, as such, are not parties. His administrators were made parties respondent, and, the estate being insolvent, it was probably supposed that the adminis- trators, representing the creditors, were solely interested in tlie redemption. Yet it is clear that Mr. Pritchard's heirs, as such, arc not foreclosed by that decree. The defence to this petition must,, therefore, rest upon circumstances peculiar to the case, and these circumstances are such, we think, as to require us to deny the prayer of the petitioners' bill. It appears that these premises had been mortgaged by Mr. Prit- chard to one Brady, and Brady had obtained a decree of foreclosure, whereby the right to redeem would be barred on the 10th of April,. 1860. On this last day of redemption, Mr. Elton, on the solicitation of Mr. Pritchard, lent the money to save the forfeiture. In con- senting to make the loan and take the note and mortgage, Elton relied on Pritchard's promise that if he should fail to repay the amount lent within four months, he would, by quitclaim deed sKr. II.] rmrciiAui) c. kltun. 1 •"»'•' conveying the projR'rty t(» lillon, save tlu' troultlc and cxjjfnsc of foreclosing the mortgage. Now. if (he case rested here, the right of rrdcinplion would not bo lost by the mere force of this agreement and the failure hy Mr. Pritchard to perform it. Courts of equity look with distrust ujmhi all restraints on the right of redemption, and it is a familiar rulf that, such agreements notwithstanding, courts of e<|uity will in general allow the jiarty in default to redeem. T\\v principle on which the court in these cases grants relief is substantially the sann; as that on which it relieves against all penalties and forfeitures, to wit, that in general adequate comi)ensation can be made to the party who is dejirived of his forfeiture, and that the exacting of the for- feiture would be and is unconscionable. Now, in the case under consideration, it is found that on the 5th of November, 1860, Pritchard executed in favor of Elton a quitclaim deed of the ])remises, and on the Oth of November caused the same to be recorded, all without Elton's knowledge; and it is furtiicr found " that although Pritchard would not have executed the deed and put it on record at the time he did, if he had not been inlluenced l)y a desire to badle other creditors, from whom he feared trouble, he, in fact, executed the deed and ])ut it on record in con>f- (juence of his promise, and in tardy fuKilment of it. and in good faith toward I^lton." By this act Mr. Pritchard ratified and cnn- iirined the agreement made at the time of borrowing the money, and it is ai)])arent that Mr. Elton would have accepted the deed, wen- it not for the fraudulent purj)ose as against creditors with which he supposed it was tainted. The non-acceptance ujjon these ground-; by Mr. Pulton ought not, we think, to impair the effect of the died as a renunciation l)y Mr. Pritchard of all interest in the premise^. Mr. Elton, ri'lying uj)on Mr. Pritehard's j)romise and this renunc:;i- lion in pursuance of it. and upon the foreclosure which he h.id obtained against the administrators, in August, IStl'J, took posM — ein^ indebted to defendant for moneys loaned and advanced, executc, when the defendant uj)on the payment of lifiy dollar-; lo the plaintilT took an unsealed pajier signed by him aiknowledging the receipt of the fifty dollars " in full satisfaction for all i-laims and demands whatsoever as to conveyance of property or otherwi-;e uj) to this date," the relation of the parties in respect to the lands now sought to be redeemed was that of mortgagor and mortgagee 462 EQUITY RELATIONS. [CHAP. II. with all the incidents of that relation (4 Kent's Com. 143). The plaintifE had conveyed the premises to the defendant by deed abso- lute in terms, but the conveyance was not intended as a sale, but as a security for the payment of money, and although there was no defeasance in writing, the intent could be and was shown by parol evidence, and the deed was but a mortgage. Parol evidence is admissible to show that an absolute deed was intended as a mort- gage, or that a defeasance has been destroyed by fraud or mistake {Dey V. Dunham, 2 J. Ch. E. 183; Clark v. Henry, 2 Cow. 324; Marks V. Pell, 1 J. Ch. R. 594; Horn v. Keteltas, 46 N. Y. 605). A conveyance absolute in terms given as a security is a mortgage with all the incidents of a mortgage, and the rights and obligations of the parties to the instrument are the same as if the deed had been subject to a defeasance expressed in the bod}' of the instrument or executed simultaneously with it (4 Kent's Com., supra). It must be recorded as a mortgage and not as a deed. Dey v. Dunham; supra. This case was reversed in 15 Johnson's Reports, 555, but this principle was recognized by the appellate court that reversed the decree of the chancellor. The reversal was on the ground that the subsequent purchaser claiming adversely to the deed was not a purchaser in good faith, and so not within the protection of the recording acts {James v. Jolinson, 6 J. Ch. R. 417; 2 Cow. 249). In White v. Moore, 1 Paige, 551, the chancellor held that the fact that there was no defeasance in writing did not taJvC the instrument out of the effect of the statute requiring all mortgages to be recorded as mortgages. The estate remaining in the mortgagor after the law day has passed, before foreclosure, is popularly but erroneously called an equity of redemption, retaining the name it had when the legal estate was in the mortgagee and the right to redeem existed only in equity. Although a misnomer, it does not mislead. The legal estate remains in the mortgagor and is subject to dower and curtesy, to the lien of judgments, may be sold on execution and may be mort- gaged or sold as any other estate in lands, while the mortgagee has but a lien upon the lands as a security for his debt, and the land is not liable to his debts, or subject to dower or curtesy, or any of the incidents of an estate in lands (2 Wash. R. P. 152 and seq.: Jackson v. Willard, 4 J. R. 41; Powell on Mortgages, 258, N. L.). ^I'he mortgagor is possessed of an estate in the land in virtue of his former and original right, and there is no change of ownership. So far as the entire estate is concerned there is but one title, and this is shared between the mortgagor and mortgagee, the one being the general owner and the otiier having a lien which, upon a fore- closure of the right to redeem, may ripen into an absolute title, their respective parts when united constituting one title. A mortgagor SEC. 11.] oDKi.i, V. .MoNiuoss. 4r>;{ mill morlga^M'c may at any (iiiir al'icr the creation of tlic mortgage ami before foreclosure make any a;,'rccmeiil concerning the estate tlicy please, anes named in it. The i)aj)er is in its terms ambiguous. It does not })urporl to convey or transfer any ])ro|)erty or estate in laiuls, but is di'clared to be in full of all claims and demands what- soever as to conveyance of ])roperty or otherwise. It is but a parol admission of a satisfaction for the right mentioned. The apparent meaning of the instrument is to admit a satisfaction of all claims against the dcfcn action is perfect. It cannot be claimed that the writti'n pajH-r cr iiro/irio v'ujorc could have that efTect. It does not profess to release' the right of redemption or to convey any lands or interest in lands. No lands in particular are referred to. No agreement can be spelled "Ut of the instrument which could be 464 EQUITY RELATIONS. [CHAP. 11. specifically performed, and it could not be aided and made a perfect contract to release or convey lands by parol proof. The whole force of the transaction, as affecting the rights of the plaintiff, is in the payment and receipt of the fifty dollars with intent to extinguish the title of the plaintiff. This cannot operate as an estoppel or take the case out of the statute of frauds. The mere payment of money will not entitle a purchaser to a specific performance of a parol contract for the purchase of an interest in lands. That can be repaid with interest, and no damage ensues from the non-perform- ance of the contract. The purchaser can be made good for the use of his money, which is all that he has lost. Had the defendant, acting upon the faith of this transaction, entered into possession of the premises and incurred expenses, and substantially changed his situation so that he could not be placed in the same situation in which he was before, it might have estopped the plaintiff from taking shelter under the statute of frauds, or alleging the insuffi- eiency of the written instrument to carry out the agreement and intent of the parties. But there are none of the elements of an equitable estoppel in the case as presented by the record. The plaintiff having a recognized legal estate in fee, he could only be divested of it (except by way of estoppel which does not exist) by some instrument which would be valid under the statute of fraud* and in compliance with the statute prescribing the mode and manner of conveying lands. The statute of frauds (3 E. S. 135, § 8) is very explicit, and needs no interpretation in its application to this case. It declares that every contract for the sale of any lands or any interest in lands shall be void unless in writing and subscribed by the party by whom the sale is to be made. The whole contract, that is, the agreement to sell and the description of the lands or the interest in lands agreed to be sold, must be in writing and subscribed by the party. The other statute referred to (IE. S. 738, § 137) is equally applicable to this case. To hold that the plaintiff had not a fee, would be to overthrow the well-established relation of mort- gagor and mortgagee and reverse their respective positions in respect of the legal estate in the lands mortgaged. The statute declares that every grant in fee or of a freehold estate shall be subscribed and sealed by the person making the grant or liis lawful agent. If a seal only was wanting to make the instrument relied upon by the defendant valid for the purposes intended, it is possible the court might compel the sealing, but that would not supply the intrinsic defects of tlie paper-writing itself. What is said in Stoddard \. Whiting, 4G N. Y. G33, of the nature of the estate of a mortgagor and the bearing of the statutes quoted upon a conveyance of his estate, was not necessary to the decision of the case or necessarily adjudged by the court. The plaintiff SEf- "•] I)K MAKTIN C. I'MIM.AN. l')'* there, wlio was onforcin*; an oquity of redemption, wliieli was n- sisted, clainifd under a written liiit unsealed assi;^'nnient (a parol writing) from the mortgaj^^or, and that was hehl sullicient to givi; him a standing in eourt and enable liim to maintain the e(juitaljle action to redeem. Tiie decision is not in conflict with the views here expressed. The defendant could have acquired the estate and interest of the plaintilf either hy a deed-poll, as a relea.>;e or a grain. in any form sullicient in terms and mode of execution to convey an estate in lands. Mr. Powell, in his treatise on mortgages, vol. 1. p. 2G0, in speaking of the methods by which a mortgagee may acquire the interest of the mortgagor, says that it may be by inden- ture with covenants or a release by deed-poll, for by that means tiie estate of the mortgagor and mortgagee will become merged, and the mortgagee will be owner in fee of the whole estate. The rights of the mortgagor and his estate can only be foreclosed by due jjrocess of law, or a release by deed in proper form, or a conveyance sullicient to pass the title to an estate in fee. The defendant has not purchased the equity of redemption or acquired the estate of the plaintilT by any proper release or conveyance. No injustice will be done the defendant by the result to which this conclusion leads. He will receive his money and interest, and will be fully indemnified, and he is not entitled to speculate in his deal- ings with his mortgage-debtor. The judgment of the Special Term niiglit have directed a redemp- tion, upon the projx'r terms, within a specilied time, or in default thereof the plaintil! be foreclosed. That, I think, would have been the proper judgment. But as no fault is found with the terms of the judgment at Si)ecial Term, the judgment of the General Term should be reversed and that of the Special Term allirmed. All concur, except Rapallo, J., not voting. Judgment accordingly. DK MAirriN' V. IMM'.T.AN'. SurREMK Corur or (' ai.iiouma, 1807. (iiT) Cnl. r):{s.) Appeal frojn a judgment of the Superior Court of the city and county of San Francisco. .lames V. C'olTcy, Judge. The facts are stated in the opinion of the court. Ti'Mri.i:. J. This ajipeal is from a judgment upon demurrer 46G EQUITY RELATIONS. [CHAP. II. to the complaint. The complaint contains averments to the effect that on the fourth day of November, a.d. 1881, plaintiff owned a certain tract of land which was then subject to mortgage liens, then owned by James Phelan. The amount due on said mortgages was $196,000. The real estate was worth $390,375. The plaintiff and her thirteen children were in indigent circumstances, destitute of available means of support, in great need, and unable to secure an additional loan upon said land or to sell the same, owing to financial stringency then prevailing, and were wholly dependent upon the charity of others. Said Phelan knew of her distressed condition, and also that her equity of redemption was worth at least $45,500. Still, designing to take advantage of her distress and necessities, he first offered her $1000, and then $10,000, and finally $19,000 for her equity of redemption. The offers were successively made on different days ; and in the meantime, said Phelan had her property advertised for sale, under execution, on a decree of fore- closure of said mortgages, and had the sale postponed repeatedly for the purpose of securing her equity of redemption for a sum greatly disproportionate to its value by taking an oppressive and unfair advantage of her necessities and distress. Also that on the fourth day of jSTovember, 1881, decedent made her the offer of $19,000, and threatened to proceed with the sale imless she accepted it. Compelled by her distress and necessities, she finally did accept said offer, and conveyed her equity to him for said sum. She did not know that decedent had taken such advan- tage, or that he knew of her necessities and distress at that time, but that she discovered such fact on the twenty-seventh day of December, 1887. It is averred that when defendant falsely represented that he would sell said property unless she accepted $19,000 for her equity, decedent did not intend to sell said property, but had in fact deter- mined not to sell the same unless he was unable to procure plaintiff's interest for $45,500. He fully intended to offer her $45,500 for her equity, if he could not procure it for less. This intention was concealed from plaintiff, and decedent knowingly and designedly took advantage of her said necessities and distress. A great many objections are made to this complaint, but I do not deem it essential to consider any of them, except the general objection that it states no cause of action. That the complaint does not state a cause of action is quite obvious. The facts constituting the supposed fraud are: 1. Plaintiff was witliout available means and in great financial distress; 2. Decedent had obtained a judgment foreclosing mortgage liens upon her land, amounting to $196,000. Her land was worth much more than this ; but owing to a temporary stringency in the money market, she pKr. II. 1 i)i; MAiniN /. I'lir.i.A.v. 407 rcuM not liorrow mow niom'v uj)()n tlu- laml or .-ell il for more than ilii- inort^'a^c debt ; 3. llotcdcnt knew that her e(|uity of redemption was worth $l."»,r)00, and was willing; ts ; 4. He eaused the property to he advertised for sale under the ,000, whieh last olTer she accepted, in i<;no- rance that deceased would have given her more had she insisted iip»»n it, and induced by her necessities and fears of losing her jiroperty in case of a sale under the decree. It is impossible to believe counsel serious in their contention that it constituted fraud or opj)ression on the part of IMielan to rmerly held by Phelan, nor does it now matter. When the wrongs detailed in the complaint were enacted tlu* mortgages had been foreclosed, and Phelan had only his decree. 1 1 does not appear that a receiver h.id been appointed or that jiroceedings to that end were threati'iied. 2. The sale, even after the decree was obtained, was not hastened. The negotiations between the parties were protracted and deliberate. I'laintilT was fully aware of the situation, and knew all the e.s.sential facts of the case. The sale was adjourned many times, and sueirs- ^ive offers were made to lier for her equity. She >;iy> >be was 468 EQUITY RELATIONS. [CilAr. ii. threatened with a sale under the decree if she did not sell. Of course she knew without being told that such sale was inevitable if she did not pay the debt or sell her equity. The financial stringency was not brought on by Phelan. It is not charged that he interfered to prevent her selling to another or to prevent the obtaining of a loan. I can discover no element of fraud, oppression, or unfairness in the case.^ The judgment is a/firmed. Henshaw, J., and McFarland, J., concurred. » Compare West v. Reed, 55 111. 242 (1870). *EC- 111.] WILLETT I'. WINNELL. 4G9 CHAPTER II. {Continued). Section III. Agreements kou C'oll.vtkkal Advantage. WILLETT V. WIXXELL. High Court of Ciianckry. 1G87. (1 Vcrn. ISS.) Tlio plaint ifl" wn? tho youngest son of his father, who was sei.sed, according to the custom of the manor of Wolverly, of a copyhold ten- ement of the nature of Borough English of tho value of £15 per iinnum : and in April, KJTl, the ])laintifl"s fatlier, having horrowed £vH)0 of the defendant's father, for securing the same made a con- ditional surrender into the hands of two customary tenants of the manor, to he void on payment of the £200 and interest in April, li;i.i-i:. 473 I'.IJOAI) \. si;i,Fi:. Cocur «»!• ('iiANci;in . Isd.'J. (11 ]\'rrl,h/ J,'rp. lone.) Tliis was a foreclosure suit. Tlic plaint ilTs prayod an account of ■what was due to them for principal moneys and interest, commission and expenses, under the agreement liereinafter set forth; payment l»v the defendant of the amount so to he found due. or, in default, foreelosure. It appeared ihat in June, 1801, the |)laintilTs lent to the defendant £'^U0 on his promissory note, which was due in the Septemhcr fol- lowing, hut was dishonored. On the 30th of September, 18G1, the defendant gave to the jjlaintiffs a new promissory note for the same amount, and also signed a ^lemorandum of Agreement, as follows: " Memorandum of Agreement made this 30th day of September, 1801. l)etween Teter Broad and Taylor Pritchard. of 28 Poultry, in the city of London, auctitmeers, and John Sdfe, of Surbiton Ilill, in the county of Surrey. Whereas, in consideration of the said Peter Broad and Taylor Pritchard advancing to the said John Selfe the sum (if £200 upon the security of a piece or parcel of laud known as 'The Park,' Surbit«m Hill, &c.. the said John Selfe herd »y au- thorizes nnd instructs tlie said Peter Broad and Taylor Pritchard to sell and dispo.se of the whole or any portion of the land as above named, either by ])rivate or public sale, at and for the best price that can be obtained; and further, to repay themselves out of the pro- ceeds of such sale l!u' said sum of £200, with interest at the rate of 5 per cent. i)cr annum from the date hereof, with a commission of 5 per cent, on the amount realized, and the expenses attending the sale thereof: and in the event of the said John Selfe repaying the said IV'ter Broad and Taylor Pritchard the aforesaid sum of £200 and interest, the said John Selfe shall i)ay to the said Peter Broad and Taylor Pritchard a commission of .'> per cent, on the value of the said jiroperty, together with all the ex])enses incurred by them, whether the projH-rty or any ])ortion thereof is sold by any other agency or retaincti by the . forrcl(».8, for an interim injunelion in the terms of his elaim. The defendants' sum- mons for re(lemi»tion was adjourned into eourt, and came on f^r hearing with the motion. Levctt, Q. ('.. and R. F. Xoiiuii for the motion. The eovenani lo purchase malt liquors from the mortgagee during the continuance of the mortgage in no way clogs the redemi)tion ; any money owing to us for beer is not charged on the mortgaged property. A proviso for the continuance of the loan for a term certain is verv usual, and is a lawful provision: see the remarks of Jes.sel, M. K., in Tccvan v. .s'/»i7/t (IM.S-J), 20 Cli. D. T-Jl, T'.'!) ; and the mortgagor cannot compel the mortgagee to accept, against his will, repayment otherwise than in accordance with the contract: West Dcrhif i'nlon V. Metropolitan Life Assurance Society {lS[)7^, A. V. G47. The covenants for the purchase and s\ipply of beer have nothing t<> do with the equity of redemption. Covenants of this kind are valid and can be enforced : Lukcr v. Dennis ( ISs; ). : (h. I). *>': ; protits made under a covenant of this kind are lawful, ami would not have to be accounted for by a mortgagee in pos.session : Wliili- v. Citi/ nf London lireucnj Co. (1888), :{!» Ch. 1). 5.50. There is nothing uii- rea.sonable or oppressive in these provisions: it was part of tiie terms of the loan that the mortgagor should buy l)eer from us dur- ing the continuance of the security ; it nuiy be a collateral advantage, but Mainland v. Upjohn, 41 Ch. 1). Vi{\, shews that this may be d..n.- under a bargain deliberately entered into by the i)arties whib- en e(|ual terms and without any improper pressure or unfair dealing .ui the part of the nu)rtgagee. No charge of imi)ro|>er pressure or unfair dealing is nuule against this mortgagee. For these reasons we are entitled to have the bargain entered into by the mort- gagors, when the loan was nuule, enforced by injunction. Farnell, (^. ('.. and Imjpcn for the mortgagors. The ((tMii.iiu binding the mortgagors to buy all uudt Ii(pu)rs from the mortgagee during the ccuitinuance of the security is bad as a collateral ad- vantage stipulated for by a nu)rtgagee: Janirs v. Knr (1880). 10 Ch. 1). 1 10: a mortgagee is not entitled to anything more than Iujj principal, interest, and costs: Jrnnintjs v. Want. * Vern. ."i^'O ; Firld v. IIi>phins (IS'JU), il Ch. 1). :y>l. h is well known what largo 478 EQUITY RELATIONS. [CHAP. II. profits are made by brewers out of tied houses, and it may be that a covenant of this kind will give the mortgagee the whole amount of his principal and interest by way of profits, and that is an unfair collateral advantage, which, if Jennings v. Ward, 2 Yern. 520, is good law, cannot be maintained. [RoMER, J. The proposition stated in Jennings v. Ward, 2 Yern. 520, seems to me to be too wide, having regard to the later authorities.] The rule was recognized by Lord Braniwell, though unwillingly, in Salt V. Marquis of Northampton, [1892] A. C. 1, 19. This is an attempt by a brewer under the guise of a mortgage to get all the advantages of a tied house : a bargain that the Court has never allowed between mortgagor and mortgagee. With reference to the summons to redeem, we submit that, not- withstanding the provisoes for the continuance of the loan, we are entitled under the circumstances to redeem now. A simple proviso for continuance of the loan for a term certain is good; but this is not a simple proviso for continuance of the loan: the two provisoes depend on each other, and are in effect one transac- tion; this is a clogging of the redemption, and therefore the whole is void. The mortgage is to be irredeemable for five years in order to give effect to this covenant, and an unreasonable bargain of this kind cannot be enforced : Fisher on Mortgages, 5th ed. p. 669 ; Tal- l)0t V. BraddiU (1683), 1 Yern. 183; Cowdrij v. Day (1859), 1 Giff. 316. For these reasons we submit that the mortgagors are entitled to redeem at once. RoMER, J. With regard to the summons by the mortgagors to redeem, I do not require to hear counsel for the mortgagee, and I think it will be convenient to dispose of that application at once before hearing the reply on the motion. It appears to me that I am bound by authority, and also on prin- ciple, to dismiss this summons. I take it that what was said by Sir George Jessel in Teevan v. Smith, 20 Ch. D. 729, is good law, at any rate, so far as I am con- cerned, and, indeed, I trust good law in whatever court the question may ultimately be raised, namely, that, " Although the law will not allow a mortgagor to be precluded from redeeming altogether, yet he may be j^recluded from redeeming for a fixed period, such as five or seven years." The period in the present case is five years. Now, I am of opinion that it is obviously to the advantage of both the mortgagor and mortgagee that such a provision should be enforced. Of course, that does not prevent the Court in a proper case from preventing the application of the clause if it is too large, or there are circumstances connected with the proviso which renders it, in the opinion of the Court, unreasonable or oppressive. In •**»■«• '"1 BIGGS /•. IloDDINoTT. 470 llif present cast' 1 cmii liml iiothiii;,' uiircii.-oiialtlc or oppressive in the proviso which jtrevents the niort^'a^jors from redecinini^ for tlie live years. The term is not unreasonahle, nor is there anything lonnected with the proviso whieh would render it unreasonable or iiii^' liiiiiscir within >unii' of the liniitalicnis hiid (l(iu 11 by the cases to wliich 1 have already ri'ferrcd. Now. tliat the ))rinii]il(' is not so wireviously refi-rri'd. They shew, for e.\amj)le, this: that a mort- .i<,'ee can lontract with his inortivi' and imj)roper, and moreovi'r clogged the equity of redemp- tion. Then take the case of Brvad v. Selfe (1803), 11 W. K. 1030, which lias been referred to. That was peculiarly a case affecting a noticed that when that case came before the Court of Appeal, as it did, they dealt with it purely as a question of construction, and did not, as they undoubtedly would had the argument before nie been correct, say that the mortgagee was not entitU'd to makt' the charges in question. I'ccause the contract with regard to those charges was altogether invalid. It is impossible to sujipo.se that the Court of Appeal, witli ;lie learned and ex|)erieneed judges sitting then*, would have over- looked a point of this kind if sucii a point i-ould have luH'n made. Lastly, the case before the IIoikm' of Lords, Salt v. Maniuis of Xurthanipton^ [18'J'2] A. C. 1, had nothing whatever really to do 484 EQUITY RELATIONS. [CHAP. II, with the point I have to decide here. That was merely a question whether a certain policy was mortgaged; and when the House of Lords held that the policy was mortgaged, it of course followed that in equity a bargain seeking to prevent the mortgagor from having the right to redeem it could not be enforced. I need scarcely point out, therefore, that that has no bearing really upon the ques- tion before me. Finding, therefore, as I do in the result, an honest bargain entered into, the benefit of which has been obtained by the mort- gagors, and finding, as I am glad to say and as I think, no principle or authority which prevents me from enforcing this con- tract on the mortgagors' part, I enforce it accordingly, and therefore grant the injunction in the terms of the notice, limiting it according to those terms during the continuance of the security; and the defendants, of course, must pay the costs. C. A. The defendants appealed from the order on the motion. The ap- peal was heard on July G, 1898. Farwell, Q. C, and Ingpen for the appeal. We contend that the covenant to take beer from the mortgagee alone is invalid. [Collins, L. J. A mortgagee may now stipulate for any rate of interest he likes. Why may he not take a lower rate and stipulate for a collateral advantage of this kind ?] Jennings v. Ward, 2 Vern 520, lays down the broad principle that a mortgagee shall not by the inortgage deed stipulate for any advantage beyond principal, interest, and costs. Chappie-^. Million (1870), Ir. E. 5 Eq. 235, does not merely say that a covenant for a collateral advantage to the mortgagee will not be enforced in a foreclosure or redemption suit, but that it is void. In re Edwards's Estate (1861), 11 Ir. Ch. Eep. 367, affirms the same principle. Romer, J., appears to lay down that any bargain between mortgagor and mortgagee which is not unconscionable and does not clog the equity of redemption is valid, but in this he ignores the above rule. In Chambers v. Goldwin, 9 Ves. 271, Lord Eldnn lays it down that a mortgagee cannot stipulate to be a receiver of West India estates with a commission, nor stipulate for any advantage beyond the interest. Afterwards mortgagees of West India estates, if not in possession, were allowed to be consignees and to charge commis- sion; but Lord Brougham in Leith v. Irvine (1833), 1 My. & K. 277, refused to extend the practice to a mortgagee in possession, and expressed a doubt, ihid. 292, 295, whether Bunhunj v. Winter (1820), 1 Jae. & W. 255, was rightly decided, and whether Cox v. Champneys (1822), Jac. 576, supported the case of the mortgagee. In Potter v. Edwards, 26 L. J. (Ch.) 468, a mortgage was given for- ^'*'- '"1 UKUis r. uoithiNOTr. 48.0 11(»(KI. tlu.U-ll clllv l":i»l» \\a> ;l(l\;lll.c.l, and l\ill.l.T>|rV, V. ('., lirld thai tliriv coiilil only Ik' ivdcinption on i)ayiu('nt of £1000 with .intrivst and co.sts. 'I'his may be treated as if the mort^'a^a-e had j>aid the £1000, and hy >uhse<|uent ^'ift received (lie £:?00 hack ai:ain. In this case the point here in <|uestion was n<»t ar^^'ued. Mnt of it. so that it r)ulecreed redemption without regard to that stipula- tion. He is rcitorted to have said: " A man shall not have interest for his money, and a collateral advantage besides for the loan of it. or clog the redem|)tion with any by-agre»'nu'nt.'* That has Imvu understood as meaning exa(ily what was said, without regard to the « ircumstances of the ca.«e. and has found its way into the text-book-; ■^ establishing that a mortgagee cannot have principal, interest, aud costs, and also some collateral advanta^'c Hut that supposed 486 EQUITY RELATIONS. [CIIAP. II. rule has been departed from again and again. Take the case of West India mortgages : it has been repeatedly decided that the mort- gagee, if not in possession, may stipulate that he shall be appointed consignee. The proposition stated in Jennings v. Ward, 2 Vern. 520, is too wide. If properly guarded it is good law and good sense. A mortgage is regarded as a security for money, and the mort- gagor can always redeem on payment of principal, interest, and costs ; and no bargain preventing such redemption is valid, nor will unconscionable bargains be enforced. There is no case where col- lateral advantages have been disallowed which does not come under one of these two heads. To say that to require such a covenant as that now in question is unconscionable is asking us to lay down a proposition which would shock any business man, and we are not driven to it by authority. The proposition laid down by Hargreave, J., in In re Edwards's Estate, 11 Ir. Ch. Eep. 367, that where an onerous contract entered into by a mortgagor with his mortgagee is part of the arrangement for the loan, and is actually inserted in the mortgage deed, it is presumed to be made under pressure, and is not capable of being enforced, goes too far, though the decision of the learned judge was correct; for the stipulation with which he had to deal was unreasonable, and one which ought not to be enforced. The appeal will be dismissed. Chitty, L. J. The mortgage here is a mortgage of a public house for a time certain by publicans to a brewer, effected in the usual way, and it contains a covenant by the mortgagors during the continuance of the security to take all their beer from the mortgagee, and a covenant by the mortgagee to supply it. It is contended that the covenant by the mortgagors is void in equity. The first objec- tion I have to make is that it in no way affects the equity of redemp- tion, for it is not stipulated that damages for breach of the covenant shall be covered by the security, and redemption takes place quite independently of the covenant; so this is not a case where the right to redeem is affected. Equity has always looked upon a mort- gage as only a security for money, and here the right of the mort- gagors to redeem on payment of principal, interest and costs is maintained. It has been contended that the principle is estab- lished by the authorities that a mortgagee shall not stipulate for any collateral advantage to himself. I think the cases only establish that the mortgagee shall not impose on the mortgagor an uncon- scionable or oppressive bargain. The present appears to me to be a reasonable trade bargain between two business men who enter into it with their eyes open, and it would ])e a fanciful doctrine of equity that would set it aside. As regards the authorities, Jennings v. Ward, 2 Vern. 520, was relied on. That was a redemption suit, and the Master of the Eolls st;< '• "1.] HUiCS r. IIiiKDINOTT. 48T tlt'iTci'd rt'dcmptioii wiilidui i(Mrar not necessary for the decision of the ca.se before him. for the ^ti|)ulation there was one which interfered with the right of redemp- tion on ))ayment of j)rincij)al. interest, and costs. On wiiat jirinciple can any stipulation in a mortgage deed which does not fetter the right of redemption he held invalid? I think 488 EQUITY RELATIONS. [CHAP. II. only on the general principle that effect will not be given to what is unconscientious and oppressive. No narrower principle will work. Here the provision is reasonable and does not fetter the equity of redemption. The wide proposition in Jennings v. Ward, 2 Vern. 520, was not necessary for the decision in that case, and there is nothing in this case to bring it within that decision. The mere fact that a stipulation for the benefit of the mortgagee is contained in the mortgage deed does not necessarily make that stipulation invalid. Saxtley v. Wilde, [1899] 2 Ch. 474.— The plaintiff. Miss Kate Santley, being the sub-lessee of the Eoyalty Theatre, and having an option to acquire the reversion of the head-lease on paying £3000 Avithin a limited time, borrowed that sum of the defendant, S. J. Wilde, on the terms of the loan being repaid with six per cent, inter- est and secured by a legal mortgage, which was also to provide for payment to said Wilde of one-third of the clear net profit rental of the theatre. The mortgage, executed in pursuance of the agreement, was for the whole of the term acquired by the plaintiff, less one day, and contained a covenant by her for repayment of the £2000 by twenty quarterly instalments of £100 each, and also a covenant to pay the one-third of the profit rental during the whole of the mort- gagor's term, although the £2000 and interest should all have been paid. The property was redeemable only on the payment of £2000 and interest, and all other moneys covenanted to be paid. Some of the instalments being in arrears, defendant gave plaintiff three months' notice to pay off all the principal moneys and interest secured by the mortgage. Plaintiff paid the instalments in arrear, and within the three months tendered the balance of the £2000, with interest to the end of the three months and the costs, but Wilde refused to accept the money. Plaintiff then brought the present action, claiming (1) a declara- tion that the mortgage ought to stand as a security for the £2000, or so much thereof as remained owing, with interest, and that so far as the same deed provided for payment to the defendant of a share of the rents and profits, or precluded the plaintiff from redeeming on payment of principal and interest, such deed was invalid and not binding on the plaintiff; (2) redemption and reconveyance. The defendant counter-claimed for (1) a declaration that during the residue of the leasehold term, notwithstanding that all the prin- cipal and interest had been paid, he was entitled to be paid one- .•,M-. Ill] SAXTI.KV V. WlLDi:. 480 third uf tlio clear lu-t \)rul\[ rt'iital ; ('!) an actouut of what was due II the footing of tliat declaration.* LiNDLKY, M. li. Tlie (juestion raisi-d on this appeal is extremely important : I do not profess to he ahle to decide it on any principle which will he in harmony witii all the cases; hut it appears to me that the true principle running through them is not very didicult to discover, and I think tliat it can he applitnl so as to do justice in this case and in all other cases on the suhject that may arise. The jirincijile is this: a mortgage is a conveyance of land or an assign- ment of chattels as a security for the payment of a debt or the discharge of some other obligation for which it is given. This is the idea of a mortgage: and the security is redeemable on the pay- ment or discharge of such debt or obligation, any provision to the contrary notwithstanding. Tliat, in my opinion, is the law. Any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by a clog or fetter on the equity of redemption, and is there- fore void. It follows from this, that "once a mortgage always a mortgage;" but I do not understand that this principle involves the further proposition that the amount or nature of the further debt or ol>ligation the ])aymont or performance of which is to be secured is a clog or fetter within the rule: see 1 Powell on Mortgages, Gth ' <1. pp. IIG et seq.: title, "How a Mortgage is considered in llcjuity." The right to redeem is not a personal right, but an M|uitable estate or interest in the property mortgaged. A "clog" r " fetter " is something which is inconsistent with the idea of security": a clog or fetter is in the nature of a repugnant con- dition. If I convey land in fee subject to a condition forbidding lienation, that is a rej)ugnant condition. If I give a mortgage on condition that I .-hall not redeem, that is a repugnant condition. The Courts of Equity have fought for years to maintain the doctrine that a security is redcemal)lc. But when and under what circum- stances? On the j)erformance of the obligation for which it was given. If the obligation is the payment of a debt, the security is redeenuil)le on the jtayment of that debt. That, in my opinion, is the true principle applicable to the cases, and that is what is meant when it is said there must not he any clog or fetter on the equity of redemption. If so, this mortgage has no clog or fetter at all. Of "Urse. the debt or obligation may be imj)eachal)le for fraud, ppression, or over-reaching: there the obligation is tainted to thai • \tent and is iinaliil. lint. |)iilting .such cases out of the question, uhen vou <:et a seeuritv for a debt or oblijjation. that securitv can ' This stntonuMit of fiu't'< i- iil>l>ir\ iuti'd from tlip ii-pdrt of tlu' caHc in Xhv >urt liclow: [ISSO] 1 Cli. 747. 490 EQUITY RELATIONS. [CHAP. II. be redeemed the moment the debt or obligation is paid or performed, but on no other terms. ^ GLEASON'S ADMX. v. BUKKE. Court of Chancery of New Jersey, 1869. (5 Green, 300.) This cause was heard upon bill, answer, and proofs. The Chancellor. The complainant's intestate, in April, 1862,. leased of H. M. Post a lot of land of twenty-five feet by one hundred feet at the southeast corner of Prospect and North First Streets, in Jersey City, for the term of fifteen years, with a provision for a renewal for ten years longer. He leased it for the purpose of erecting upon it a building for his business, to front on North First Street. He applied to Burke, with whom he had been in the habit of deal- ing, for a loan of $1500 for that purpose. Burke agreed to advance this loan after he should have expended $500 on the building. Gleason proposed to secure it by mortgage, but upon applying to Mr. Clark, the counsel of Burke, to arrange the matter, he advised that a mortgage should not be taken, but that for the $1500 Gleason should assign the lease ; to this Gleason assented, and executed the assignment on June 1st, 1862, absolute on its face, reciting the consideration of $1500. Before this assignment was made. Gleason had offered to Burke to let him put up a building on twenty-five feet of the rear of the lot without charge, and that he, Gleason, would permit Burke to occupy that part during the whole term, and he would pay the rent, taxes, and assessments for and upon the whole lot, so that it should not cost Burke anything. He alleged as the ground of this offer that this rear part was of no value to him, and that such a building would bring business to him and add to the value of his premises. ^ "I take it that it is clearly established now, in the first place, that there is no such principle as is suggested, namely, that a mortgagee shall not stipulate for any collateral advantage for himself. He may so stipulate : and, if he does, he may obtain a collateral advantage: nothing can be said against it, and he can enforce it, always assuming that the bargain is not unconscionable or oppressive. In the second place, I take it also to be clear that there is now no such principle as is suggested, namely, that where a collateral advantage is stipulated for by the mortgagee as a condition of the loan, that advantage or contract is to be presumed to have been given or made under pressure. There is no such presumption, but each case must be decided according to its own circumstances. The Court will look into the circumstances of each case and see whether the bargain come to ia unconscionable or oppressive." — Per Komer, L. J., in s. c. id. p. 478. sKt-. III.] oleason's admx. r. lu i;ki;. K'l At or .shortly aflur the a^si^'iiniciit of tlir lease it was agreed that Cileason shouhl pay tlic $1500 hy semi-annual instalments of $125, until the same and all inlerest on it should he j)aid : and that upon -ueh payment Burke should reassi;,Mi to (Jlcason the lot, except the twenty-five feet of the rear, which he should retain for the residue of the term and the renewal ; and it was agreed that for the term and its renewal Gleason should pay all rents, taxes, and assessments on the whole lot. This agreement was made hy parol only, hut was to he reduced to writing and signed; it was reduced to writing hy Mr. Clark, but both parties neglected to sign it. After the assign- ment of the lease Gleason finished ids house, and Burke advanced the loan as needed for that purpo.se. Burke built a house on the twenty-five feet, on wliich he expended about $1800; it was finished in the fall of that year, after (Jleason's hou.se was finished; both were being erected at the same time. Burke has since received the rents of the rear building, amounting to about $1800, and Gleason and the eomi)lainant have paid all rents, taxes, and assessments for the lot. Gleason died in ()ctol)er, ISi;."), and until his death contin- ued dealing with Burke, who sold him the goods used in his business on credit. After the complainant became administratrix she tendered to Burke the balance of the loan and the interest accrued on it, and ilemanded a reassignment of the lease. Burke refused to accept the jiaymcnt or to reassign tiie lea.se, unless he retained the twenty-live feet of the rear of the lot and complainant would agree to pay all the rents, taxes, and assessments for the whole lot for tlie residue of the term ; this she refused to do. Upon this, comi)lainant brought this suit, alleging that the assignment of the lease is a mortgage only, and that she is entitled to redeem the whole premises, and praying for a reconveyance upon paying the amount of the loan still unpaid, with inter(>st, and upon paying tlu' amount expended l)y Burke for the building on the twenty-five feet, above the amount received by him for rents, of both which she prays an account may be taken. .The defendant contends that tliis was an absolute sale of the lea.se, with an agreement to convey part of the premises upon pay- ment of $1500 and interest. One may convey lands for a certain price, and agree to repurcha.sc them at a fixed tinu", for a certain amount exceeding tiie price received and the interest, without the sale lu-ing construi'd a mort- gage or the transaction being alTccted with usury. But such trans- actions are suspicious; they are an easy cloak for usury, and their bona fides must be clear, and the court must be satisfied that it was not intended to cover iisury or to take away the right of redemption uj»on what was, in fact, intended as a mortgage to secure a loan. 493 EQUITY RELATIONS. [CHAP. II. Courts of equity are very jealous of every device or contrivance intended to take away the right of redemption of what is the security for a loan. And one proof that the formal conveyance was intended as a mortgage only is that the transaction commenced by negotia- tions for a loan and conveying the land as security for the loan. In this case the original agreement was for a loan, and the property was offered by way of mortgage, and the form only was changed at the suggestion of counsel. The transaction must be considered as a mortgage only, and not as a sale and agreement to reconvey part on payment of a fixed sum. Another indication of the transaction being a mortgage existing in this case is that Gleason agreed to pay back the principal and interest at fixed times. In a mortgage any agreement to pay more than the sum loaned and lawful interest is usury; so also must an agreement to allow the lender to retain part of the land mortgaged after being repaid the loan in full be treated as usurious ; and neither will be enforced by courts of law or equity. If this was the whole of this transaction, the complainant would be entitled to the full relief sought. But a borrower and lender may lawfully make other bargains, even relating to the mortgaged property ; and if they are not in consideration of the loan or the condition of its being made, and are otherwise lawful, they niay be enforced. If Gleason had not borrowed money of Burke, he might lawfully have given him without consideration the right to occupy part of his lot for the term on the conditions here agreed upon; and if Burke had erected the building in accordance with the gift, the gift would be valid, and would be enforced in equity. In this case it needed no agreement in writing, the legal title to the land for the term was in Burke by the assignment ; and effect can be given to it Ijy limiting the quantity of land to be reconveyed in ordering re- demption according to the actual agreement between the parties. It is certainly a case in which the gift should be shown by clear proof. But it is sustained by the testimony of Scott and Burke, and the subsequent agreement in conformity with it is proved by Clark and by the fact that Gleason, in his life, permitted Burke to buiW, to rent the building, and receive all the rents, while he paid all the ground rent and the taxes and assessments for the whole lot. These facts and the testimony of Clark are consistent with the fact that the gift of the twenty-five feet was a usurious premium for the loan. But the evidence of Burke and Scott shows that the gift was made for other reasons, and was not connected with the loan or a condition of its being made. There is no evidence and no circum- stance to contradict or impeach these witnesses. The complainant is entitled to a reconveyance of the seventy-five feet of the north part of the 1(H upon being paid the balance of the ■EC- III.] TiiOLEN r. DiiFV. 49:3 $1500 unpaid with intLTft^l, and ujion (.'xecutiug an iigrccnitiil making that part liahk' for the ground rent, taxes, and assossmeuls on tiu> whole lot, but not for taxes and assessments on the rear building. TiiOLEN V. DiFFY, 7 Kans. lO.") (1S71). Brkwefj. J. The stipulation in tiie mortgage in regard to attorney's fees is in the^^! words: " And the said parties of the first i)art herein' agree that ten per cent, upon the amount due on said note at time of any judgment thereon shall be added to the same and judgment rendered therefor for attorney's fees for collection and services." The learned judge who tried the case cliarged the jury that this stipulation was valid, and that they might add to the amount found due uj)on the note ten per cent, thereof, and bring in a verdict for such sum. Tin- verdict they returned really included only between six and seven j)er cent, for attorney's fees. Stipulations like this have been sus- tained bv the decisions of manv courts, and properly so (7 Watts. 126; SlPenn. St. 78; 3 Wis. 454; 10 Wis. 41 ; 12 Wis. 170, 4r)-.> ; 15 Wis. 522; 16 Wis. 672; 8 Blackf. 140; 1 Xev. Kil ; 2 Nev. 190; 21 La. An. 607). It does not violate the usury law, because it is no stijjulation to pay for the use of the money borrowed, but only an agreement to compensate the mortgagee for the expenses of compelling the mort- gagor to perform his contract. If the mortgagor pay the money borrowed at the time it becomes due, as he has promised to dtt, ho incurs no loss by reason of this clause in the mortgage, lie is wholly released by the payment of the money borrowed and the stipulated interest. Where by the term of a contract a party can discharge himself by paying the real amount due, the tran>action is not usurious (Bae. Abr., title. Usury, 6; HilliiiiisU'ii v. Dftm. 11 Ind. 331; Lawrence v. Cowhe, 13 111. 577; Guuld v. The Jilshui> Hill Co., 35 III. 325). Nor is it against i)ublic policy that the expense of a litigation should be borne by tiie party whose bn-acii of his contract neeessitates such litigation. On the contrary, it accords fully with the soundest principles. Our statutes, as well as those of nearly, if not (piite, all of the States, i)rovide that the costs — using the term in tiie limited sense as embracing the anjounts due the sheritf, the clerk, and oilier odieers of the court, for their services in the case — shall be paid by the losing j)arty. Tlu' theory is that the determination of the suit has shown that his wrong i-au.sed the litigation, and, therefore, he should bear the expen.>aynient was intended to he for something; lej^al or ille^'al, then tiie court will not upJKtid the stipulation. We think the stijjulation is void, and, therefore, the niortfjapje is the same as tlKnigh there were no such stipulation contained in it; and, there- fore, the judfjnicnt for fifty dollars as attorney fees is erroneous (liioLcr V. Juhnni/cake, 9 Kas. 'M\7). D.\LV V. MAl'I'L.WD. SurHK.MK C'orirr or Pknnsyi.vama. ISTO. (88 Pa. .s7. ;]84.) January 1(5, 18T0. Before SiiAitswooi), C. J., MEijcrR. Gordox, Paxson, Woodwaku, Thlnkey, and Sti:kki:tt, J.T. Hrn)r to the Court of Common Pleas, No. 'i, of Philadelpliia I'ounty. Of July Term, 1878, Xo. '2. Scire facias sur nu)rtji:artgage and to proceed therein to judgment and execution f(»r the recovery of the whole of the said principal debt and all interest and taxes due thereon, together with an attorney's commi.ssiou for collection, viz. : live per cent., besides costs of suit, without any stay, any law or Usage to the contrary notwithstanding." On the trial, after tlu- olTcr of the mortgage in cvideme, tlu> de- 496 EQUITY RELATIONS. [CH^. II. fendants admitted plaintiff's claim for the 2>rincipal of the mortgage and interest, bnt resisted his claim for five per cent, commission on the principal of the mortgage. The defendants submitted the following points, which the courts Mitchell, J., refused: 1. That the plaintiff is entitled to recover upon the mortgage above the amount of the mortgage and interest, a reasonable attorney fee for the collection of the mortgage, and what is a reasonable fee must be proved by plaintiff to recover it. 2. That the plaintiff is entitled to recover under the mortgage sued on only a reasonable attorney fee in addition to the amount of the mortgage and interest. The court charged as follows : " The plaintiff is entitled to recover the full amount of his debt covenanted in the mortgage to be paid, including the five per cent, upon the amount of the mortgage debt for collection, that being expressly stipulated for in the mortgage to be paid on a contingency, which is admitted to have happened." The verdict was for $14,862.40, which included interest and the five per cent, commission. After judgment the defendants took this writ and assigned for error the refusal of the foregoing points and the portion of the charge noted. Chief Justice Sharswood delivered the opinion of the court March 17th, 1879. In Huling v. Drexel, 7 Watts, 126, it was decided by this court that a stipulation in a mortgage that, in the event of the necessity of proceeding to recover the mortgage by suit, the mortgagee shall be entitled, in addition to the debt and interest, to damages for cost and expenses incident thereto, was not usurious, and might be enforced in the scire facias. In consequence of this decision, it has become common to insert a provision not only in mortgages, but notes and other instruments for the payment of money, that the creditor, in the event of being obliged to resort to a suit, shall recover a certain percentage as commissions to the attorney who is retained by him to collect the debt. This commission, it has been held, does not belong to the attorney, but to the creditor. It can- not be collected as costs, but must be included in the judgment {Mahoning County Bank's Appeal, 8 Casey, 158; McAllister's Ap- peal, 9 P. F. Smith, 204; Faulhner v. Wilson. 3 W. N. C. 339; Schmidt £• Friday's Appeal, 1 Xorris, 524). In Robinson v. Loomis, 1 P. F. Smith, 78, it was ruled that such commission was not a penalty, but an agreed compensation to the mortgagee for expenses incurred by the default of the mortgagor. It is undoubtedly true that the parties to a contract may lawfully agree that the damages in case of a breach shall be liquidated at a certain amount. Equity will not relieve against such a contract •'*'^^- '"J l)\\.\ (. M AH LAND. 4!»i fairly cntorrd into, unless it is (.'vidi-iitly a penally. This princijde of liquidated damages is not aj)plicablc, however, to a contract (or the loan of money — at least sueh stipulation is subject to the control of courts of equity. As in the days of Solomon, " the borrower !.■< servant to the lender," and courts of ecpiity from the earliest period have assumed the jurisdiction of relieving the borrower from un- reasonable and oppressive stipulations, exacted from his necessities, altogether apart from the statutes against usury. Especially has this always been the case as to mortgages. Agreements embarrass- ing or restraining the ecjuity of redemption have invariably been set aside. The stipulated commission for the attorney may be so far beyond the ordinary rate charged for such services as to require imperatively the interj)osition of the equitable j)()wers of the court. Equity has always been a part of the law of Pennsylvania. In tlie administration of equitable principles it is the court and not the jury who exercise the functions of the ciiancellor, even where the action is in the common-law form. The jury, like the same tribunal in an issue directed by the chancellor, decide dis|)uted facts; but it is the court that must be .satisfied and apply the equity on the facts found or undisputed. If they think an equitable title to relief not made out by the proofs, it is their duty so to direct the jury, and contra if they think the ecjuity has been established. These rule- are so familiar and well settled that it would be a work of sujwrero- gation to cite the numerous cases which su))port them. We think these })rinciples api)ly to the c|uestions raised upon {\u< record. The lender of money on any species of security cannot exact an unreasonable stijiulation in the shape of an agreed licpiidation of damages. Equity interposes her shield to protect the borrower. The debtor in ca.ses of this kind will readily yield to the demaml of the creditor, as he would be apt to regard collection by suit as a remote and improltal)le contingency. Even at law what is reasonable is often, indeed, a (piestion of fact, but in many cases it is a pure question of law. Thus, notice of the non-payment of a promissory note, though it was at first submitted to the jury to decide whether it was within reasonable time, is now uiKpiestionaiily the exclusive province of the court ; so it is now held that after a lapse of seven years an abandonment of a title by settlement is a conclusive pre- sumption of law. No court has ever thought of sending an issue to a jury to determine wiiat is reasonable compensation to trustees. They would be a tribunal entirely unsafe to intrust with >\u\\ a question. 'I'hese decisions have been reached by the necessity of certainly in the rules in such cases. Many other illustration-; could be given. It is important, unless we are pre|)arcd to say that the lender may stipulate for any amount as i-ommissions for the colh>c- tioii of his del»t, that there should i)e some more certain riile than could be reached by submitting every case to a jury. It would 498 EQUITY RELATIONS. [CHAP. n. practically in a great number of cases have the effect of destroying the stipulation altogether. If the question must in every case be referred to a jury, the creditor will abandon the claim sooner than encounter the delay and the risk of a very small sum being allowed. The court, from practical knowledge of professional work, are able to say in every particular case what ought to be the compensation or rate of commissions for collecting a debt by suit. Whatever is stipulated beyond a reasonable rate should be relieved against upon equitable principles. Certainly, no certain commission can be deter- mined upon to be applied to all cases. As responsibility, as well as labor and skill, is involved, in reason and the usage of the profession h depends upon the amount collected, but not absolutely so. If there should be no defence to the mortgage or other instrument of writing for the payment of money, the court in giving jvidgment can decide whether the stipulated rate is too large, and enter judgment for what is right. Should, however, a defence be set up in whole or in part, and the case necessarily go to a jury, it would be the prov- ince of the court to instruct the jury what, under all the circum- stances, should be allowed, of course not exceeding the agreed rate. It does not appear by the paper-books that there was in this case any rule for judgment for want of an affidavit of defence, though it does appear that there was no other defence than the amount of the collection fee. Had there been such a rule, the court should have decided the question, and not have sent the case to the jury. We think the learned judge below was right in refusing to leave it to the jury to determine the rate of commission, but he was wrong in instructing them to find the full amount agreed upon. Five per cent, upon $14,000, in other words, $700, was far beyond what was reasonable, even in view of the fact that the defendant below had interposed a defence against the commission, and that the case might be carried by writ of error to this court. We think even under these circumstances two per cent, would have been an ample and liberal allowance, and the jury should have been so instructed. In general, this court will not review the exercise of a sound dis- cretion by an inferior court upon such a question, and the presump- tion will always be in favor of their decision unless it is plainly excessive, or, as appears to have been the case here, founded on the mistaken idea that they had no equitable power to interpose and moderate the agreed amount. Judgment reversed, and venire facias de novo aivarded.^ Mercur, J., dissented. Vilas v. McBride, 63 Hun (N. Y.) 324 (1891). Learned, ^Wilson V. Oft, 173 Pa. St. 253 (1896), accord. Clawson v. Munson, 5o 111. 394 (1870), contra. SEC. 111.] VILAS V. MlUKlUi:. 4'jJ r. J. This i> an npponl from u decision in an action of foreclosure. Two questions were sultinitted to the jury: tlie first, whether the mortgage was usurious; the seeond, wiiether David Mcliride, grantee, assumed payment of tlie mortgage as part of the considera- tion. Tlie jury found tlie first in the allirmative. the .second in the negative. The K-anu'd justice a(h)pted the>e liiidings as correct, and that as the house was not then finished and the manure would not be in existence until the lioust" was tinisheil, and as Vilas was to have it only as long as he carried the mortgage, the contract was not usurious. The proof, however, establishes that this was intended as an additional compensation for the use of the money, and it was actually received for many years. Where a con- tingent advantage is reserved to tlu> lender without putting capital or interest in any kind of risk, the contract must be usurious (liarnard v. Yomuj. 17 Ves. 41; ClcvvUiml v. Lodcr, 7 Paige, 'uu ; /v'(/,s/ Jiiicr lidnh- V. IIoi/l. 32 N. V. 110; Hriilnilwinur v. Mnt/rr. \'2 X. Y. Supr. r)Or)). There seems to be no room to doubt here that the agreement was that the lender should, at the least, have the probability of getting an additional advantage, and that this agreement was made in order that he might have more than legal rate. We think the vt'rdict and the decision on this j>oint were edirect.' ' .\fl'innf(l by tlic Coint of .\|iiu<;iIh on at.ovi- .i|iiiiion, Nov. CO. 1S92 (KUJ N. Y. 034 ) . 500 EQUITY RELATIONS. [CHAP. 11, CHAPTEE II. (Continued). Sec. IV. Tacking Collateral Claims. BAXTER V. MANNING. High Court of Chancery, 1684. (1 Vern. 244.) The plaintiff makes a mortgage of his estate to the defendant, and afterwards the mortgagee advances and lends more money unto the plaintiff, the mortgagor, on his bond. The plaintiff brings his bill to redeem. The defendant insists to have his bond debt as well as the mortgage-money paid him. Per Curiam.* Although there is no special agreement proved in this case, that the land should stand as a security for the bond debt, yet the mortgagor shall not redeem without paying both.' Challis v. Casborn, Finch, Pre. Ch. 407 (1715). Before Lori> Cow^PER, L.C. In this case it was said by Mr. Vernon, and agreed to by the court, that if a man has a debt owing to him by mortgage and another on bond from the same person, that he cannot tack them together against the mortgagor, but that he shall be let into a redemption on payment of the mortgage money only; but the heir in such case shall not be let into a redemption without payment of both, because the land in his hands is chargeable with the bond, even at law; and now, since the statute against fraudulent devises, the devisee of the equity of redemption is in the same case, and cannot redeem without payment of both, because the statute make- such devise void, as against creditors, and then the devisee stand- in the same place as the heir must have done if no devise had been made; but before that statute such devisee would not be liable to the bond debt any more than the mortgagor himself. ' Sir Francis North, Lord Keeper. 'Reg. Lib. 1683. A. fol. 730. It was referred to the Master to enquire whether the debts secured in this ease by bond were separate or included in the mortgage, and in case they should prove distinct debts, then the decree to be as above, and so made 31st January subsequent. Reg. Lib. ]r,84. A. fol. 252. *■=''■ '^1 COLEMAX V. WINCH. 601 COLEMAN V. WJXCII. High Court of Chancery, 1721. (1 /'. Wms. 775.) A., seised in fee of lands, makes a mortgage to B. for £100 and afterwards borrows £100 more of 13. upon bond, and dies; the heir at law conveys the inheritance and equity of redemption of the jiremises to trustees in trust for payment of all the bond and simplc- luutract debts of his father equally; after which the trustees bring tlu'ir bill to redeem B., who insists on being paid his debt by bond as well as that by mortgage; and for the mortgagee it was objected, First, that as he had the estate at law absolutely, and the trustees eould not come at it without the interposition of e(|uitv, it seemed not agreeable to reason that he should be hindered by this court from receiving what was due to him by bond as well as by mort- gage, the former being as just a debt and as much due in conscience as the latter. Secondly, that if the heir had brought a bill to redeem the mort- gage, it was plain he must have j)aid as well the bond debt as that by mortgage; and if the heir must have paid it, why should any one claiming under him be in a better condition than he himself? Lord Chancellor [Macclesfield]. The bond of the ancestor, wherein the heir is i)ound, becomes, upon the ancestor's death, the heir's own debt, for which he is suable in the debet and dclinet; and, therefore, if he comes to redeem the mortgage made by his ancestor, he nmst pay the debt by bond as well as that bv mortgage ; but. though this be the debt of the heir, it cannot be said to be due from the heir's assignee, the bond being no lien upon the land: which appears most plainly, in that it was no lien on the land, even against the mortgagor himself, who happened to be indebted to the same person by mortgage aiul by bond. Suppose one be indebted to A. by mortgage of a term for years, and also indebted to him by bond; if, on the death of the mortgagor, his e.vecutor brings a bill to redeem the mortgage, he must pay both; but if the executor assigns over the ecpiity of redemption of the mortgaged term, and the assignee of the executor brings a bill to redeem, he shall only !'ay the mortgage money. So if the testator, being possessed of . term, mortgages it to A., and becomes al.so indebted to A. by ^mple contract and dies, his executor, bringing a bill to redetMU. -hall pay both the mortgage and the debt by simple contract, because he very equity of retlemption is assets to pay simple-contract 503 EQUITY RELATIONS. [CHAP. II. debts; but if any creditor of the testator brings a bill to redeem this mortgage, he shall pay only the mortgage. Lord Chancellor farther said that the law of England in suits against heirs imitated the civil law, where an heir sued by a bond creditor is sued as for his own debt in the debet and detinet, and is lirima facie supposed to have assets, but that the heir might dis- charge himself by saying that at the time of the writ brought he had no assets ; or if he has assets descended, may show those assets, of which the plaintiff may, if he pleases, take judgment ; and that in case the heir had aliened before action brought, though at law there was no remedy against him, yet in equity he was responsible for the value of the land aliened ; but now the heir is made liable- at law for the value of the assets he has aliened. POWIS V. COKBET. High Court of Chancery, 1747. (3 Atk. 556.) Lord Chancellor [Hardwicke]. The estate, made subject tO' a five hundred years' term by the will of Corbet Kynaston for the payment of debts, must first be applied before the creditors can come upon the estate descended on his heir at law ; for if a testator has created a particular trust out of particular lands, and subject to that trust devised it over, the devisees can take no benefit but of the remainder after the whole burden is discharged upon it; and as to that the heir at law stands in a better place than the devisees do. The next question is between the devisees of the real estate which passes by the codicil and the heir at law of the testator ; undoubtedly,, according to the determination of Galion v. Hancock, June 11, 1743, the assets descendible on the heir at law must be applied to the payment of debts before the lands can be charged which are specifically devised. Another defendant in this cause, and mortgagee, Amye Kynaston, was likewise a bond creditor to Corbet Kynaston; her counsel insisted she had a right to tack it to the mortgage as against the heir, because, assets being descended, he cannot redeem one without paying off the other, for the court will not make a circuity by put- ting her to the necessity of suing on the bond ; and they insisted, further, that the rule was the same with regard to a devisee, and 8KC'. IV. ] IIEAMS t'. BAXCE. 50^ that the court will not oblige a mortgagee, who is likewise a creditor hy bond, to sue him under the statute against fraudulent devises. Loud C'iianckllou agreed this was the rule of the court as to a mortgagee who is likewise a bond creditor against the heir, but did not reniemluT it was ever determined in favour of such mort- gagee where there are intervening incumbramcrs of a superior nature l)etween his mortgage and the bond, and, therefore, would not direct that Mrs. Kynaston's bond should be tacked to her mortgage. HEAMS v. BAXCE. High Court of Chancery, 1T48. (3 Atk. G30.) Lord Chancellor, since Hilary term last, ordered this cause to stand over, to search the register's book for the case of Ridont v. Lord Plymouth, which had been mentioned at that time as an authority in point, but, being looked into, it did not appear to be at all similar to the present, in which the question is whether a mortgagee who lent a further sum afterwards upon bond should be allowed to tack it to his mortgage in preference to other creditors under a trust for payment of debts created by the will of the mort- gagor ? Lord Chancellor [Hardwicke]. I have considered this case, and am inclined to think the mortgagee shall not be allowed ti» tack the bond to the mortgage; with regard to the heir of th.' mortgagor, tiie reason why he shall not redeem the mortgage with- out paying the bond likewise is to prevent a circuity, because the moment the estate descends upon him it become.<< assets in hi' hands and liable to the bond; a devisee, too, of the mortgaged premises for bis own benefit is subject to the same rule since the statute of fraudulent devises made in favor of bond creditors. But this is a devise in trust for the payment of debts, and the descent is, consequently, broke; so that, as T am at present advised. I am of opinion the mortgagee can have no priority with regard to his bond, but a.s to that must come in pro rata with tlie rest of the creditors under the tnist ; but if the counsel for the mortgagee have an inclination to ]>e heard on this point, it shall stand over. The Attorney Cieneral, of counsel for him, i?aid he thought the 504 EQUITY RELATIONS. [CHAP. II. point was too strong against the mortgagee to be maintained, and the court thereupon made their decree accordingly.^ Lee v. Stone, 5 Gill & J. 1 (Maryland Ct. of App., 1832). Dorset^ J. (p. 21). It has been further contended that the appel- lants are to be first paid, as well the balance due them from Key as that which appears on the auditor's account — Booth, as the secur- ity, being answerable for the defalcations of the guardian; that, the appellants being seized of the legal estate in the land sold, their legal title could not be taken from them until they were paid, not only the remaining balance of the purchase money, [but all other debts] upon whatever account due from Booth to them; and this pretension is rested upon the familiar principles of equity, "that he who seeks equity must do equity ;" "that a multiplication or circuity of action should be avoided." But these principles have never been carried to the extent that would be necessary to their atfording relief to a party in the predica- ment of the present appellants. They stand here in the character of complainants seeking to enforce their lien for a balance of the purchase money by a sale of the premises on which their lien attaches, and require this court not only to enforce their lien, but to tack to it another debt, apart from such their application entitled to no priority over other creditors, and this to the exclusion of ellants be gratified. Their doctrine is in clTect simply this, that in all cases where the sale of the real estate of a deceased debtor is decreed, the debts due to the heirs at law to whom such estate has descended, be their nature what they may. must first be paid, even to the exclusion of judgment creditors. To such a length the doctrine of tacking has never yet been carried.' ' '■ Tlierc is no doubt as to the liglit of the plaintifT ( inortgajror ) to ifilooin the wliole of tlie promises nioitrrafrcd : but as he wlio will have oijuity must do equity, it must be on eontlition not only of |)ayin{; the sum rhaitxe }'. a- CuU. 117.) In the year 182S the ))lainliir contracted with the defendant Denhain for the purchase of two third parts of a freehold messuage and lands situate at llandley, in Derhyshire, for ;?.")<)/. ; and shortly afterwards contracted with some persons of the name of ilawksley for the purchase of the remaining third j)art. The i)laintifr nor heing ahle to pay the .'JoO/. to Denham, it was arranged that the whole of the propi-rty should he mortgaged to Denham to secure the repayment of that sum with interest. This arrangement was didy carried into eirect hy deeds hearing date in June, 1828. Those deeds were prepared hy the defendant, Thomas Clarke, who acted as the solicitor for hoth parties. In the same month of .Tune, IS^'S, (he jjlainiiir i»eing seised of some fri'ehold and eojiyhold jiroperty situate at Woodhead, in the county of Derhy, hy indentures hearing date the l(!(h and 17th of that month, reciting that there was due to one Boot, on the security of those premises, 140/.. and (ha( (he defendan(s. Thomas and John Clarke, had agreed (o i)ay o(T (he same, and also to advance to the plaintifT 200/. more, it was witnessed, that in con- sideration of 140/. paid hy the Clarkes to Boot, and of 200/. paid hy them to the plaintilT, (he la((er covenan(ed to surrender tin- cojiyholds, and rele;ised and conveyed the fre«'hoIds (o the de- fendants Thomas and John Clarke ami (heir heirs, in trust to .5es, and o\it of the proee(>ds of the sale to n'injhurse them- selves their costs antl expenses; then to re|>ay (hemselves (he 3(0/. 508 EQUITY RELATION'S. [CHAP. II. with interest ; then to repa}' Denham his 350/. with interest, and to pay tlie surplus, if any, to the plaintiff. In 1830 the interest on these mortgages heing greatly in arrear, the defendants turned the plaintiff and his family out of the prem- ises, sold the crops, and took and retained possession of the property. The Woodhead property was advertised for sale, but no sale was effected. The plaintiff now brought his bill to redeem both mortgages, charging that the defendants had ])een guilty of gross negligence in the management of the property while in their possession, and ought to be made answerable for the damage done througli their neglect ; charging also that the money stated to have been advanced l)y the defendant Clarke was the alleged amount of his bill of costs, l)ut was in fact not justly due to him from the plaintiff, and that in fact no bill of costs iiad ever been delivered; praying accounts of the rents and profits of all the premises, that the defendants might be chargeable for damage done from non-repairs, and that Clarke's bill might be taxed, &c. The defendants by their answers admitted that the premises were out of repair, l)ut ascribed it to the conduct of the plaintiff and an attorney wdiom he had lately employed, who, as they alleged, liad done various acts to stop the sale of the property, and liad thereby prevented respectable tenants from hiring it. The charge in the bill respecting the mortgage made to the Clarkes was ex- plained thus: that 140/. was advanced by them to pay off Boot's mortgage; 12G/. 17s. to pay the Hawksleys for their one-third of the Handley premises; and 78/. IGs. 5d. for Thomas Clarke's bill of costs. The defendant Clarke also insisted that before the plain- tiff executed the mortgage deeds of the 16th and 17th June, 1828. he carefully inspected the bill of costs, and made no objection to any item therein; but the defendant did not recollect whether he liad delivered to the plaintiff a copy of his bill of costs. The cause coming on for hearing, the plaintiff gave evidence of Ijad husbandry and w^ant of repairs on the premises since August, 1830, when the defendants took possession. In reference to the Handley property, one witness swore that a field of about three acres and a half was fallowed in the summer of 1831, and laid down on such fallow, and that three crops following the fallow had since ])een sold therefrom ; and that the fourth crop was a hay crop, which was then growing thereon ; and that the greater part of the remainder of the farm which should have been fallowed had not ])een so, but liad been hardly cropped, without an adequate quantity of manure laid yearly thereon. It was also proved that the barns and out-buildings on the freehold premises were in a tenantable '^''•- ^1 \\i;a(;<; c. dkniiam. oi)'.i >talo of ivjiair in !S;50; \m[ siiu-c iliat tiiiu' llii'V liiid Ixtoiiic very ruinous for want of luri'ssary rcj)airs, tin* wet In-in;; allowed to get in. In the judirtiK'nt of the witii»'>;ses, the llandley ])nti(erty was in Au^'u>t, iS.Jd, wnrth Ki/. per annum, hnl now imt above !•/. l>er atmuin. The Woodhead jjroperty was not so inueli depreciated. Mr. Spcncc and Mr. Ifall. for the phiinlilF, suhinitteuch an eiupiiry would have been es.sential, but that does not apply to mere depreciation arising from bad husbandry. [Alukuson, B. In Uuijhcs V. Williams, 13 Yes. 4i)5, Lord Eldon says, that " if the mortgagee can be shewn to be guilty of such gross negligence as (••»ines up to the description of wilful default, he ought to be answerable for it." The question is, whether there has not been here such gross negligence as to occasion de])rcciation ; not merely whether there has been mishusbandry. What is alU'ged by the wit- ness as to the manner of cro])ping the land, appears to be gro-s misconduct in the mortgagees.] Tin- (juestion is not between landlord and tenant, but between mortgagor and mortgagee. The tenant is under a contract with his landlord for the jiroper manage- ment of his farm, but the morlgngee is in no such situation, if. failing to obtain his princij)al and interest, he gets posses-^ion t>f th" premi.mcnts ; l)ut of this no evidence was given. .][r. ('liaiullrs.-<. for the plaintitT, eontendccl, first, that tliere ought to be a taxation of -^o nuieh of the defi'udant's demand as eon- .512 - EQUITY RELATIONS. [CIIAP. ii. sisted of professional costs {Wragg v. Venluuii . 2 Y. & Coll. Excli., 117) ; secondly, that the mortgagee was liable for the damage done by pulling down the cottages {Wragy v. Dcnham); and, thirdly, that the defendant onght to pay the costs of the suit, it having been occasioned by his improper conduct in refusing to render accounts. {DctilUn V. Gale, 7 Yes. 583; Taylor v. Balrr, Daniell, 71; Har- veii V. Tehhuit, 1 Jac. & W. 197; and see }yihon v. Cluer, 4 Beav. 214). Mr. Kindersley and Mr. Stevens, for the defendant, did not op- pose the taxation, but contended that the defendant was entitled to an inquiry as to the substantial repairs and lasting improvements, and to be allowed the amount ; and that the defendant was entitled to the costs of suit, and of the ejectment. Mr. Chandless, in reply. — There is no proof of any substantial repairs or lasting improvements; the defendant, therefore, is not entitled to any inquiry. The Master of the Eolls [Lord Laxgdale]. It is objected on behalf of tlie plaintiff, and properly objected, that so far as the sum of 140?. consists of the bill of costs, which is payable to the de- fendant, it ought only to stand as a security for so much as will be properly due upon taxation. That is not disputed by the defend- ant ; it has been very properly conceded to the plaintiff, that he is en- titled to have that investigated. In the year 1838, the defendant obtained possession by an action of ejectment, and after he came into possession he pulled down two of the cottages which were upon the premises, and he says, in his answer, that he laid out a considerable sum of money, to the amount of about 300?., for repairs and substantial improvements, which he alleges were done with the privity and knowledge of the plaintiff. First, with respect to the dilapidations, they are proved ; and there is not an attempt made in evidence for the purpose of shewing that it was proper. I am therefore of opinion that the plaintiff is enti- tled to an account of any loss occasioned by pulling down those houses. The next question is, whether the plaintiff is entitled to anything for the improvements which he alleges to have been made. With respect to what a mortgagee in possession may do with the mort- gaged property, several cases have occurred at different times, shew- ing what he ought, and to some considerable extent, what he ought not to do. Such repairs as are necessary for the support of the property he will be allowed for. He will not only be allowed for repairs, but he will be also allowed for doing that which is essential for the protection of the title of the mortgagor. Further, if he has got the consent of the mortgagor, or has given him notice, in whieti SKC. v.] SANDON C. IIOOI'KK. H 1 :'. he ac(juie.sces, tlifii he may Itc allowed for sums of iiumcy wliicli ar'- laid out in increasing the value of the property ; hut he has no right to hiy out money in what he eall.s inereasing the value of the prop- erty, whieh may he done in such a way as to make it utterly impo'^- >ihle for the mortgagor, with his means, ever to redeem; this i< what has heen termed improving a mortgagor out of his estate — an expression wiiieh has heen used botii in this argunu-nt and on ft)rmer occasions. The mortgagee has not a right to make it more expensive for the mortgagor to redeem than nuiy be required for the purpose of keeping the property in a proper state of repair, and for protecting the title to the pnjperty. Now, in this case, it lias also to be considered, whether it is a matter of course to direct an incjuiry whether any money has been laid out in lasting im|)rovements. Many such incpiiries have; been directed where the fact of any money having been laid out has been proved and brought to the attention of the Court. I quite agree with the argument that has been used on this occasion, that it was not necessary for the defendant to prove the items of sums of money laid out in the pernuinent improvements alk'geil to have been made; but, in this case, there is, as to that, a total absence of all evidence whatever. There is evidence. on the part of the plaintifT,to .'^hew that what was done deteriorated the j)roperty, and tluTC is not one word in evidence, on the part of the defendant, in support of his allega- tion, that he has laid out any money for lasting improvements, or that anything he did was done with the privity, consent, or knowl- edge of the j)laintifT. In the absence of all i)roof, it is not at all within my authority to direct an incpiiry to enable liim to sup|)!y that in the Master's office, which he has already had an opjmrtunity of doing. See Mtirtoii v. Whirhclo, ("r. & IMi. "ioT. He may have, done something towards the improvement of the estate; and if he had entered into any general proof without going into the item-, it is very prol)able that the j)roof might have been such as woiiM have induced the Court to direct an in(prny upon the siibject ; but there is no siu-h ])roof brought forward. Another point has been raised in this case as to the refusal of the defendant to account. To excuse his refusal, the defendant al- leges that he was under a mistake as to the party on whose Ix-half the application was made; but 1 think the eirciimstanci\s sufficiently shew there was no mistake. Under these cin-umstauces I shall direct no incpiiry as tt> lastiii_' im|)rovements. 1 think the ])laintilT is entitli'd to an intjuiry as to tile loss sustained in conse(|uence of pulling down tlu' cottages; he is entitled to a taxation of the bill of costs, which formed part of the consideration for the further i-barge; and. considering tlu^ 514 EQUITY RELATIONS. [CHAP. II. course the defendant has taken, I think he is liable to pay some of the costs of this suit. I cannot, however, take it for granted that this suit would not have occurred if the estate had not been dealt with as it appears to have been; I cannot therefore say, that the plaintiff is to be excused from the whole costs of the suit up to the hearing. I think the plaintiff must pay the costs, except those which relate to the claim for lasting improvements, those relating to the plaintift"s claim for compensation for the dilapi- dations, and those which have arisen from the evidence, which the plaintiff has been obliged to enter into for the purpose of shewing the refusal to account. There must be an inquiry taken of what is due to the defendant for principal and interest, and for the costs payable by the plaintiff. SHEPARD V. JONES. Supreme Court of Judicature — Court of Appeal, 1882. (21 Ch. D. 469.) By an indenture of transfer of mortgage, dated the 31st of January, 1874, the Victoria Brewery and other hereditaments at Wrexham were conveyed to the defendant, Edward Jones, for securing £2000, subject to redemption by Thomas Manby. By sub- sequent deeds further sums of money were charged on the same premises. On the 10th of October, 1878, Thomas Manby was adju- dicated bankrupt, and the plaintiffs, H. Shepard and H. Davies, were appointed trustees of his estate. On the 18th of February, 1879, the defendant offered the mortgaged property for sale by auction under the power of sale in his mortgage, but no bidding was made for it. Several persons also inspected the brewery with a view of purchasing it by private contract, but declined to do so, alleging as their objection to it the inadequate supply and inferior quality of the water in the well on the premises. In August, 1879, tbe defendant took possession of the brewery, which was then vacant, and placed a person in it to take care of it, but did not him- self occupy it. In the early part of the year 1880 the defendant commenced boring operations to deepen the well, and eventually obtained a good supply of water. Tlie defendant alleged that this was done with the knowledge and acquiescence of the plaintiffs. On the 12th of May, 1880, the defendant again put up the mortgaged premises t^Kc. v.] siii:i'\l;i) r. .ionics. ."il'i for sale bv iiiictiDn, when it was hoii^'ht l>y David .Tolinson for toOOO. one of the conditions l»'in«; that the salt' should he complctiMl on the v"tth of S»'i)t('mht'r follo\vin;,^ At that time the |irinci|)al >uiii (if tiddO and a considcrahlc arrcar of interest were due to the th of Sej)temher. Tlie purchaser was not a brewer but a manufacturer of zoedone, and used the premises after taking j)ossession as a storeliouse for his goods. The defendant ten(hTed to the trustei^s C.")0!) 18.v. U., which he considered to be tlie balance due to them, but they declined to ac- cept it. They claimed in addition rent for use and occupation from the time when the defendant took possession till the SOth of Scjitcmber, ISSO, and they also refused to allow the expense to which the defendant had been put to in deepening: the well, amount- ini: to about £83. The plaintilTs then brought this action against the defendant, claiming the balance of the purchase-money, and ask- ing for accounts against the defendant as mortgagee in possession. Tlie defendant i)aid VAA 1T.«.\ 2d. into Court. At the trial the above-mentioned facts were proved, but there was a conllict of evi- ut there is no evidence whatever that the price was so increased, and in the ab.sence of that evidence, and as the brewery has been bought liy a man who .seems to l)e only using it as a ware- hou.se, I cannot come to the conclusion that he gave more for it in consequence of the boring operations. The rule of law is (piite settled, and has never been alten>d from what was laid down in the ca.se of Sandon v. Ifooprr. (i Heav. 2l<;, •M8. There Lord Langdale states the rule thus: "The next ques- tion is whether the jilaintilf is entitled to anything for the improve- ments which he alleg(^s to have been madr-. With respect to what a mortgagee* in possession may do with the mortgaged property, .sev- eral cast's have occurred at dilT«M-ent tim(>s shewing what he ought and to some considerable extent what he ought not to di». Such re- OIG EQUITY RELATIONS. [CIIAP. U. 23airs as are necessary for the supjiort of the property he will be al- lowed for. He will not only be allowed for repairs, but he will be also allowed for doing that which is essential for the protection of the title of the mortgagor. Further, if he has got the consent of the mortgagor, or has given him notice in which he acquiesces, then he may be allowed for sums of money which are laid out in in- creasing the value of the property, but he has no right to lay out money in what he calls increasing the value of the prop- erty, which may be done in such a way as to make it utterly impossible for the mortgagor, with his means, ever to re- deem; this is what has been termed improving the mortgagor out of his estate, an expression which has been used both in this argu- ment and on former occasions. The mortgagee has not a right to make it more expensive for the mortgagor to redeem than may be required for the purpose of keeping the property in a proper state of repair, and for protecting the title to the property." Now it must be under this last branch of Lord Langdale's judgment that the case of the mortgagee must succeed if at all. Had he got the consent of the mortgagor, or given him notice in which he acqui- esced ? I cannot find that either has been done, but if by any strain of language it were possible to assume that this comes within the case of the mortgagor having had notice in which he acquiesces, then, as Lord Langdale says, the mortgagee may be allowed for sums of money which have been laid out in increasing the value of the property; but then the onus would be on him to shew that the money was laid out in increasing the value of the property. Now this as it seems to me he has failed to shew. In the first place there is no consent of the mortgagees or trustees in bankruptcy; and in the second place no notice was given in which they acquiesced; and in the third place the mortgagor has failed to shew that what has been done has increased the value of the property. Therefore I am not able to direct an inquiry as to any improvements. I must say that if I had been satisfied that the value of the property had been increased I should have struggled very hard to prevent .tlu^ mortgagor getting the purchase-moneys which represented the valut- of the property without allowing for the expenses that occasioned the increase of value; but, as I have said, I have listened attentivelv to the evidence, and I am not able to see that the mortgagee has proved that there was that increase, or that there was any notice by which the mortgagor can be fixed as acquiescing in these im- provements. Upon the other point the question is whether the mortgagee ha.?- been in such occupation of the property as entitles or makes it just for the Court to* treat him as liable to an occupation rent. Now, ar- '''■<■ '^■1 >iii;i'Ai;i) r. .loNiis. 017 os.«<<'ssion and use tlu-m, by storing goods there, and Johnson has used them ever since, and is now using them as a warehouse. Tiien the mortgagee either charged Johnson with rent or did not. 1 understand he did not, but if he allows that state of things Johnson must be treated as in possession as liis agent, because if Jf)hnson hail no right to possession under the contract, then permission to take ]»ossession being given would make him an agent of the mortgagee. If Johnson has been in possession and using tiiese premises for iiis <»wn purj)oses, and the mortgagee does not choose to charge him rent as he ought to do, then the possession by Jolinson is the posses- sion of the mortgagee, and if the mortgagee himself had been in possession and using the premises as a warehouse, I could not have tlu' least doubt that he would under the rule be liable to pay occu- pation rent. Therefore as he chose to let Johnson iuive that pos- session and use, I must charge him as thougli he had been himself in possession from the time when Johnson took pos.session. Ac- cordingly I direct the usual account in the redemption suit as against the mortgagee in possession, and I direct the usual inquiry as to what he ought to be charged with as occupation rent from the time that Johnson took possession of the estate. I reserve the (pus- fion of costs. C. M. From this judgment the defendant appealed. Tiie appeal was heard on the 2\A of July, 188:^. Cozens-IIardij, Q.C., and Swinfen Kadij. for the appellant : — We aj)peal from the judgment on two grounds: first, the defentl- ant is ciiarged with an occupation rent, although he was not in actual occuj)ation of the brewery. Xo one is liable for an occu- pation rent unless he is making use of, or deriving profit from, the premises. In the present case the defendant put Johnson into ]»ossossion of the brewery before the day namcMl in the conditioTi-; <«f sale in order that the expense of a caretaker might be savi'd. but he received no rent from Johnson. 518 EQUITY RELATIONS. [CHAP. II. In the *cond place the learned Judge refused to allow the de- fendant the expense of deepening the well. There is evidence that this was done with the knowledge and consent of the plaintiffs. But in truth notice is immaterial if the outlay was for the benefit of the property. In the present case it is clear that the value of the property was increased. It could not be sold until a better supply of water was provided. A mortgagee in possession is always entitled to be allowed for permanent improvements {Tipton Green. Colliery Company v. Tipton Moat Colliery Company, 7 Ch. D. 193; Sandon v. Hooper, 6 Beav. 346; s. c. on appeal, 14 L. J. Ch. 120). Mr. Justice Kay had only before him the report of the case before the Master of the Rolls. The report on appeal materially modifies the law as tnere laid down. Lord Lyndhurst says that if the value of the property had been increased he would have given the mortgagee the benefit of it. Rigby, Q.C., and T. A. Roberts, for the plaintiffs: — With respect to the first point, the occupation of Johnson was the occupation of the defendant. It was the defendant's duty to require Johnson to pay rent for the brewery until the day appointed by the conditions of sale for completion of the purchase. As he did not do so Johnson must be treated as his agent or servant. At all events the plaintiffs are entitled to charge the defendant with wilful default in not making a profit by the occupation of the premises, which comes to the same thing as an occupation rent. The deepening of the well did not really raise the value of the brewery. It was the quality, rather than the quantity of the water, that was deficient. In fact Johnson did not purchase it for a brewery, but for a place for storing his zoedone. Whether the outlay really improved the property is a question of fact which the Judge decided against the defendant, and the Court of Appeal ought not to interfere with his conclusion. Jessel, M.E. My present opinion is that the appellant is enti- tled to succeed on both the points in this case. I have always under- stood that occupation rent is only charged against a mortgagee who occupies. If one wants authority for that proposition he will find it in the case of Truloclc v. Robey, 15 Sim. 265. The Vice-Chancellor there says : "A man may have been in possession of an estate without being in the occupation of an acre of it. Anyone is in possession of an estate who receives rent from the tenants who do occupy it. Why did not the plaintiff amend her bill by stating that the de- fendant had been in the occupation of part of the tenements ? How can the Court make a decree on a fact that does not appear on the bill?" Therefore the plaintiffs have to shew that the defendant, the mortgagee, was in occupation. Of course, a man may be in SEC. V.| SMIJ'AIM) r. JONES. •")!!♦ occupation in law by occupyin*; the liousc himself personally m- hy an (ttcupation through his servants. In that sense I agree with Mr. Kij,'hy's ar^annent that a man need not l)e in what is eallrd personal oeeupation, hut occupation, like most other things in law, is a complex term, ami it is impossible for a man to be in occupa- tion if somi'hody else is in occupation ; that is, excluding the case of joint tenants or tenants in common. Now in this case the sale by auction was to a purchaser of the name of Johnson, and before the time of completion arrived .John- son asked the defendant, the vendor, to let him into possession. I am not going into the (piestion whether h<> ought to have been let into possession on the terms \\\wn which he was let in. It seems the defendant had a caretaker for him. Therefore he was in occu- pation through the caretaker in that sen.se up to the time that John- son was let into possession. Then Johnson was let into pos.*ession on the terms of i)aying a part of the outgoings, as I understand. Whether they were jjroper terms or not is a question for iufpiiry. I have heard nothing to shew that they were not proper terms, but upon that I give no opinion, because there is the usual account di- rected for wilful default, and if it turns out that he was not let in on proper terms or on reasonable terms, the defendant may be liable for not getting all he might have got. Hut in no legal sen.se wa< the vendor in occupation after he let the purchaser into occupation. The purchaser was not his servant or his agent, but he was a purcha.ser entering in his own right and oljtaining not only legal possession but legal occupation. It ajqiears to me. therefore, there is no case whatever for charging the defendant an occupation rent pimply because at that time he was not in occupation. That 1 think is suiricient to dispose of that part of the ai)peal which relates to the occuj)ation rent. With regard to the other point, it is one of more general interest. I have always understood the practice to be quite settled. If upon the hearing of a rt-demption suit the mortgagee, having charged in his pleadings that he has laid out money in lasting improve- ments, produces general evidence that he has laid out money in last- ing improvements — that is, produces evid«'nce of the laying out of tlu> money, and that the works are prima fticic improvements — that is sulVicient for an incpiiry. If he ])roves more, that is, if he not only proves that he has laid out money in permanent works, hut they are really imp'-ovements and have imj)rovi'd the proj)erty to the extent of the money laid out, he will then get not only an incpiiry but an account of the siims laid out in the lasting improvenu-nts. Hut, of course, to get the account he must prove a good deal more than to i:et an incjuiry. r|)on that point 1 will quote some of the words of 520 EQUITY RELATIONS. [CHAP. II. Lord Lang'dalo in the case of Saiidon v. Hooper, G Beav. 24G, although Sandon v. Hooper went too far on another point, and was varied on appeal ; but on this point there has been no appeal. Lord Langdale says this : "jSTow, in this case it has also to be considered whether it is a matter of course to direct an inquiry whether any money has been laid out in lasting improvements. Many such inquiries have been directed where the fact of any money having been laid out has been proved and brought to the attention of the Court. I quite agree with the argument that has been used on this occasion that it was not necessary for the de- fendant to prove the items of sums of money laid out in the per- manent improvements alleged to have been made." Then he goes on : "He may have done something towards the improvement of the estate, and if he had entered into any general proof without going into the items, it is very probable that the proof might have been such as would have induced the Court to direct an inquiry upon the subject." That is, you want general proof of money laid out, and you want general prima f.acie proof that it has 1 -en laid out in lasting improvements. That being so, we have only to consider whether there was in this case proof of both those facts. There was not only general proof, but, as I understand, there was detailed proof as to the money laid out. There is no dispute about that. The money laid out was about £100; but was it proved generally and prima facie to be laid out in lasting improve, jnts? Now it stands in this way ; the money was laid out in bor' .g for water. That was not at first productive, and then they .aid out more money which was productive, and the quantity of w.iter was largely increased. Whether or not that was an increa e which added much to the saleable value of the property would h- a matter for inquiry, but they did satisfy the two things laid dowj. by Lord Langdale, namely, that they laid out money, and that „he money Avas prima facie a lasting or permanent improvement. It was last- ing and permanent, and it was prima facie an improvement ; be- cause it very much increased the quantity of the water in the well, whether we look on it as a brewery property or even as a property not used as a brewery, because it appears that a supply from the water company was no longer required. I think there is suflicicnt for inquiry even if there were no special c' imstances in this ease to distinguish it from the ordinary reder ition suit. Of course, a mortgagee takes the inquiry at his own isk, as to what may be the result of the inquiry. ^ But there are very special circumstances in this a which I think distinguish it from an ordinary redemption suit, whi 'putstheright of the mortgagee to the inquir}^ upon higher grounds. This is not a SKC. v.] Mli;i'\l;l» c. .loNKs. Tj.'! irdcinption s\iii at all. ll is a suit bruiiglil by tlic mortgaj^or for an Mount fmiii (he iiiort^agee who has exercised his power of sale "f tile apjjlication of tlic jiroeeeds of that sale and a claim for tiie balance. If it should turn out that the n»ort<;agee ha.s done some- thing to the property at his own expense which increased its sale- able value, I think it is j)lain on ordinary principles of justice, that that increase should not go into the pocket of the mortgagor without his j)aying the sum of money which caused the increase. It dis- linguislu's it froni the ordinary case of improvements. The in- < n^ase may have been an increase which did not come under that denomination, but which increased the selling-price. It seems to me that wherever there is a case of that kind where the mortgagee < an ])rove that the selling-price was increased by reason of the out- lay, then to the extent to which that selling-price has l)een so in- < reased the mortgagor cannot get the benefit of it without paying for the outlay. Of course the mortgagor could not be made to ))ay more than the increase; but to that extent it seems to me in ordinary justice the mortgagee is entitled to say, '"You shall not iret'i'hat increased benetit caused by my outlay without paying for that outlay." In this case it seems that this property was a bn'wery. It seems also from the evidence that the supply of water was deficient both in quantity and cpiality, that there was an abortive sale, which was abor "-'e by reason, to some extent at all events, of the defective -upi)l;" of water, and that thereupon after the abortive sale the niortga,:ee set to work to supply the deficiency. There is a dispute whether he did supply it altogether. It is said that although he >u|)plied it as regards (puintity, he did not do so as regards quality. Then ther,» was a second sale, at which the property sold for a go«id price, hut the purchasiT was not a brewer, and it is suggested that the j)urchi:ser would have given the same money for the proj)erty whether tlvre had been this im-rease in the supply of water or not. Wt>ll. that T'lay be so, but it does not at all follow that the .>jelling valuf^ was not increased. It was a sale by auction. A brewer nuiy have attended the sale, or several brewers nuiy have done so. and they may have bid up to the last bidding befon^ thr.t which was bid for by the purchaser, because there was a good supply of water, and it was su ' ble for brewery purposes. If that was so, the price would be incrc, -c'^ '•.^' i*«'i<>'^'i '^^ •'"' achlitional supply of water, although the a(-..'al final purchaser did not want the water at all. That does not ] -ove it. .Ml I can say is. that there being in my opinion a prima fric case that the property was increased in value. i» is fair that ,,,?''re shouhl be an inquiry to ascertain whether it wa-; -o in(rea 1. Of course that incpiiry will Ix^ whether anv and 522 EQUITY RELATIONS. [CHAP. II. what sum ought to he allowed in taking the accounts of the de- fendant by reason of lasting improvements, and that will leave the whole case open. There is another observation I wish to make on the supposed necessity of notice, and there are some words in the judgment of Lord Langdale in Sandon v. Hooper, which I have always de- clined to read literally, and which do not appear to me to be war- ranted by the judgment of Lord Lyndhurst. That is, as to notice. I am by no means prepared to say that Lord Langdale did not mean exactly what I am going to say : I rather think he did ; but it was imperfectly expressed either by himself or by the reporter. As I understand it, notice is not necessary if the improvement is a rea- sonable one, and produces a benefit. The mortgagee cannot be deprived of that benefit because he did not tell the mortgagor of it. If on the other hand it is an unreasonable one, and produces no advantage, I do not see why the mortgagor should be charged w^th it because the mortgagee gives him notice of it. He could not prevent it, the mortgagee being in possession. That being so it seems to me that the real doctrine as to notice is, that where the mortgagee gives the mortgagor notice of the expenditure, and the mortgagor agrees to it, then of course it is unnecessary for the mortgagee to shew that the expenditure was reasonable. It is a contract. If the mortgagor does not actually agree to it, but does such acts as in the view of a court of law amount to tacit consent, or, as it is sometimes called, "acquiescence," that will also put the mortgagee in an equally advantageous position. But if the mort- gagor simply does nothing, it appears to me that notice cannot affect the rights of the parties either way. I think that is the true explanation of what was intended by Lord Langdale in Sandon v. Hooper, and I think that is the real view of the law on the subject. Under these circumstances I think the appeal must be allowed. As regards the costs there is an ample fund, and you can add the costs to the mortgagee's costs of this suit.^ Dexter v. Arnold, 2 Sumner, 108. (Circuit Court of the United States, 1834.) Bill in equity to redeem a mortgaged estate. Story, J., delivered the opinion of the court : — The fourth exception is on account of the Master's having made a deduction of the supposed rent, upon the ground that the premises were out of repair and partly untenantable while in possession of ' The concurring opinions of Brett and Cotton, L. JJ. are omitted. f^'-^'- ^1 i>i;\ii;i; r. ai.'noi.k. oZi till' mortgagee aiitl liis representatives. The argument seems to j)n»- eoed upon the grouiul that the mortgagee was hound to kcrp the jtromises in good repair, and therefore «niglit to he accountahh- for sueli rents as he might liavc obtained if lie had (hme his duty in regard to repairs. We know of no universal duty of a mortgagee to make all sorts of repairs upon the mortgaged premises while in his possession. Ilo is hound to make rea.sonalile ;inil neeessary repairs. But what are reasonahle and neeessary repairs must de- pend upon the jiartii'ular eireiimstanees of the ease. If a house is very old and dilapitlate(l. he is not hound to go to extraordinary expenses to i)ut it into full repair, if those expenses will he greatly disproportionate to the value of the estate, or to his own interest thenMn. Certainly it eannot he jiretended that he is l)0und to make new advances on the estate. In (iiidfrcy v. Walsou, W Atk. 5 IS, Tionl Ilardwicke said that a mortgagee in possession is not obliged lo lay out money furth(>r than to keep the estate in neeessary rej)air. In Ruxsell V. Sntilh. 1 .\n>t., K., DO, it was decided that a mort- gagee, after long possession, was not hound to leave the })remi>es in as good a condition as he found them. The fac-t, also, that there has heeii a er pi'rmanent rej)airs for the hem-fit of the estate, he may not be allowed to claim an allowance therefor. That is a point depend- ent upon other considerations. But where a mortgagee is guilty of wilful default or gross neglect as to repairs, he is properly responsi- ble for the loss and damages occasioned thereby. That was the doe- trine asserted in IIiK/hes v. WilUdiiis, 1"2 Ves. 4!)'). And there is the stronger reason for this doctrine, because it is also the default of the mortgagor himself, if he does not take care to have suitable repairs made to preserve his own property. In the present case, however, tlu' jioint does not arise, for there is no evidence in the Master's report which establishes any fact of wilful default or gm-s negligence in the mortgagee. These remarks dispose also of the fifth exception, which is founded upon the supj)osed dilapidations of the buildings, while in possession of the mortgagee. There is no j>roof whatevt-r that these were caused by his wilful ilefault or gross negligence; but thev were the silent efTccts of waste and decav from time. 524 EQUITY RELATIOXS. [CHAP. II. MOORE V. CABLE. Court of Chancery of New York, 1815. (1 Johns. Ch., 385.) Bill for the redemption of a mortgage. On the 26th of February, 1789, William Brown being seised of the premises, lot No. 54 in ►Smith & Graves's patent, conveyed the same to Joseph Eoe, who, for securing tlie purchase money, reconveyed them to Brown by mortgage dated the 27th of February, 1789, and conditioned for the payment of £40, with interest, on the 1st of May, 1790. On the 28th of October, 1794, the mortgage was assigned to the defendant for the consideration of £30 by the brother of Brown, as his attor- ney. The heirs of Koc, on the 1st of August, 1807, sold and con- veyed the premises to the plaintiff with cos^enants and warranty. It appeared that the defendant entered into actual possession of tlie premises, by his tenants, in 1800, but had, previous to that time, exercised acts of ownership. He continued in possession until 1808, when he, in conjunction with one Corbin, took a lease from the heirs of Koe. Corbin, being in as tenant of the defendant, con- sented to let in the plaintiff with him; and the defendant brought an action of ejectment and recovered judgment in 1813, and has since continued in possession and made improvements by clearing part of the land, and has received the rents and profits. The plain- tiff did not know until the trial of the ejectment in 1813, that the defendant held under a mortgage, and had in 1807 offered to pur- chase his interest. The Chancellor [Kent]. Two questions are presented in this case : 1. Is the plaintiff entitled to redeem ?i 2. The next question is, whether the defendant, standing in the place of the mortgagee, can be allowed for what the case states as improvements in clearing part of the land. Such an allowance appears to me to be unprecedented in the books, and it cannot be admitted consistently with established principles. The defendant was, in this case, a volunteer. Instead of calling upon the debtor, or foreclosing the mortgage, he elected to enter upon uncultivated lands, and to exercise acts of ownership by clearing a part. To make the allowance would ])e compelling the owner to have his lands cleared, and to pay for clearing them, whether he consented to it or not. The precedent would be liable to abuse, and would l)e increas- ing difficulties in the way of the right of redein])tion. ]\rany a ' Tlie opinion on this point is omitted, tlio ooint holding that the pos- session of defendant was not of such a charaetov nor so long continued as to operate as a bar. I !'••:<■• ^1 MooKi: /•. cAiti.i:. r)"2"» (Ichtor niJiy lie iiMc ti» i'<'(l('ciii l»y rcl'iiinliii^f tin' ilcht and intcrc.-l, Itiit miiilit not l)c iililc to rcdcciii iiiidrr ihc cliiirgc of pjiyin;^ for tli<' lu'iii'licial iini»rovciiiciits wliicli the inort^'a^^cc had been able and williiij^ to make. Tin- Kii;:lish courts have al\vay< looked with jealousy at the demands of tlie iMortpi;,'ee, beyond the payment of his debt. In Fremh v. liaroii, 'I Atk. 1"iO, the Chanecdlor would not allow the mortgagee anything more than his prineij)al and in- terest, though there was a i)rivate agreejneni bi-tween the mortgagor and mortgagee I'or an allowance for the mortgagee's trouble in re- ceiving the rents and luofit-; of I he estate. The same thing was re- peated in the ease ol' (nxlfrcij v. Walson, 3 .\tk. 517, and Lord Hardwieke there said that a mortgagee in possession was not ol)liged to lay out money any further tlnni to keep the estate in necessary repair; but if the mortgagee had expended money in supporting the title of the mortgagor when it had I) 'en impeached, he would allow it. The same doctrine was maintained in the case of lioui- llioii V. iforl-hturc. 1 ^'ern. 31(), in wliich it was declare*] that no allowance was to be made to a mortgag<'e or trustee for their care and pains in managing the estate. I shall, accordingly, direct a niay a niortpifior a<;ainst a niort;.'a;;ee in possession. }\'rll.i v. Van Ih/kc, 1(1!» Peiui. St. 330 (ISS.->». in Massachu- setts, J>y statnte (I'ub. Stat. Cli. ISl, Sc: 23). ".Ml snnis expemli'il in reasonal»!i> repairs and iniprcivenn-nts" are allo\ve (lS3.">i, wluTe this doctrine is lecoj^nized hy Stoiy, .1. Unt that the ri^ht of the inort^'a^ree to an allowance even for necessary re])airs is not ahsohite, sec Hank nf A usirala.sia v. I'nUnl Co.. 4 .\pp. ('as. 3!H. 408 (187'.)». and Hontli v. Italtimnrc Steam Packet Co.. (i3 Md. 3!) (1884). In Harthcll v. Siivrrsun. 54 Iowa. ItlO (1880), such ri^ht seems lo be denied. 526 EQUITY RELATIONS. [CIIAP. II. MICKLES V. DILLAYE. Court of Appeals of Xew York, 1858. (17 X. Y. 80.) Appeal from the Supremo Court. The action Avas for the redemp- tion of certain premises in the city of Sj'raciise, mortgaged to Philo D. Mickles. The trial was before a referee, who found that the mortgaged premises were, in 1840, eonve^yed to Philo D. Mickles by one Fitch. There was then outstanding a mortgage upon the premises, executed by Fitch to David Hall. Philo D. Mickles con- veyed to the plaintiff, with warranty, March 8th, 1841, for the price of $4000, to secure $2000 of which the plaintiff executed a mort- gage, which in this suit he souglit to redeem. This mortgage and the bond collateral thereto were, in April, 1841, assigned by Philo D. Mickles to John Townsend. Piiilo D. Mickles purchased the Fitch mortgage on September 23d, 1843, and on the 6th of No- vember, 1843, assigned it to John Townsend, without the knowl- edge or consent of the plaintiff, so far as the evidence showed. Townsend, on the 23d of September, 1846, sold the premises to Charles A. Whoaton for $1750, upon a foreclosure of the Fitch mortgage, of which no notice was served on the plaintiff. At the time of this sale, Wheaton was the owner, by assignment from Townsend, of the mortgage for $2000, executed by the plaintiff to Philo D. Mickles. Wheaton took possession of the premises, and conveyed the same, with warranty, December 19, 1846, to John A. Pobinson, who conveyed, Xovember 19th, 1852, to Henry A. Dil- laye, also with warranty. The only question in dispute in this suit was as to the allowance to be made to Dillaye for improvements after he took possession under the deed from Robinson; the effect of the purchase by Philo D. Mickles of the Fitch mortgage being the subject of litigation in another suit. P. D. Mickles was in possession of the premises at the time ho conveyed them to the plaintiff, and when he received the mortgage now sought to be redeemed. From that time until the sale under tlio attempted foreclosure he continued to rent them in his own name and to receive the rents, without disclosing the interest of the plaintiff. They were assessed to him. Whoaton, the purchaser, wont into possession immediately after the sale, the tenants of P. D. Mickles attorning and paying the rent to him. P. D. ^Mickles, who was examined as a witness, testified that when ho heard of the sale, whicli ho supposed was by virtue of the mort- gage exocut(Hl by the plaintiff, he told Whoaton ho was very glad of it. llv understood that the premises sold for enough to pay the ***■•'• ^-l Mi( Ki.i> r. 1)11.1. \^ i;. 527 iiiurt^rjior,., ;,n(l h,' coii-idfird tlu- iiialti-r settled, iind tliat Wlwatoii had ol)taiiU' Icn^'th to .seventy feet, j)re.;»Vs Jo redeem, lu' must do er to apply the cases in which permanent improvements have ■"^Kr. v.] \ll«Kl.l> r. itll.l.Wi:. .*.',".» lurii allowed \n l)c takfii into the atcoimt, it is iifco.-ary to iiavr a clear view of the situation of these jjartiert at tlio time the improvements were made. 'I'he defeiKhint Dillaye wa.s in posses- sion as owner umh-r a deed with warranty from a person in posses- sion holding a similar evidence of title from one wiio had pur- chased the premises at a sale made professedly upon the fore- closure of a mortgage executed l)y the true source of title, and who had taken possession imdrr that fon-closure. It is easy to see thai an examination, such as a very cautious man would have made, would have shown the invalidity of the foreclosure. But the omis- sion to make an examination was not such gross negligence as to charge the defendant with had faith. He cannot claim that the estate is irredeemahle hecause he supposed it to he so: but lie i.-< not deprived by his omission to examine, of tlie position of a person acting in good faith without actual notice. The referee has found, what could not he doubted upon the eviflence, that he l)i'lieveack of thi- bond and the mortgage sought to i»e re that of Dillaye in lliis case. Judgf Story has carried the ri<;hts of a party in possession, who has in <.'oi)(l faith made improvements, aitojfether heyond what would he necessary to protect the defenchmt in this case. He says generally that courts of cipiity have extended the doctrine to cases where the party making the repairs and improvements has acted bonn fxdr and innocently and there has heen a suhstantial Ijcnelit conferred <»n the owner (Treatise o\\ Va\., ^ \'i',\'i); and he has carried the l)rinciple into practice in a case decided hy him in the Circuit Oourt of the Tnited States. In Britjht y. Boijil, 1 Story, 478, lands had heen sold hy an administrator, hut the sale was void hecauso he had not given security according to the statute. The heir of the intestate had sued for and recovered the posi^ession against the ])laintiir, who derived his title under the administrator's sale. The latter filed a hill in equity in the Circuit Court of the United States to recover of the lu'ir the value of certain improvements which he had in good faith made upon the land, and which in- cluded the bnilding of a large dwelling-house. The heir was an infant, and resided in another state; but Judge Story, notwith- standing, referred the case to a master to take an account of the eidianced value of the premi.ses, dtilucting the rents and profits, with a i)retty strong intimation that the phyntiir was entitled to recover them, though he said he would look into the ca.'^e again iijion the coming in of the report. This conclusion could not j)rol)- ahly be sustained e.\cei)t upon the principle that one who fraudu- lently stands hy and sees another expending money in good faith upon his land, shall not reclaim the land without jiaying for the improvements. Chancellor Walworth, I think, laid down the true principle in Puhunn v. IHtchir, (i l*aige, IV.H). lie decided in a case very similar to that which was before dudge Story, that where there was no fraud or ac(iuiescence on the part of the person having the legal title, lie could not be compelU'd, even in favor of a party in possession who had made imj)rovements bona fide, to allow for such im])rovements ; but he said that such allowances were con- stantly made by courts of eipiity wheii' the legal title was in the j)erson wiio had made the improvements in good faith, and where the equitable title was in another, who was ol)liged to n'sort to the court for relief. This, as we have seen, is precisely the case now before tlu' court. In Wclmoii' V. Huberts, JO How. l*r. K. ."il, the question we are now considering was examined in the Supreme Court«l)y Mr. .lus- tiiv Hand, with his accustoiued industry. It was a suit for fon>clos- iire bya junior mortgagee, the defemlant having purchased the prem- ises from out' who had bid them in upon a foreclosure of the elder 533 EQUITY KELATIOXS. [CIIAI'. II. mortgage, in which proceeding the junior incumbrancer was not made a party. It was alleged that the defendant had made improve- ments in good faith, of the value of $6000, and it was decided that the premises should be sold, and that the value of the permanent improvements as well as the amount due on the elder mortgag(> should be paid out of the proceeds; after which the plaintiff was to be paid the amount due on his mortgage. I refer to the author- ities relied on by Judge Hand, and also to Talbot v. Braddill. 1 Yern. 184, and to Coote on Mortgages, pp. 392, 561. I am clearly of opinion that the refusal to allow for the erection of the building was erroneous. The judgment of the Supreme Court should be reversed, as respects the account stated by the referee, and there should be a reference in that court to take an account between the plaintiff and the defendant Dillaye, in whicli the latter should be allowed for the enhanced value of the premises on account of the improvements made by the defendants. In other respects, the order sliould direct the usual allowances between mort- gagor and mortgagee on a bill for redemption. Harris, J. The plaintiff acquired his title to the premises, such as it is, in March, 1841. The purchase price is said to have been $4000. Of this, no part was ever paid. The plaintiff executed his bond and mortgage for $2000, and, as Philo D. Mickles, the grantor, now testifies, it was agreed that the remaining $2000 should be applied upon a note which the plaintiff held against him. There was no written evidence of such an agreement, and the indorsement was, in fact, never made. At the time of the conveyance the Fitch mortgage was an outstanding incumbrance upon the premises, and yet no provision was made for its payment, nor did the plaintiff in any way protect himself against this incumbrance, except by the covenant of warranty in his deed. Indeed, it does not appear that the plaintiff ever so much as inquired whether the property was incumbered or not. For five years, and more, after the conveyance, the grantor con- tinued to possess and enjoy the premises, as he had before. He received rents in his own name; paid taxes and assessments; made improvements; and, in short, held himself out to the world as the absolute owner. There is no evidence that the plaintiff ever claimed to be the owner, or that Philo D. ]\Iicklcs ever, by word or act. recognized his ownership. At the time of the foreclosure of the Fitch mortgage, in 1846, the amount due upon the two mortgages was at least equal to the value of the premises. Certainly, it exceeded the purchase price mentioned in the plaintiff's deed. Philo D. Mickles was then in- solvent. There was no inducement, therefore, for the plaintiff or ''»:<'■ ^1 MicKi.Ks c. 1)11, 1. \vi:. 5;{:{ IMiilo 1>. Mickli's 1(1 jHvvciit ii I'orcclo^nn' l)y p.ayin;,' ftfT ilit' mort- •ragps. Upon the foreclosure, the (Icftndant Wlicaton, who had then heeoine the owner of the sceond inort;,M^'t'. hecamc the pur- * hascr, and thus, liad the f()reeh)sure heen pcrlect, Ixtth mortgages uould have heen satisfietl. Wheaton wouhl have hceoine the owner nf the premises, hut at a eost prohahly exceeding their value at that tiiiv. After the sale I'hilo 1 ). Miekles in<|uired of Wheaton whether the {jrcinises had hrought enough, and. upon heing in- lonned that they had heen sold for the amount of the mortgage, he expressed his gratification that the nuitter was settled. Wheaton, as jiurchaser, went into possession, and soon after con- veyed the premises hy deed, with warranty, to the defendant Roh- inson, who held the premises ahout four years and then sold to the defendant Dillaye. The latter, in 18");}," ^'in the full helief that he was the ahsolute owner," as the referee has found the fact to he, proceeded to make 'Marge and permanent and valuahle improve- ments upon the premises, costing sonu' $r)()00, more or less." The j>roperty heing thus douhled in value, it hecame an ohjeet for the jilaintiir to assert his right of redemption. Acconlingly, after sleep- ing upon his rights, such as they were, for nearly thirteen years, lie eonimenced this action in IS")!, claiming the right to redeem; •iTul the (pu'stifui presented is whetlu'r, assuming the right, any cimi- jiensation shall he made to Dilhiye foi- the large improvements he lias nK\de. All will agree. T think, that the phiiiitilf pi-e-ents a case which entitles him to no greater degree of favor than tlu' estahlished rules of equity applicahle to this ca.se entitle him to demand. '*! should have heen glad." says Mr. Justice Allen, in pronouncing the judg- nu^nt now under review, "to have found some principle upon which the defendants, who have, in perfect honesty, expended their money to a large amount in the permanent inijirovement of the property. l>y which its value and productiveness have heen and are greatly enhanced, could he reimhur.sed, at least to the amount of the rents and profits which they had received." We are therefore to consider whether the |)lainti(T stands uj)on any legal right which precludes the court, in granting the relief for which he ajijdies, from doing -uhstantial justice hetween the partic^s. I admit the general rule to be that, where the simple and acknowl- edged ndation of mortgagor and mortgagee in possession exists, the latter will not, upon redempticui, he allowed for general imj)rove- MUMits nuide without the acquiescence or consent of the mortgagor, '•sp(>cially if the improvements tend to cripple the power of n-- demption. Monro v. ('nliJi'. 1 John. CU. U. 38."), was such a cas<\ The assignee of n mortgage, without calling upon the morfLragor 534 EQUITY RELATIONS. [CHAP. II.. or attempting to foreclose the mortgage, chose to take possession of the mortgaged premises, which consisted of wild lands, and had a part of the land cleared. The claim of the mortgagee to be al- lowed for what he had thus expended, was rejected. In noticing this case in his Commentaries, Chancellor Kent says : "The clear- ing of uncultivated land, though an improvement, was not allowed in Moore v. Cable, on account of the increasing difficulties it would throw in the way of the debtor to redeem. But," he adds, in the same connection, "lasting improvements in building have been allowed in England, under peculiar circumstances, and they have sometimes been allowed in this country, and sometimes disallowed." (4 Kent Com. 167.) In a note at the same place it is further added that "all the cases agree that the mortgagee is to be allowed the expense of necessary repairs, and beyond that the rule is not inflex- ible, but it is subject to the discretion of the court, regulated by the justice and equity arising out of the circumstances of each par- ticular case." Accordingly, in a recent English treatise (Coote on Mort. 354) it is said to be the duty of the mortgagee in posses- sion to keep the premises in repair, and he will be allowed the charge of permanent improvements. And Hilliard, in his Treatise on the Law of Mortgages, after noticing the general rule on the subject, says : "The rule refusing the allowance of lasting improve- ments has been subjected to some exceptions in special cases, as where the mortgagee makes such improvements supposing himself to be the absolute owner." In support of this proposition he cites the language of the chancellor of Maryland in Neale v. Hagthrop, 3 Bland Ch. R. 590, where it is said : "If the mortgagee has been long in possession, claiming adversely, and suffered to treat the es- tate as his own, and the mortgagor stands by and permits lasting improvements to be made, he shall pay for them." (Hilliard on Mort. 297.) In the case before us, the premises had been held, under the statute foreclosure of 1846, for more than six years before Dillaye purchased. The possession had been continued and undisturbed. The silence of the plaintiff for this long period had encouraged the belief that those who had the property in possession were the true owners. Dillaye purchased, not as the assignee of the mortgagee, but believing that he was acquiring the property as his own. He made the improvements never doubting that he was the absolute owner. The referee has not found that the plaintiff was ignorant of the fact that the premises had been sold upon the foreclosure, or that Wheaton and his grantees were in possession under that sale. All he finds on this subject is that "during the erection of the improvements the plaintiff was absent from Onondaga, and KKf. V.) MhKi.i-s r. Mii.i.wi:. r):5.*> tluTc was no ovidonro thai he was awan- of tlio fart whilo the iiii- jjrovcnicnts were j)r()^n's-;in<,'."' 'VUr plaintilT liaviii;: so Ion;: a((|ni- csccd ill till' adverse j)oss('ssioii of tlic prciniscs, liimscif coiitriljiitcil to the mistake under wliidi the defendants acted. Had no iin- ])roveinents lu'cn made, tlieri' is no reason to helieve that lie would ever have assi-rted his right to redeem. Under sneh cireumstaiuM-s, lie should not be allowed, in a courl of f(|uity, to enrieii him.self at the expense of one who has acted innocently. Tlw inif)rovf- mcnts are a substantial benefit to the projx-rty, and, if In- would n'deeni, he ou<:ht, ex aquo et bono, to pay for them to the extent of such benefit. The plaintiff has found himself under the necessity of resort- ing to a court of equity to enforce his right. He has thus placed himself within the range of that great principle, that he who seeks equity must himself do e(iuity. The improvements were made in the full belief that the plaintiff had no right to the property. That belief has, to some extent, been induced by the apparent acqui- escence of the plaintiff in the adverse possession of the defendants. If now the plaint itf, after so great delay, will assert his right to re- deem, and invoke the aid of a court of equity to imforce that right, he should be required to make ecjuitable compensation for the bene- fits he will receive from the imj)rovements. To refuse such com- pensation, instead of doing ('([uity, would produce the most revolt- ing injustice. {'I Story's Eq. Jur., ^ 7!)!1, id.. ^ T^:?:.) CoMSTOCK and Puatt. Js., did not sit in the case; all the other judges concurring, Judgment modified and ticroiinl ordered to he re-stated.^ ' "Whoii, as in tlii^ fuse, a plaiiitilT lias pcriiiittod liis ri^'ht to satisfy a niortffa^o to ipinain doiinant for nearly thirty years, during which other'* have paid the assessments and taxes, and made improvements in the l)elief that they had title under a foreclosure of the mortgage, he cannot complain that, as a condition of re;;ainin;; possession, he is compelled to account for and pay such taxes, assessments and for such improvi'inents. according to the just anil enli^htened princi|)les of courts of equity." — Per Orover, .1., in ^^illrr v. linkmuii. ')(> N. V. 3.SS, •^A'> (iHT'i). The do<-trine of the leading case is everywhere acce|»te«l, the improve- ment heiiifj reasonalih' and "judicious." (liHi.s v. .Martin, 2 Dev. Kq. i N. (.'.) 470 (lK3;n: .MrCoiiiirl V. H„l,ihu.sh, 11 111. (il (1S4!>): .\lrS„rlr,, v. l.nr- issn, !()(» Mass. '270 (18(58); lltirprr's .Ipinitl. e,A Tenn. St. .115 ( IS70) ; Amrricau Buttonhole T'o. v. Iturlinqton Loan .\itsn., (i8 lown, 32(5 (IS8(5). Hut Hoe .\lillrr v. Currif, 124 hid. 48 (18S!»), in which it is curiously lim- ited, and eouipure Burnett v. Stlsun, 54 Iowa, 41 (1880). -536 " EQUITY RELATIONS. [CHAP. 11. McCUMBEE V. OILMAN. Supreme Court of Illinois, 1854. (15 7/Z. 381.) Calvin McCumber, the ancestor of the complainants, on the fourth day of August, 1842, purchased from Joel Walker, lot two in block seven, in Walker's addition to Belvidere, for $100, and took a bond for conveyance of the lot, on payment of the money in one and two years, with interest, payable annually, for which Me- < 'umber gave his notes. McCumber paid the first of these notes nnd a part of the other before his death. McCumber borrowed of Oilman $600 in Illinois internal improvement script, drawing inter- est; to secure the repayment of wdiich, with interest at three per •cent, per annum upon the $600, he gave his note and a mortgage on the lot in question. This note and mortgage were made after the last note given for the payment of the lot had become due. On the 16th of August, 1845, McCumber died intestate, leaving a widow ; and the complainants, his heirs, returned to probate court $125, which was set off to widow. The estate owed debts, as proved, amounting to $220, not including the notes to Walker and Oilman. The mortgage to Oilman was acknowledged and recorded in Sep- tember, 1844. After death of McC'umber, Oilman sued out scire facias to foreclose his mortgage, and took judgment in April, 1846, for $240. The premises in question were sold on this judgment for $393.07, and Oilman became the purchaser; the redemption expired, iind Oilman took a deed from the sheriff. Walker, by order of a de- cree in chancery, conveyed the lots in question to Oilman. In the spring of 1849, Oilman made improvements on the premises by re- moving a wooden building, variously estimated from $25 to $100, and erecting a new building in its phice ; by laying new floors, put- ting on blinds, &c. The decree was rendered by J. 0. Wilson, Judge, at April term, 1854, of the Boone Circuit Court. Caton, J. The case of McCumber v. Gil man, reported in 13 111. r)43, disposes of all claim which the defendant could assert under tlie judgment of foreclosure, which was there reversed, and leaves him simply in the position of a mortgagee in possession for condi- tion broken, and leaves nothing to be decided in this case except to determiue how much he shall be entitled to for repairs or improve- ments which he has put upon the premises during his possession. The rule on this subject has been as well settled by this court as its nature will admit. It is not only the right, but it is the duty of the mortgagee in possession, to put upon the premises all necessary- »*►-"'• ^ J M((iMiii:i; r. (in, man. 537 ainl i)r()j»('i- rcjiiiirs lo |)rcvciit tln-iii rroiii ^'oin;,' to waste, and c, the court could not sanction an expenditure thus injudiciously made. But the rule does not admit the mort- gaj;^ee in po.ssession to make new improvements at the e\pen.se of the estate; although circumstances may e\ien.>ii' of the mortgagor. (McCoiincI v. Ilnlnhush, 11 111. on his own absolute prop- « rty. He j)urehased it under a judgment (»f the circuit court forc- < losing liiis same mortgage, and after the time allowed for n'di'mp- tion had expired he took a sheriff's deed, and we have no reason to doubt that he su|)i)osed his title good. Under this supposition he made the improvenu'uts, and with himself as owner, it may \io very true that the im|)rovements were quite judicious and j)roper. But It by no means follows that, counselling the estate as Ix'longing to th(> heirs of MeOumber, the new improvements were judicious and pro|>er. Indeed it is very manifest that they were not, espec- ially as to the new stone house which the defendant erected on tl\" pninises. The propriety of the expenditure must be (h'termined with reference to the circumstances of the heirs of the mortgagor, for it was upon their estate that the improvement was made, and it is against them that the expense is sought to be charged. It is a very hard, if not an \injust rule, which in any ease makes one a debtor against his will ; and it is very clear that it shi>uld never be done, unless it is manifestly to his advantage, as well as just and |)roper as to the other party. Were we to consider the case of (nlman alone, there can be ik^ doubt that he should be comp(^n- -atcd to th(> exfcMit of the enhanced value of the premi.ses bv reason arties. and thus save the expense ane remandept the prop- erty insured, for that ho should be credited also. He shoukl be charfTcd with the value of the rent of the premises, exclusive of the new improvements whiih he has jiiit upon them and for which he gets no allowance in making up the account. The value of the rent is to ho estimated of the premises with the repairs for which he receives a credit. The rents to bo applied in extinguishment of the taxes paid, repairs. Sec, first, and, should any balance remain, then towards the interest due upon the mortgage, and then the ))rin- cipal ; annual rests being made in computation. Or, if the amount ])aid for taxes, repairs, &c., should exceed the value of the rents, interest may be allowed upon the excess. Xo charge to be made for the wooden shed or kitchen removed. The decree must be reversed, and the suit rtMuanded. with direc- tions to the Circuit Court to proceed conformaldy to the principles of this opinion. Decree reversed. MOIJC.W V. W.M.HIMDCK Sri'i!i:,\ii: Coi i;r oi- \'i:i;M(iNr. ISS;5. (:.»; VI. lit:..) Bill in chancery to redeem certain mortgagt^l premises in the jxtssession of the mortgagee. Heard on hill, answer and the report of a special master. March Term, 1883, Essex County. Ross, Chan- O-iO EQUITY RELATTOXS. [CIIAP. II. cellor, decreed that the orator could redeem by paying $329.81. The chancellor stated that in his judgment this case was exception to the general rule that a mortgagee in possession could not improve the mortgagor out of his estate. The master found, that the balance due from the orator on the bank notes^ money paid to Ingalls, etc., was $229.81 ; that the use of the premises while occupied by the defendant was $200; and that the value of the land was enhanced $300 by reason of the improve- ments. It was a part of the decree below that the defendant, on payment of the $329.81 by the orator, should deed back and sur- render the bank notes which had not been fully paid. The other facts are stated in the opinion. Bates & May for the orator. — The court will treat the deed as a mortgage. (WrigJit v. Bates, 13 Vt. 341 ; Hills v. Loomis, 42 Yt. 562.) The note which H. cl' W. signed as sureties is not at l)resent i^aid. {Becd v. Gannon, 5 X. Y. 348; StrH'c v. McDon- ald, 3 Harr. & G. 191.) The improvements are not of such a character as to warrant an allowance of the same. The mas- ter makes no finding as to whether any of tlie improvements were reasonably necessary and proper; if not so found the court cannot infer that they were so. {Saunders v. Frost, 5 Pick. 259; 2 Jones Mort. 1129.) The charge for clearing the land is not allowable {Moore v. Cable, 1 Jolm. Cli. 385; Morrison v. McLeod, 2 Ired. Eq. 108 ; 2 Kent Com. 334 ; Sanders v. Wilson, 34 Yt. 318;) nor the charge for building the barn. {Russell v. Blair, 2 Pick. 505 ; L'eed v. Beed, 10 Pick. 398; Bed-man v. ^Yihon, 10 Reporter, 554.) Nicliols & Dunnett, for the defendants. — Defendant concedes the general rule that a mortgagee cannot improve the mort- gagor out of his estate; but this case is a plain and well-recog- nized exception to the rule. A mortgagee in possession mak- ing improvements upon the mortgaged premises in the belief that his title is perfect is entitled to remuneration for expense so incurred to an amount equal to the enhanced value of the premises. (Howard v. Harris, 2 Lead. Cas. Eq., p. 2011 ; ^Vhitncij v. Richard- son, 31 Yt. 300; 2 Jones Mort. 1128; Green v. Biddle, 8 Wheat. 77 ; 4 Wait Act. & Def. 578 ; 2 Story Eq., s. 1237, n. 1 ; 2 Wash R. P., p. 22^ ; French v. Burns, 35 Conn. 359.) The opinion of the court was delivered by Powers, J. This is a bill to redeem certain mortgaged premises now in the possession of the defendant Walbridge as mortgagee, and encumbered by a mortgage executed by Walbridge to defendant Chase. The right of redemption as against Walbridge is conceded ; and the master reports that Chase took his mortgage with notice of the orator's equity, and thus the right of redemption exists in •*t for their creditors; — Ingalls, however, taking such conveyance with notict* of the orator's equity. In the spring of 1878, the orator was noti- fied that Ingalls was about to sell said premises, and that the ora- tor could have them for $100. The orator declining to purchase, Walbridge, his co-surety Hill having died, procured one Tilt<»n to take a conveyance and pay $100, Walbridge furnishing the money. This conveyance was on .\i»ril 23, 1878. This money was paid out for the orator's benefit on his notes upon whi. The orator knew of the improvements a< they were from time (o time going on, and made no objection thereto, and asserted 542 EQUITY RliLATIONS. [C'lIAP. II. no right or wish to redeem until the summer of 1881, when, through 0. F. Harvey, he communicated to Walbridge his desire to redeem. In March, i882, the orator offered to pay Walbridge $125, and called on him for a deed. At this time, and when Harvey inter- viewed Walbridge in 1881, the improvements had been substantially all made, costing Walbridge about $375, and enhancing the value of the premises, as the master reports, $300. Are these improvements chargeable to the orator on redemption ? The general rule is conceded, that a mortgagee in possession with- out foreclosure cannot improve the mortgagor out of his estate. The mortgagee is not in possession as owner, but as a quasi trustee, to keep the premises in proper repair, carry them on according to the rules of good husbandry, and apply the rents and profits to the extinguishment of his mortgage debt. As a general proposition, lasting improvements cannot be made at the expense of the mort- gagor, if he elects to redeem. But it is a rule of general applica- tion in courts of equity that he who seels equity must do equity. It is obvious that the orator had no interest to redeem the premises before the improvements were made ; and, upon foreclosure brought, he would, doubtless, have declined to redeem. He had declined to take the title at the actual value of the land. It was only after the improvements had made the land of productive value that he discovered a wish to redeem. He was not improved out of an estate, but was improved into one. He stood by in silence, and saw the improvements going on, and now, when the land has been made of practical value, seeks to reap the benefit of such improvements by paying its original value with interest. This proposition is too unrighteous to meet the approval of a court of equity. The case is not that of a farm already in a condition to be carried on, like Sanders v. Wilson, 34 Yt. 318; nor that of wild land, like Moore v. Cable, 1 Johns. Ch. 385 ; but it is the case of land partially sub- dued, requiring further expenditure to bring it to productive value. The rule forbidding an allowance for permanent improvements is not an infiexible one, but is suspended in exceptional cases, if justice and the equity of the case require it. (4 Kent Com. 167 and note.) Such allowance has been made where the mortgagee has acted in good faith and under the mistaken notion that the right of redemi)tion has been barred {Benedict v. Oilman. 4 Paige, 58) ; and where the mortgagor has been slow to act and has thus led to a false impression by his silence {Michles v. Dillaye, 17 N. Y. 80) ; and where the mortgagee makes the improvements supposing ho is the absolute owner (Hill, Mort. 297) : and where the mortgagei; lias been long in possession and suffered to treat the estate as his '^'••''- ^J iir<;iii:s /. w i i.i.i.v.MS. i')\:\ own. aiul the niort^'Ji^'or stiuuls liy aiul in silence jxTinils tin- iin- j»n»venients ((» he made {Xcal r. Ilntjlhroit. .'5 HIand Cli. o90). When the nii>rt<:a^'ee has heen luUed into the helief that th(3 ri^jht of redemption has heen harred or al>andoned, and the niort- j;a;Z<»r. knowing', or having; reason to helieve, that tlie mortgagee supiMtses that he is the al)solute owner, stands hv and sees the mort- gagee make histing im|)n)vements u|)on the hind, in kind and eliar- iicter sueh as the land in its condition and wants clearly re(|uircs, and which are ohvionsly sanctioned Ijy the usages of good liushandry and faithful stewardship, then the right to redeem will he hurdened with the expense of such improveyieiits. This rule is wi-ll fortified hy authority, and is securely grounded in reason and justice; and this case is one proper for its application. Decree nffirmrd} (h) Rrnfs and Profit.'^ — Aninuil Hcsls. ANONYMOUS. IIiGii Court of Chancery, 1682. (1 Vern. {:>.) .\ mortgagee shall not account according to the value of the land, viz. He shall not he hound hy any j)r()of that the land was worth Ko much, unless you can likewise prove that he did actually make so much of it, or might have done so had it not heen for his wilful default: as if he turned out a sufhcient tenant, that held it at so much rent, or refused to accept a sutVicient tenant that would have 1,'ivcii so m\ich for it. HITOHES V. WILLIAMS. IIkiii CofKT ok ('han(|;i!V. ISOCi. (!'.' Vrs. lit:?.) i']\ce|)tions were taken hy the o with the knowlodjro of iiKut^ujidr nnd williout olijpction from hiin; M>intqi>i,i,iM V. Chmluirh. 7 Iowa 114 ( 1 S.'tS ) . 54 i EQUITY RELATIONS. [CllAr. II. gagee in possession personally, and by a receiver under his appoint- ment, with the rents actually received : whereas he ought to have been charged, according to the circumstances in evidence, with the improved rents, at which the estates had been since let by the re- ceiver appointed by the Court, and which ought to have been obtained Isy the plaintiff, or his receiver, but for their wilful neg- lect or default. Another exception was, that the Master had allowed the plaintiff the sum of 681. for the expense of opening a slate quarry: the defendant contending that it was an illegal and im- proper act ; and the only benefit accruing to the estate thereby being the sum of 21. charged to the plaintiff's account, as the produce of the slates. The defendant was out of possession long before the plaintiff entered, prior mortgages having been in possession, whom he paid, to prevent foreclosure. The Lokd Chancellor [Lord Erskine]. I do not mean to sa\ that to charge a mortgagee in possession actual fraud is necessary. It is sutfieient if there is plain, obvious and gross negligence, by not making use of facts within his knowledge, so as to give the mort- gagor the full benefit that the mortgagee in possession of the estate of the mortgagor ought to give him. If, for instance, the mortgagee turns out a sufficient tenant, and, having notice that the estate was under-let, takes a new tenant, another person offering more; an offer, however, not to be accepted rashly. But this case does not furnish even that ground ; for with the exception of a proposition to give 71. a year for one tenement, instead of 51. a year, the rent then paid, there is no proof of any proposal for an increase. A reason also is assigned for not accepting the proposal in that instance; that the tenant was in arrear, and the plaintiff was apprehensive of losing that arrear; and there is more difficulty where the estate consists of a number of distinct tenements. Another circumstance that weighs with me is that the mort- gagor, if he knows the estate is under-let, ought to give notice to the mortgagee, and to afford his advice and aid for the purpose of making the estate as productive as possible. If he communi- cated to the mortgagee plans of improvement in his contemplation, which were disappointed by the embarrassment of his affairs, the Court might take a stricter view of the mortgagee's conduct. In this instance not only such notice was not given, but during this whole period of 16 years, while the mortgagor was out of possession, he never stated that the estate was not managed as it might be.' Can the mortgagor lie by, not giving notice that a greater rent may be made, and come afterwards, by way of penal inquir}'', to charge the mortgagee with the effect of his own negligence? I agree to > Cktmpare Moshier v. Norton, 100 111. 03, 72 (1881). HKC. v.] I'HLCIl /•. FKLCII. ')l"> the priiuii)K' that has been stated hy the Solicitor-deiieral, that it would ho (hmgerous to say the mortgagee is not answi-rahlc except for fraud, ami would cout ra answer to the cross bill. It was accordingly refern'd to one of the masters of the court to state the sum due in equity. The only questions raisi-d upon the master's report were in regard to the liability of the plain- tifT for rents and profits while he had been in possession of the premises during the last year. In regard to this the master v\-- o4() EQUITY RELATIONS. [CIIAP. II. jjorted the following facts: The plaintiff, hefore he took possession of the premises, which consisted of a farm and small tenement, brought ejectment against the mortgagor, and recovered judgment for the seisin and possession of the premises, which the mortgagor having abandoned, the plaintiff took possession, and personally occupied the land and cultivated it in such manner as he best could, living at some distance from it, and having no opportunity to rent the house. The master reported that in consequence of the plain- tiff's living at some distance from the premises and conducting his agricultural operations at some disadvantage on that account, and not occupying the house, he did not derive as much benefit from the use as what would be considered a reasonable rent for the prem- ises for one who resided thereon, and referred it to the court to determine for which of two sums so fixed the plaintiff was liable in equity. After argument by Paddock for the plaintiff and Underwood for the defendants The Chancellor, Redfield, delivered the following opinion: The importance of this question, rather than the amount here in- volved, and the consideration that bills of foreclosure are not ordi- narily appealable from this to the Suprem. Court, has induced me to examine this case with more care than I should otherwise have done. T think it obvious that the mortgagee, under the circum- stances of this case, cannot be made liable for anything more than the actual profits. And this, I think, may l)e shown by the oath of the plaintiff in support of his account of disbursements and re- ceipts. For in regard to the rents and profits of the mortgaged premises, while he occupied them he is strictly a defendant, and the accounting party. The regular course in such case would be for -the defendants to file a cross bill, calling upon the plaintiff to state the amount of rents and profits, which strictly he should do in his answer to such cross bill ; but the same result was here attained by the rule under which the bill was taken as confessed. But the defendants objected not only to the mode of trial before tlu" master, but also that the plaintiff should, while personally occu- ])ying the premises, be made liable for a reasonable rent, without reference to his actual receipts. This latter objection deserves a more extended consideration, perhaps, in consequence of its general importance. 1. Upon principle it is difficult to perceive why the mortgagee, who takes possession of the premises while vacant, and long after his debt becomes due, should be held to any stricter accounta- bility than other trustees. It is the fault of the mortgagor, in the first instance, that the debt is not paid, and that in consequence ^K*'. v.] Fi:r.rn r. rr.i.i ir. .'> i: till' luurtpi^ec is CDiiipclli'il to take possrssioii. 2. It is contrary to the contract of the parties, and to the ordinary expectation in such . ases, that the niortjra^ee shouM be eflled to resort to the hind ■or the jjaynient eithfr of his d from the trust estate, or which might have been received hut for the neglect of such common diligence. In looking into the hooks I think no doubt can be entertained that such has been the general rub' in regard to mortgagees in pos- -ission ever since the time of the case in 1 Vernon, 45 ( KiS'i), which .!s it is very brief, and seems to form the basis of the suljsequent lecisions upon the subject, may be here excused. ''A mortgage:' -!iall not account according to the value of the land, viz.: He sliall not be bound by any ])roof that the land was worth so much, unli's-; you can likewise prove that he did actually make so much of it, or might have done so had it not been for his wilful default ; as if he turned out a sulVicient tenant, that held it at so much rent, or re- fused to accept a sullicient tenant, that would have given so much for it." There is in the j)resent ca.>^e no pretence that the plaint itT iiinied out or rejected a tenant, or that one could have been found, or that, under the circumstanct's under which he came on the premises, he co\dd have realized more than lu* did. lie must, then. I coni'lude, according to the case from Vernon, 1k» liable only f<»r what profits he actun hj did receive. This case is followed almost in terms by Ch. J. Swift, 2 Dig. 193, 2 Powell on Mort. 272; by <'hancellor Kent, 1 f'omm. lOfi, and in Ifiitjlies v. Williams. 12 Vesey, l!);?, and in Mr. Perkins's note to this last case, where all the modern authorities are collected and digested. That this is the general rule of the liability of trustees cannot be denied. The v\- leption.s to this rule, where trustees have been nuide liable for rents md profits which they tiiiijlit have received but for their own wilful .iefault, will not afTcct the present ca.se. {I.oftiis v. Sirift. 2 Scholes A Ix'f. (;.")(■>; Piikr nf linrkiiKjhnw v. Oayer, I Vernon, 2"»S; Chnp- iixin v. Titniier, Id. 2'»T ; CoppritKj v. Cooke. Id. 270; Williani^ v. I'ii,;\ 1 Simons & Stuart, ."iSl.) The cases which have i)een cited to show that a niortgag«'e wh<» 548 EQUITY RELATIOXS. [CIIAP. it. personaUij occupies tlie premises, is liable for a reasonable rent are not like the present. Where the premises consist of a tenement and out buildings which are occupied by the mortgagee, or where the mortgagee refuses a tenant who will pay a reasonable rent, no other rule could be adopted but to make Mm accountable for a reasonable rent; so also he should be accountable for a reasonable rent when he manages the premises unskilfully by reason of which they become unprofitable to him. (Van Burcn v. Olmstead, 5 Paige, 9; Bain- hridge v. Owen, 2 J. J. Marshall, 4G5). And in some cases, when the premises had suffered deterioration while in the possession of the mortgagee by his default, such damage has been ordered to be do- ducted from the mortgage debt. {Kennedy v. Baylor, 1 Washington, 163). But none of these exceptions affect the present case. The orator is entitled to a decree for the amount of his mortgage debt, deducting the amount of profits actually received by him.^ SHAEFFER v. CHAMBEES. Court of Chancery of New Jersey, 1847. (2 Halst. 548.) The Chancellor [Halsted]. On reading the testimony, I do not see any good reason why the report of the Master should not be confirmed. A mortgagee, by taking possession, assumes the duty of treating the property as a provident owner would treat it, and of using the same diligence to make it productive that a provident owner would use. If it be a farm, he is not at liberty to let it lio unfilled because the house on it, or the house and farm together, were not rented. I see no reason why the farm should not be hus- banded, though the buildings on it were not rented. Again, a mort- gagee in possession is not at liberty to permit the property to go to waste, but is bound to keep it in good ordinary repair ; and if it be a farm he is lx)und to good ordinary husbandry. It appears by the testimony that, for several years of the time during which the defendant has been in possession, the property was not rented, and the whole of it, farm and all, was permitted to lie uncultivated. The Master reports that it was not made ^ The authorities generally are accord: Robertson v. Campbell, 2 Call (Va.) 421 (1800) ; Hof/an v. Intone. 1 Ala. 49G (1840) ; Gerrish v. Blacl', 104 Mass. 400 (1870) : Moshier v. Norton, 83 111. 519 (1876) ; Moshier v. Norton, 100 111. 03 (1881). '■''•^■1 sii.\i:ii-i:u r. .ilisl'}iftoriIy to appear to him tliat tlic property was thus unoecu- jiietl without tlie default of the defendant. The ground liere taken Ity the Master raises this (juestion: a farm of .So acres, 2.5 of it in wood hind, under mortgage, is taken possession of by the Mortgagee and rented. Tie remain-^ thus in possession a number 1' years. Oeeasionally (hiring this period thi' premises are vacant lud tlie farm untiUed. Is it sulTicient for the mortgagee, thus in jios.^ession, in order to relieve himself from any eharge for rents and prolits for the years during whieh the premises were thus vacant, - nij)ly to say that lie could not rent them; or should he be held to iiuw ])ropcr diligence to procure a tenant? Is the mortgagor to prove that he might have rented it but for his wilful default, as that he turned out a sutficient tenant, or refu.sed t(» receive a suffi- ient tenant, as would seem to be held in 1 Vern. 45; or does the fact of tile premises being left vacant throw upon the mortgagee the burden of proving reasonable diligence to procure a tenant, as >.ems to be held in Metcalf v. Campion. 1 Moll. 238. It seems to me that i: will not do for the mortgagee, liaving thus taken possession, to fold his arms and use no means to procure a tenant; and I am disposed to think he ought to be held to show reasonable diligence to procure a tenant. But, at all events, if the arm and building.s are not rented he ought to cause the farm to be ;illed, and that in a husbandlike manner. From tlie testimony I think the defendant has been negligent, r«» say the least, in the manner in which he has treated the premises. Vo provident owner would have treated them as he has. They lave been permitted to go greatly out of repair, and the lands have been so badly husbanded that for several of the last years the whole premise.^, rented at first by tlie mortgagee for $11)0, have rented 'or only $(10, and he has bi'cn charged hut that sum. The de- fendant, during sevi-ral years, cut wood and timber from the prem- ises and sold it. The Master, in stating the account, made annual n'sts when he found that the wood and timber and the rents and profits e.xceeded the interest and e.xpi'n.ses, and applied tlie ine«ime, tirst, to the interest and expense account, and then to the reduction "f the jirincipal. This was objected to on the part of the di'fendant. It seems to me the Master was right. I am satisfied with the general result reached by the Master. I'Jxcepttons diKnlloirril. • ' T'nn liurrti v. Olni.ttcai!. .'i Piuro ( N. V.) 9 (1834), accord. C'ompnro Dexter v. Arunlit, 2 Siimn. lOS. \'2» (1H34): MHUr v. Lincoln, fl (Jrtiy Mass.) fi'M (1S.")(>); Richardson v. U'th of Fi'hruary, iS-So, the rent due at Michaelmas. 1834, but in what character did not distinctly appear. At thi-; period, and for some time afterwards, there was no legal pcr.-sonal representative of Parkinson. In February, 184'), the appellant took out U'tters of administration to her father, and in 1848 she fded her bill, alleging (but without specifying items) that the ac- counts rendered were erroneous, that the respondents had not ren- dered accounts of the goodwill and profits of the business of the Koyal Oak, and ]>raying that the respondents (whom she treated as mortgagees in possession) should render in that character accounts of what they had received, or what, but for their wilful default, they might have received. In 1852 she filed a similar bill, and in 1854, on her own aj)])lication, the bill of 1848, which the responil- ents had duly answered, was dismissed. The bill filed in 185'i (amended in August, 1858, and re-amended in December, 1858) prayed for an account of what was due to the respondents on their security of January, 1828. or otherwise charged npon the mort- gaged j)remises in the bill mentioned, that they might be decreed to account for the profits of the Koyal Oak, and of the goodwill of the business thereof, received by them or their agents, or whiih, without their wilful neglect or default, might have been received by them from June, 1828, up to the filing of the bill; and that they might account for the rents and profits of the houses in l{adni>r Street and Waterloo Street up to the time when the same were taken posse.>;sion of by Chambers, or to such farther time as the Court might deem fit ; also of the timber yard and tenements ad- joining, and of the houses in (Jalway Street and the ground in Cop- pice Row. And that it might be declared that, notwithstanding the conveyance and assignment of the Royal Oak by Cliambers to the respondents, they were trustees or mortgagees thereof — and that the appellant was entitled to redeem the same, and all the oth.T premises then in the possession of the respondents — ami for the usual orders thereon, and for farther relief. The respondents put in their answers, aflirming the cornvtness of the accounts delivered, alleging that they had collected the rent>; in the character of agents, and denying that they ever had n'ceived. or been entitled to receive, anything for the goodwill and |)rofits of the business. The cause came to issue, evidencv was taken, and it was heard before Vice-Chancellor Kinderslev, who on the 7th of 552 EQUITY RELATIONS, [CHAP. II. June, 1860, made his decree, by which the bill was ordered to be dismissed with costs, as to the relief sought to be obtained thereby in respect of all property in the pleadings mentioned, except the Eoyal Oak, as to which it was ordered that an account should be taken of what was due in respect of the security of January', 1828, or otherwise charged upon the mortgaged premises, and for the costs of the suit; and that an account be taken of rents and profits received by the respondents from the 1st of June, 1828, to the pres- ent time; and that, upon the appellant paying to the respondents the principal, interest, and costs, after such deductions, and giving credit to them for £1300 and interest from the 9th of October, 1834, they should re-convey, &c. But in default of her making such pay- ment the bill was to be dismissed with costs. On appeal to the Lords Justices, they on the 15th of January, 1865, affirmed this decree with costs. This appeal was then brought. It is against this decree that the present appeal has been brought, and the reasons given for the appeal are: First. "Because by the amended bill of complaint the appellant set out specific charges as being erroneous, and is, therefore, entitled to open such account, even if it was ever closed or settled, and thus obtain an account of the rents received for and in respect of the premises in the first portion of the decree mentioned;" and. Second. "Because the re- spondents are mortgagees in possession of the said Royal Oak public house, and liable to account as such, and not, as in the decree men- tioned, to the appellant as administratrix of the said John Par- rel 1 Parkinson, deceased, for the rents and profits of the same, and are, whether in possession as mortgagees, trustees, or agents, liable to account for the profits and proceeds of the business of the said public house." I will take the second reason of the appeal first. It is very clear that in the peculiar case of a mortgagee who chooses to assert his rights by taking possession of the mortgaged estate, and who is not bound to render any account to the mortgagor if the mort- gagor sues for a redemption of the property, the mortgagee who lias so taken possession is bound to account, not only for the rents and profits which he has received, but also for everything which he might have received but for his own wilful default. That, I be- lieve, is the only instance in which a person in possession of an estate who is called upon to account is made answerable for that which he might have received but for his wilful default. There- fore it was necessary, in order to lay the foundation for this appeal, to shew that the defendants were actually in possession, and in receipt of the rents and profits as mortgagees. Now it appears ■^K«'- ^J I'AIIKIN.SON r. 11ANHLUY. 553 lo me that the ajUK-llant lias ontircly failfd in establishing this Tndcr the incmorimdiiin of the 10th of May, 1828, the defend- . lilts were in receipt of the rents and jirolits, as the agents of Parkin- son, and they continued in possession in that character down to the 7th of .lun.', \HM. On the Hth of October, 1834, they came into possession uiulcr a ditrereiit character, as vend<*C8, upon the sale by the executors of Chambers. They received the n-nts down to the 7th of June, 1834; but, in addition to this, it appears by the accounts that they received the Midsummer rent for 1834, and tlie Michaelmas rent for 1834, being the rents for a {K>riod between tlieir delivering up possession, which they held as the agents of Parkinson, and the time of their becoming vendees under the purchase from Chambers' executors, on the 9th of Octo- Iter, 1834. Xow, that sale having btvn held to be invalid, it is con- tended on the part of the aj^K'Hant that these rents, having been received without any right under the memorandum of agency, or any right under the purchase from Chambers, that therefore the only title which the defendants can pretend to for the receipt of these rents must be in their character of mortgagees. But, in the first place, these rents were received, not during the interval between June, 1834, and October, 1834, but the Midsummer rent was received on the 29th of NovemlxT, 1834; that is after the pur- chase from Chambers' executors, and the Michaelmas rent was re- ecMved on tlu' 10th of February, 1835. How is it possible to say that, under these circumstances, the defendants ought to be charged in respect of the receipt of these rents as mortgagees, and that in that character the appellant is entitled to have a decree against them for an account ? It may be, my Lords, that they were not entitled to receive those rents at all : that is putting it in the most unfavourable way for the defendants. It may be that they were entitled, under the fontract of sale with Chambers' exwutors, to those ivnts, although the purchase deed was not executed until after those rents became due. It may be that they considered that they were entitled to those rents under the purchase deed as back rents. But it is per- fectly clear that they never assumed to receive those rents as mort- ^,^lg(M»s, and, therefore, if it is only where a mortgagee asserts his strong right by entering into possession and receiving the rents and profits, that, when he is called on to account, he has to account not only for what he has received, but also for that which he might have rec«>ived but for his own wilful ilefault ; that |)rinciple cannot ' ertainly apply to this cii.>i«'. My Lords, it apears to me to be impossible to jnit the case in 554. EQUITY RELATIONS. [fllAP. ii. the way in which it was ingeniously put by Mr. Darby, that the- sale by Chambers' executors having been decreed to be invalid, there was no other title on which the defendants could possibly be in possession except that of being mortgagees, and that, therefore^ retrospectively, it must be considered that their possession must be applied to that title as mortgagees, and to no other. I apprehend that it is perfectly clear that that cannot be maintained. . . . Lord Cranworth. My Lords, I think, with my noble and learned friend, that the appellant has completely failed in estab- lishing either of the propositions for which she contends. She says that the Yice-Chancellor first of all, and subsequently the Lords Justices, were wrong in dismissing the bill, so far as it ^generally sought a decree to account against the respondents as persons who have received money as agents for her, or for her late father, whom she represents; and, secondly, upon the ground that they ought to have been charged as mortgagees for wilful default, whereas they were not so charged. Then comes the other point, whether or not the accounts which were directed in respect of the occupation of the Royal Oak public house ought to have been directed, charging the defendants both with the receipts and with that which, without wilful default, they might have received. It is meant to charge the respondents with being in receipt as mortgagees upon two grounds. That which was insisted upon mainly was this : that their title, which they acquired under Chambers on the 9th of October, 1834,. although supposed by them to give them a title as purchasers,, really was a title which only put them in the j^lace of Chambers,. and Chambers was merely a mortgagee. I think that it is perfectly clear law that when a person l)e- comes possessed of a property, though erroneously supposing that he is a purchaser, if it afterwards turns out that he is not to be treated as a purchaser, but only as a person who has a sort of lien upon the property, that does not make him a mortgagee in pos- session within the meaning of that rule which charges him with wilful default. What was the origin of that rule I do not know, and it is not very clear, or very distinctly laid down in the cases;, but it seems to me to depend upon this, that the party taking possession must have known that he was in possession as mort- gagee. That seems to me to be essential to the rule. Whether it would be correct to say that, under those circumstances, a person who entered into possession not as mortgagee may not afterwards become mortgagee in possession with all the liabilities of a mort- gagee in possession, is a proposition which ne(>d not be laid down now. It is possible that, by distinct circumstances, it may b(*- ^f:«'. ^J I'\i;kins(i\ r. iiwiiii.'V. ."».">.'» >lu'\vn llial lliric \Vii> an iiitciition to alter the cliaiMctcr from tin' one to the otlicr. Hut iiotliiiij,' of the sort npiicars licic, and it is |tiTf(-otly floar that altliou<,fli tlicse respondents were pfoperly treated as parties who liad not a valid tith' as pnrehasers, heeau-e thi're was nohody who eoiild ;five a eonsi-nl to the sale on hehalf of the representatives of I'arkinson. yet they treated thein-elve> a> |turehasers having a valid title and sn|)|)ose(l that they were in jtosst'ssion as |)urehasers, and were therefore liahle to aeeoimi only in the ordinary way for the rents. Then a jmint was raised to shew that they were niort^M^ices u\)(>\\ this ground: It seems that they gave up possession as agents on the Ttli of June, 183-4, and they did not aequire th(Mr title as pur- chasers till the 0th of Octohcr, IH'M. After they had ac(|uired their possession as purchasers, or suj)j)os(>d jiurehasers, on "the I'tli of October, IS'M, they received two portions of rent, namely, that which accrued at Midsummer, 1834, and that which aeeruid ai Michaelmas, 183-1. Now, it is said that, as purchasers in October. 1S34, they could not have been entitled to those rents, becauM- they would only have been entitled to the rent which accrued after they became purchasers. How came they to receive tho.-;e rents? It is said that, because they wi-re mortgagees under the mortgage of January. 18'^S. it must be presumed that they received those rents under their title of mortgagees, and not umler the ])ur- chase from tlu' executors of Chambers. It appears to me that that would be ])usliing the doctrine to a most extravagant length. Mortgagees in actual possession they certainly were not, for they only received rents (which is the same thing, however, in ])oint of law), but they did not receive them during the time they were agents, or during the interval between iheir ceasing to 1k> agents and becoming purchasers; but thev received them afterwards, aiul I take it that they had then n > right to ri'ceive them as mortgagees. It is ci-rtainly too much t > force upon persons the character of mortgagees in possession, when they never were in actual possession as such, and never received any rents, except when they had by sul).se(|uent arrangement become entitled, as th(>y believed, as purchasers, to the actual possession, or to the actual receij)t of rents and profits thence accruing. It secm.s to me. therefore, my Lords, that tlu* case entirely fails. It is only very much to be de])lored that this lady should have involved herself in this course of protracted and useless litigation. I apre«\ therefore, with my noble and learned friend in thinkini: that we ought to follow the \'ice-('hancellor aiul the Lords Justices by dismissing the appeal, with costs. Loud Wkstiuuy. My I>ords. I have felt scunc anxietv in this 05G EQUITY RELATIONS. [CHAP. ii. case, by reason of the form of the decree to account for the rents and jDrofits, and certain!}^ that is a point which deserves some attention on the part of the House. I take the law to be this. It is undoubt- edly settled in the courts of equity that if a mortgagee, in that char- acter, enters into receipt of the rents and profits, he will he bound to account not only for what he has received, but for what, without wilful default, he might have received. It is difficult, perhaps, to ascertain the origin of the rule, but I take it to be this — that when a mortgagee, by virtue of his mortgage, claims to receive the rents and profits, he is regarded in a court of equity as the bailiff of the mortgagor. Now an account against a bailiff was, both at common law and in equity, given with wilful default. That is almost the only case, save in cases of fraud or breach of trust, where wilful default is infused into the form of the account. And if the mortgagee is regarded as in the nature of a bailiff to the mortgagor, then it would be proper to give the decree against him, as it is always done against a bailiff with wilful default. But if that ground is referred to as the foundation of the practice, it must of necessity follow that the party receiving receives in the character to which that relation of bailiff and principal may be properly imputed; and consequently it would follow that if the mortgagee takes in another character, more especially if he re- ceives in a character adverse to the right of the mortgagor, then it would* be impossible to ascribe to him, by any inference of law, the conclusion that he intended to take possession, or to receive the rents, as the bailiff of the mortgagor, or that that relation could properly be imputed to him. Supposing that to be the origin of the rule, it will, therefore, not be applicable to any case where the con- clusion of the defendant being in receipt of rent as mortgagee is a conclusion consequential only on your having reduced and set aside some other pretended or alleged title, in respect or by virtue of which he had actually received the rents and profits. The case here is clearly this : The present respondents claimed the Eoyal Oak, not in the character of mortgagees, but in the char- acter of purchasers of the property from Thomas Chambers, by virtue of his power of sale. In that capacity they entered and en- joyed, and you have to remove that title by decree before you can fasten on them anything like that state of circumstances which would bring them within the character of mortgagees in possession. But then it was said on the part of the appellant, with much ingenuity, that it appeared that they had actually received some rent which accrued due at a time anterior to the date of the contract of purchase, and that it was impossible to ascribe that receipt to any fl f^E<^- V] I'AliKINSOS l\ llAMMltY. Oo^ other title than a titU' which they had as si-coiitl mortgagees. Buf I do not think that that is a just or hv any means a necessary ( onsiMjucnfr. The fact a|)p(Mrs to l)e, that anteriy means of an authority piven to the respoiuh'uts. Sup]>osing that that authority luid terminated in the month of .lune, ls;?4, anterior to tho date of the purchase deed, yet it hy no mi-ans follows that Chanilxjrs had then given up his right or claim to the receipt of the rents. It is impossible, therefore, to ascribe, with any accuracy in point of fact, the receipt of the two sums which actually came into the hands of the respondents in the months of November, 1H;}4, and January, 1835, both of them after the date of the purchase deed, to the title which they might have asserted as second mortgagees, supposing Chambers had aljandoned the receipt. I collect, therefore, from the facts that the inference rather would be that these two sums of money, if they were not received by the respondents by virtue of their purchase contract, were received by them still on behalf of Chambers, and not on behalf of themselves, in the character of second mortgagees. There is no room, therefore, for the argument, ingenious as it was, and which might have had some cffi^ct, that anterior to their purcha.se they were dc facto in receipt of the rents in the character of mortgagees, by virtue of their second mortgage. Then we come to the question whether the case is atTccted by the decision in the case which has been very properly cited by the appel- lant herself this morning, namely, Xrcsoni v. Clurksnn, 2 Hare. KI3. That is a case which is very material, and which needs some explanation, in order to shew that it has not a governing efTeet upon the ca.se before your Lordships. The case arose under the>c peculiar circumstances. A man had contracted to purcha.se a fee simj)le. lie dicMl before he had paid the money. lie niaile his widow his universal legatee and devisee. 'JMie e(|uilable estatt'. therefore, which he acquireil by virtue of that contract, pas-cil. under his will, to his widow. His widow married again; and her second husi)and, supposing himself to bi- entitled, jiaid the pur- chase-money under that contract. He then mortgaged the estate, the estate being one to which he was entitled oidy jiirr tixoris. save in respect of tlie lien he had nu it l)y having jiaid the purchase- money. He mortgaged it, and then convey«'d it absolut»'ly to a purcha.ser, in whose purchase deed, however, tiiere were n'citals 558 EQUITY RELATIOXS. [CIIAP. II. Stating clearly and distinctl}' in what character the vendor, that is to say, the second husband, had acquired an interest in the estate. The widow died, and the second husband died; and on the death of the widow, there being no child of her marriage with her second husband, the estate, of course, descended to her heir-at-law. The heir-at-law filed a bill for the redemption of the property, and it was held by the Viee-Chancellor (unquestionably a strong decision) that the recitals in the purchase deed gave distinct notice to the purchaser from the second husband, that all his interest in the estate ceased upon the death of the wife, and that all that he could become entitled to was a claim in respect of the money which his vendor had paid on the original purchase. The purchaser from the second husband claimed to continue in possession. It was held that he had no title to the possession, save in respect of his lien for the purchase-money; and then, certainly by a very strong stretch of the authority of the Court, and of the principle, it was held, th'^^ as his purchase deed gave him a most distinct notice of the c termination of the title of his vendor, and that he himself had n. other claim than in respect of that sum of money which had b'' paid, his subsequent receipts must be referred to the only in' he had ; and accordingly he was charged with an account dir - ^ with wilful default. That approaches very nearly to the present case in favour o the appellant, but certainly stops somewhat short of it, and is ^ guishable from it (though, if not distinguishable, I confess I not have been disposed to recommend your Lordships ent follow that authority), because in the case then before t^ Chancellor there was nothing to set aside; and it was ^ u .lu. the conveyance, upon the very face of it, was pregnant w infor- mation to the party that he had no title whatever, save respect of his lien for the purchase-money. In the present case "^^ was a question to be determined at the hearing. The qu -aon was this, whether the power of sale given to Chambers, y^ lich in its terms required notice to be given to the personal repre itatives of Parkinson, could nevertheless be operative, there he, g no such personal representative. It was held that it could not. and that the power did not arise, and that the conveyance therefor must be set aside. Although that was very right, yet I think would have been very wrong if the old rule of the Court, foun-""^ on the prin- ciple of a mortgagee receiving rents, becoming in c respect the bailiff of the mortgagor, had been applied to case where the parties clearly had taken the property, under a isonable conclu- sion that the purchase deed, by virtue of which y had acquired possession, was a valid transaction, and gave thei bona fide title. ^'••<"- ^1 MDltiMs r. ItlDI.ovi;. a*)I» I iiiii llicn-rorc, my Lord-, of oitiiiion in llmt respect with your lionlsliips, lliat the decree was ri<;htly framed in the form in which we find it, and that the present a|ipellant had no tith' to have tlu; account directed with wilful default. . . . Decree and order iijijiealed from (iffirmed, uiul appeal dismissed iril/t costs. MoHius V. BrDLOXG, 78 X. Y. 54.3, 555 (Court of Appeals, 1879). This action was ori{,'inally l)rou0.87. To raise the money for tiie.se purpOj, s Budlong was obliged to go to Wisconsin to get in sonu^ inve*' .nts which he had there, thus incurring expenses, and an absence from home of three or four weeks. That he should do so was vf'reed Uj)on at the time the above arrangement was made. Immedi dy after the mortgage sale Budlong entered into pos- session ( the farm, cultivated it, and received the j)ro(its thereof, except suicli portion as was received by the Morris family, until about y,ar 'l^ 31, lH(!(i. During the first three years that family occuj)ied t' whole of the farm house, and during the remaindtT it was occjipied by them and the family laintiff, that defendy held the farm as mortgage* in possession and was •chargeable i. )nly with the rents and profits actually received by 5G0 EQUITY RELATION y. [CIIAP. II. him, but with the full rental value of the farm, wliieh, it was alleged, had not been worked to its fullest eapaeity. Danforth, J. An account rendered upon an application to re- deem would properly charge the estate with the money advanced by Budlong and interest, with the expenses and compensation pro- vided for by the agreement, and would credit the estate with what- ever had been received from it by sales or rents and profits, as in- cident to the right of redemption, and as an equitable offset against the amount due on mortgage, after deducting taxes, repairs and other necessary expenses incurred on account of the estate. (EucJi-- maii v. Astor, 9 Paige, 517.) It would include, therefore, the pro- ceeds of timber sold and rents and profits actually received. That the farm was not worked to its fullest capacity furnishes no ground, under the circumstances of this case, for an enlarged liability. A provident owner might not do that, and there is no fact stated from which the wilful default of Budlong in this respect could be found. Nor has it been. He is in no sense a wrongdoer. He went into possession under the legal title, taken with the knowledge of Mrs. Morris and continued under circumstances which might well have induced a belief that he was in fact the owner of the estate, sub- ject only to an agreement to sell. He was not technically at any time a mortgagee in possession. There was no mortgage. The character is cast upon him by the application of equitable rules to an oral agreement easily susceptible of two constructions, of which the one chosen is in direct contradiction of the written instruments which display his title, and he is therefore chargeable only with what he has received and not with what he might have received. "I thinJc," says Lord Cranworth, in Parkinson v. Ilanhiiry, 3 L. R. Eng. and Irish App. 1, "that it is perfectly clear law that where a person becomes possessed of a property, though erroneously sup- posing that he is a purchaser, if it afterwards turns out that he is not to be treated as a purchaser, but only as a person who has a sort of lien upon the property, that does not make him a mortgagee in possession within the meaning of that rule which charges him witli wilful default." In 1 Story Eq. Jur., s. 514 a. (10th ed.) it is said : "Where the estate is thrown upon one in the necessary enforcement of his legal rights, or comes to his possession as trustee, he should only be required to act in good faith and to account for what he in fact realizes;" and so in Moore v. Cable, 1 J. Chy. 384, Chancellor Kent directed the defendant to be charged only with rents and l)rofits received. In Harper's Appeal, 14 P. F. Smith, 315, it is declared that "whatever the rule on accounting might be, where the party charged was a mortgagee under an ordinary formal mort- I ^'^*- ^'l VAN \i;(».\Ki:i! r. kastman. r,t',\ i^iii^i', it <)U<,'lit not to lu" the saiiii', when, liy the cxpri'ss agrecniiiit of the i)arty sfckinj,' o'gin- ^ Rarnnrd v. Jriniison. 27 Midi. _':?<) (lS7:n; //«/// v. Wrslmtt. 17 U I. 504 ( ISni). tirront. * Sufti coTimiissions arc alimvcd in Ma-^-^arliiisptls : (liltson v. Crrhon. ."> Pick. 140. l(;i (IH27); dnrish v. HIikI:, 104 .Muss. 400 (1870); uiid iri Connecticut: \Viilfniiati v. Ciirtifi, 2('i I'onn. 241 (18r)7). Hut this is ox- ccptional, conunissions licin;j generally rofiisotl even wlipic stipulated fur: Rnnithnn v. Ilorkmorr, 1 Vorn. 31H (HIS.")); Frrnrh v. linruu, 2 .\tk. 12i> (1740): Gndfrrif v. Watson, .3 Atk. r)17 (1747): Clnrk v. Smith. Savt. (N. .1.) 121, l.-i? (18.30): llarprr v. A/-/. 70 III. T.Sl (1878); niiinl \. %»!.<». 40 Hun. (N. Y.) 500 (1880). But sec Green v. Lamb. 24 linn. S7 (1881). 502 EQUITY RELATION'S. [CHAP. II. ning of the year as the new capital to compute the year's interest upon. So to the time of judgment.^ MosHiEE V. NoETOx, 100 111. 63, 73 (1881) . Mr. Justice Shel- don. Complainant takes exception to the mode of stating the ac- count in making annual rests. The Master reported that on Jan- uary 1, 1870, the principal sum due from Norton to complainant was $8782.50; that the accrued interest thereon to that time was $8240.93; that the net rents up to that time were $8617.47. As the amount of rents at that time exceeded all interest due, said amount of the rents to that time was deducted from the whole amount of principal and interest at that time, leaving a balance due complainant of his principal sum, $8105.96, on January 1, 1870. Then to this sum was added the interest for one year, the taxes paid in 1870, and interest thereon to- January 1," 1871, which made the sum of $9190.48, from which was deducted the rent of 1870 as found, $1711.50, leaving a balance due complainant of $7778.98 at that date. Then follow similar annual statements of balances on the first day of January in each year, up to and including January 1, 1880, the rents as found for each year exceeding the interest and taxes for the year. Complainant concedes the mode adopted by the Master in making annual rests was the proper one when no arrears of interest are due at the time the mortgagee enters into possession, but [claims] that, where the interest of the mortgagee is in arrears, as in the present case, when the mortgagee takes possession, the court will not re- quire annual rests to be made, even although the rents and profits i"The two essential points are: First, that when there is a surplus of receipts in any year above the interest then due, a rest shall be made, and the Ijalance remaining after discharging the interest shall be applied to reduce the principal, so that the mortgage shall not continue to draw interest for the face of it, when in fact the mortgagee has in his hands money that should be applied to reduce the principal, and thereby make the interest less for the following year. Secondly, although the amount received in any year be insufficient to pay the interest accrued, the surplus of interest must not be added to the principal to swell the amount on which interest shall be paid for the following year; for that would result in the charging of interest upon interest, which is not allowed ; but the interest continues on the former principal until the receipts exceed the interest due." — Jones, Mortgages, § 1130. The cases are numerous and generally accord. Connecticut v. Jackson, 1 Johns. Ch. (N. Y.) 13 (1814); Reed v. Reed, 10 Pick. (Mass.) 398 (1830) ; Green v. Wescott, 13 Wis. 006 (1801) ; Oladding v. Warner, 36 Vt. .54 (1803) : Mahone v. Williams, 39 Ala. 202 (1803) ; Adams v. Sayre, 70 Ala. 509 (1884) ; Bennett v. Cook, 2 Hun (N. Y.) 520 (1874). •*«r:r. v.] II \i;i'i:i: r. I'.LY. '>C>'^> may exceed llie aimual interest. iu»r until tlie principal of the inort- gaj^e debt is entirely paid ntT. 'i'liere is auth(»rity for this position and distinction. It appears to he supported hy .hid<,'e Story in his \a[. .lur., vol. '2, sec. loiC, (I, iind the l'ji;:lish cases cited hy liini. iiut there are American decisions which lay down a dilTerent rule, as we re^rard, and a;,'reein^f with the one which was adopted in this ease. 1'^/// ]'ri)nk('r v. Knsliihiii. 7 Mete. l.")7; (Irffit v. WesroU, \:\ Wis. (;(><; ; •.> Jones on Mort., sees. WMK 1110. . . . Xo satisfaet(»ry reason appears to our minds why, when there is a suri)lus of receipts in any year ahove all the Interest then due and 11!. '>S\. .'.SI (1S7;?). Mi;, .li stick Cuam;. It is claimed by appellants that the i-ourt erreil in allowing '"Now, ttiinkin^, as I do. Hint, Ixitii upon |>i iiiciplt' aiul autlmrity. tlu' iiipie fact of an aiioar of iiiteri'st lu'iiif; or in)t Ih-Iiij: dm- to tlio inortpi<;iv when the inortf:aive upon tlie qiu-stion of rests, hut tliat every circuinstanee must he ie;,'aiile«l. looking; at all the n<'(onipanyin^ ciicunistances. Iookin<; at the ^'eiieial ri;;ht of a niort;e«' not to l>e paid piecemeal, lookin;,' at tlie po>iition to whieh Mi-«. IViestly I the mortfjaj/ee in possession I has Immmi driven hy the wronjrful nets of the ]iaities opposed to lier, I think that she ou;;ht not to Im* e<)mpell«Ml to have iier nei'ount taken with rests." — I'lr Kni;,'lit Hnue. \". C. in llnrUuk v. Smith, 1 Coll. Ch. 2S7. 207 (1S44). Compiiro Finch v. Unnm. .'I Meav. 70 ( l.S4(M : lli/xon v. Clucr, id. l.'lrt • 1S40) ; I'litch v. Wild, 3U Hoav. SHI (18U1), and Htiunlt v. Cook. 2 Hun. ' N. V.) 520 (1874). 564: EQUITY RELATIONS. [CIIAr. II. the Thompson and McQiiestion debt. This debt was secured by a jDrior trust deed on the premises, and Ely, in order to protect his interest under the mortgage, under which he claimed, was com- pelled to discharge this lien. We apprehend there can be no doubt but a mortgagee is entitled to be repaid all sums he may advance for the purpose of removing a prior incumbrance from the mortgaged property. The fact that Ely paid off or purchased this debt, which was a prior lien on the land, could Avork no hardship on the complainant. It was a sub- sisting debt, and a lien upon the mortgaged premises, and had to be paid, and whether complainants are required to pay it to Ely, or the original holder, can not, in anywise, prejudice their rights. But this debt was also secured by the Haddock mortgage, as well as a prior deed of trust, and may be regarded as a part and parcel of the mortgage debt from which complainants are seeking to re- deem. In either event, however, we regard the decision of the Circuit Court on this point correct; but it is said ten per cent. interest ought not to be allowed Ely on this claim, after it came into his hands. The claim drew ten per cent, interest in the hands of the original holder, and when Ely bought or paid it, in equity he was subrogated to the rights of the original holder of the claim; and when the original creditor, by the terms of the eon- tract, was entitled to ten per cent, interest, we fail to see upon what principle Ely Avould not be entitled to the same.^ SIDENBEEG v. ELY. Court of Appeals of Neav York, 1882. (90 N. Y. 257.) Appeal from judgment of the General Term of the Court of Common Pleas, in and for the city and county of Xew York, entered upon an order made May 11, 1880, which affirmed a judg- ment in favor of plaintiff, entered on a decision of the court on trial at Special Term. The nature of the action and the material facts arc stated in i\v^ opinion. ^Silver Lake Bank v. North, 4 Johns. Ch. .370 (1S20) ; Pafje v. Fo.sfrr, 7 N. H. 392 (1835) ; Arnold v. Foot, 7 B. Mon. (Ky.) GG (184G) : McCormick V. Knox, 105 U. S. 122 (1881), and the authorities generally accord. '">:<• \] SIOKN'nKRfi V. Rl.Y. 5(;."» Mii,i,i;i{, J. This action was l>nmglit for tin- foifclosurc of a iuortf.'ago made by one William (J. Ely, dcecaHod, in 1825, to the .Htim Iiisuraiioo Company, to scoiiro tlio sum of $3000. It con- taint'd no clause in reference to taxes and as'3r). At the time of the assignment to the plaintifT. the sum of .$!t:M.7N was due for interest. The defendant Catharine Ely is tlie widow and executrix of the mortgagor, who died leaving a will, by which he devised her the estate for life with remainder over in fee to the children of his brother James, who are de- fendants in this action. Upon the trial, the court allowed for the la.xi>s, assessments ami water rates paid by adding them to the mortgage, which, with the principal and interest found due to the plaintiff, amounted to the sum of $73(5"). 70. The most material (question upon this appeal ari.ses in regard to the rights of the plaintiff to the amount of taxes i.nd assessments paid by him and his a.ssignor, and to collect the same out of the mortgaged property. The rule seems to be established by jd)un- ilant a\ithority that wlien the owner of mortgaged property refuses or neglects to pay taxi's and assessments, or liens of a like nature, which are imposed upon the mt)rtgaged premises, the mortgagiv has the right to i)ay the sanu' in order to protect his security, and the amount so paid may be adde7 their duty the taxi-s would not liavc acciiiiiulatt'd. Having' failfd to pcrlorin a plain duty, if they dt'sin-d to protect the proiierty against tlic taxes, after they have permitted the niort;,'agee to pay the taxes, they arc in no position to ohjeet that it o|)erates as a liardship upon tiieni. Tliey would have had an undouhted ri^rht to make applieation for the ajtpointment of a receiver to collect the rents and ajiply them to the payment of the taxes. {Cairns V. Chabcrt, S Edw. "Ch. 313; 1 Washhurn on Real Prop. 97.) In the case we are considerin<;, the taxes remained unpaid from the year 1805 to the year Wt^, and then a^'ain from 1872 to 18T4, all inclusive. For eight years tiiey were allowed to accumu- late in the first instance, and afterward for three years, and during that period no effort was made to pay them, nor any attempt to com- pel the owner of the life estate to pay them, or the apj)ropriation of the rents for tliat purpose. Here wa^? a gross neglect which would have resulted in the sale of the property, and perhaps the destruction of the estate, hut for the intervention of the owner of the mortgage. Again, if the mortgagee or his assignee had the right to pay within the autliorities to which we have referred, to protect his mortgage lien, any equity which might have existed between the life-tenant and the remaindermen cannot destroy or take away that right. The remainderman's rights and his interests are subject to the right of the mortgagee, which was a j)rior and superior right given by the mortgagor. If the mortgagor had survived, and the mortgagee had paid the taxes, the amount i)aid would clearly have been a claim against the mortgagor and the mortgaged premises. The devisees of the mortgagor cannot have any greater or better right than the mortgagor, and they stand in his placi\ There was no evidence of any fraud or any conspiracy, to impose upon the remaindermen an obligation which belonged to the life-tenant to j)erform. The mortgage was i)urchasey the trial court, which also refu.>;ed to fmd to the contrary. The effect of the jjayment was, although it increa.-ed the amount of the mortgage, to cancel and di.scharge the lien of the taxes for the same amount. The estate of the apjudlants was bound to pay the taxes, and the payment by the mortgagee, or his a.'Jsigni'e, did not add or increase the burden imposml thereby, but in fact it operated to reduce the rate of interest on the amount of t^uch taxes. Ecpiity could not grant n-lief to the remaindermen, for the reason alone that the lien had Ihmmi changed from a tax lion to that of a mortgage lien, and we are luiable to see why the life- tenant could not as well have been charged with the burden of thf taxes after payment by the mortgagee, as i>e coidd before <\\rh oG8 EQUITY RELATION'S. [CHAP. II. payment, and in this case no reason existed why the interest of tlie life-tenant in the fund after payment of the mortgage by a sale should not have been burdened with this charge. The defendants claim they are entitled to pay up the mortgage and to be subrogated as mortgagees, leaving the plaintiff to his remedy, or if the property be ordered to be sold, that the value be computed, and only that value, less the present value of taxes iuid interest during the life in expectancy, be applied to the accre- tions, and that after applying the present value of such taxes and interest only, the remainder of the principal sum be paid out of the sale of the inheritance. It does not appear that the defendants have applied to be sub- rogated as mortgagees, or placed themselves in a position which entitled them to an assignment of the mortgage; nor was the ques- tion raised upon the trial as to the application of the interest and taxes. The plaintiff is entitled to the payment of the mortgage out of the real estate upon a sale thereof, and the question as to the disposition of the surplus, if any there be, does not arise upon this appeal. 1 The other points urged by the appellants' counsel have been care- fully examined and considered, but none of them present dny suffi- cient ground for a reversal of the judgment. There being no error, it should be affirmed. All concur, except Rapallo and Tracy^ JJ., absent. Judgment affirmed.^ 'A portion of the opinion, not relating to the question under examina- iion, is omitted. = There is no dissent from the doctrine of the principal case, the apparent aberration of the Supreme Court of Iowa in Huvafje v. Scott, 45 Iowa, 130 |187G), having been promptly corrected: Barthcll x. 8i/verson, 54 Iowa, KiO, 164 (1880). The same result is reached in Kansas by statute. Gen. Stat. 1889, Ch. 107, § 148; Stanclift v. Xorton, 11 Kans. 218 (1873). That a mortgagee who has redeemed from tax sale is to be allowed only the amount of the taxes and not the amount paid by him for redemption, see Moshier V. Norton, 100 111. G3, 74 (1881). As to the position of mortgagee pur- chasing at tax sale, see Dale v. McEvers, 2 Cowen (N. Y.) 118 (1823) ; Strong v. Biirdick, 52 Iowa, 630 (1879). ^*'*- ^l MA\i,()\ i: c ham:. 5G!» {(l) Morhjnger. hoir fur n I'ruslrt'. MA.\i.o\i-: s. i;aij;. IIkiii ('(Mii'r (»i- Cir \\('i:i!y. KiSS. {•i Vrni. S4.) One Brutoii liaving a cluireli-IcjiM' U>v tlirt'c lives in 1004, con- voyed and assi<;ned it to the defendant Hale's lather, in consider- ation of .'),■)()/. The conveyance was ahsolnte. But Mr. Bale, the pur- «'ha.ser, hy writing' under his hand and seal, agreed that if Mr. Bru- ton, till' vendor, should at the end of one year then ne.xt c:isuini.i-s decreed a re- tlemj)tion on j>aymcnt of the ."j.'jd/. whieh was the first consideration money, as also the fines ])aid upon the renewal of the leases, which monii's were to he paid with interest, and the account of profits was to commence hut from the death of Teter Bale, who was the jnir- «ha.ser, and father of the defendant, and until that tim«' thi- profits Were to he set against the interest of the ').")(»/. consideration money.' ' " Tlic inortfrafiof lioro dntli Imt {.'raft upon liis stock mid it sliall Ik^ for tlio iiioi tjja^ror's l)oiiefit." — I'lr N<)ttiii;,'tiaiii. I^. f'li., in Kushirorth's Cii.sr. 2 Krcfin. 12 ( l»i7(>) . " Tliis additional term conies from tlic ^ainc old root, and i- ol tlic same nafnrf, subject to tiif same e<|iiity of redein|)tion. eNo liary a system of rules estab- lished by a long train of decisions, and universally adopted and acted ui)on in a court of equity. If the form of conveyance and the legal title were to prevail, the absolute ownership of the estate, after the condition is forfeited, would, in the ca. ;ui(l crsfiii ([Uc I nisi. The inort;^ii^t'i', wlicii he tiikr> (lie j)()>>c.->i()ii, is not acting as a (riistc*- for tli<' ni')rt;,Mg«»r, l)nt ine stopped, be- cause in liini it is no breach of trust, but in strii-t conformity If) his contract, whiih woubl be directly violated by any impediment thrown in the way of the exercise of this right. I'pon the same princii)le tlie mortgagee is not preventt'il, but as-istei| in e<|uity, when he has recourse to a proceeding which is not only to obtain the possession, but the absolute title to the estate, by foreclosure. This presents no resemblance to the character of a trustee, but to a char- acter directly opposite. It is in this opposite character that he ac- counts for the rents when in jiossession, and when he is not, re- ceives the interest of his mortgage del)t. The j)aynient of that interest by the person claiming to be the mortgagor is a recognition of that relation subsisting between them, but is no ri'cognition of the mortgagee's possessing the character of trustee, much less of his being a trustee for any other person claiming the same chara<'ter of mortgagor. The ground on which a mortgagee is in any case, and for any purpose, considi-red to have a character resembling that of a trustee is the partial and limited right, which, in ecpiity. he is allowed to have in the whole estate legal and e(iuital>le. He does not at any time possess, like a trustee, a title to the legal estate distinct and .separate from the beneficial and ((luitable. Whenever lie is entitled at all to either he is fully entitled to both, and to the legal and equitable remedies incident to both; but in e(piity. his title is eon- fined to a particular purpose. He has no right to either, nor can make use of any remedy belonging to either, further than and as may be necessary to .secure the repaynu-nt of the money due to him. When that is paid, his duly is to reconvey the estate to the jierson entitled to it ; it never remains in his hands cloathed with any fidu- ciary duty. lie is uiver entrusted with the can* of it, nor under any obligation to hold it for any one but himself, nor is he allowed tti use it for anv other puri)ose. The estate is not I'ommittcd t<» his care, nor has he the means of |)reventing or being acquainted with the changes which the title to the ecpiity of redemption may undergo, either by the act of the mortgagor, without his privity, or by ojieration of law, bv descent, forfeiture, or otherwise, and con- se(pientlv, as I have alreadv endeavouretl to shew, by the ojieration of the analogy to the statute of limitations. When the interest of the mortgage money is tendered to him from year to year by the jht- .«on who, claiming to have succeedetl the original mortgagor in the 5Ti EQUITY RELATIOXS, [CIIAP. II. title to the equity of redemption, is, by the acquiescence of the right- ful owner of it, allowed to remain in the quiet and uninterrupted enjoyment of the estate as the sole and admitted owner, can he be expected to refuse receiving it upon any doubts of his own respect- ing the title, when it is apparently abandoned by those who possess better means of judging of it, and who alone are interested in con- testing it ? If there is no fraud, or collusion of any kind, the fault lies wholly with those who possess the rightful title to the equity of redemption. The mortgagee is a mere indifferent stakeholder. The real contest lies between the competitors for the estate, which, in the hands of either, must continue subject to the mortgage till paid off; when paid off, the mortgage title ends, and then, and not before, the implied trust, to surrender the estate to the person entitled to demand it, begins. If there is a question who that person is, it must be contested, not by the mortgagee, but by the parties con- cerned, and between them the title must be decided in the same manner, and by the same principles, though the form in which it may be contested may differ, as it would have been had no mort- gage existed. KIRKWOOD V. THOMPSON". High Court of Chancery, 1865. (3 De G., J. S S. G13.) This was an appeal from a decree of Vice-Chancellor Wood. The bill was filed by the heir-at-law and administratrix of Stephen Kirkwood, late of Kingston-upon-Hull, to redeem certain heredita- ments which had been mortgaged and sold under the following circumstances: By an indenture dated the ITtli January, 1846, certain hereditaments, the property of Stephen Kirkwood, were conveyed by him to William Cash and others in fee by way of mort- gage for securing the sum of 5500Z. and interest. The mortgage contained a power of sale in case of default in payment of princi- pal or interest on six months' notice. By another indenture dated the 16th June, 1846, other premises were mortgaged by Stephen Kirkwood in fee to George Davidson and otbers, as the trustees of the National Provident Institution, to secure 4000?. and interest. By an indenture of even date the said sum of 4000/. was further secured by a second mortgage of the premises comprised in Cash's mortgage. The two last-mentioned deeds contained power of sale. •''I^C- ^O KIUK\V()(tI> r. 1 IloMI'SOX. 57."> subject to the proviso that the jH)\ver shouhl not he exercised without six months' notice, or unless three months' interest was in arrear; smd tiiey also contained a proviso exempt in;,' the purchaser from liahility to see to the performance of this condition, and restricting his remedy to damages oidy. Suhsc(|uen(ly to these deeds Stephen Kirkwood, having borrowed H»i>(i/. from the North nf I-]nglaiid l-'ire ami Life Insurance Com- pany, agrei'd to execute a good and eU'ectual mortgage to the de- fendants Messrs. 'riiomjjson and C'arr, as trustees for the insur- aince eomj)any, of tlie hereditaments comprised in the previous mortgages. This agreement was carried into effect by an indenture dated the 10th December, 1847, and made between Stephen Kirk- wood of the one part and ^lessrs. Thompson and Carr of the other part, whereby Kirkwood conveyed to Messrs. Thompson and C'arr in fee all the hereditaments comprised in the above-mentioned mortgage-ch'eds, but subject to the j)rior mortgages, upon trust that Messrs. Thompson and Carr should, in their discretion, at any time, without any further consent or concurrence of Stephen Kirkwood, his heirs, executors, administrators, or assigns, sell and absolutely dispose of the premises, and should out of the proceeds of such sale jiay all costs and expenses, and the principal money and interest due to themselves, and all other incund)rances, and pay over the sur])his to the mortgagor. Kirkwood died in July, 1848, leaving a will, but the executor renounced ])robate, and ad- ministration was granted to ilary Todd, one of the plaintiffs, on th.> 10th February, IS.')'). In 1849, in consecpu'nce of default having l)een made in payment of the interest due to them, the North of England Insurance Company entered into pos.session of the pn'mises and received the rents, which were, however, as they stated in the answer. insulTi- 4-ient to pay the interest on the company's mortgage, after j>ay- ing the int(>rest on the prior mortgages. In 18r)0 the trustees of the National Provident Institution, with tlu^ consent of the per.son.s interested in Cash's mortgage, j)ut up to auction the whole of the hereditaments comprised in their mortgag(>. Pre- viously to the sale tlu' solicitoi-s of the National Provident Institu- tion communicated to the North of Knglantl Company their inten- tion to .sell, and gave them a formal notice to pay the prior mort- gage, but no notice was given to any person on Ixdialf of the mort- gagor, there being at that time no repres(>ntativ«' of Kirkwood's es- tate. Mr. Hall, one of the directors of the North of England (Com- pany, attended the sale, which took place on the ?lth (1ctob(>r, }>s')0. and became the |)urchaser of part of the property for ."i.^OfV. The North of Kngland Company adopted this purchase and paitl the 576 EQUITY RELATIONS. [CHAP. II. purchase-money, and Hall executed a declaration of trust in their favour. The North of England Companj' was subsequently dis- solved, and their business was purchased by the Liverpool and Lon- don Fire and Life Assurance Company, and the premises were con- veyed to their trustees in May, 1860. The plaintiffs filed the present bill against Messrs. Thompson, Carr and Hall and the Liverpool and London Assurance Company, praying that the plaintiffs might be declared entitled to redeem tbe premises purchased by Hall, and that Hall and all persons claiming under him might be declared trustees for the plaintiffs, and that, if necessary, the conveyance to Hall and' to the Liverpool and London Assurance Company might be cancelled, and that the prem- ises might be conveyed to the plaintiffs on payment by the plaintiffs of what should be found due from them on taking the accounts, and that in taking the accounts the defendants might be charged with the full value of the mortgaged premises at the present time, or at such other time as the Court might think fit. The Vice-Chan- cellor was of opinion that there was no reason either in law or under the special circumstances of the case for impeaching the sale, and dismissed the bill with costs. From this decision the plaintiffs appealed. Mr. Willcock and Mr. T. A. Roberts, for the plaintiffs.— The sale to Hall was really one to the North of England Company, who were second mortgagees and also in possession. A second mortgagee cannot purchase for his own benefit from the first mortgagee. He is in the position of a trustee for the mortgagor; and here we have the additional circumstance that the purchasers were in possession, and had thereby an advantage in getting up the sale, and special moans of knowledge. Moreover, they wert' not simple mortgagees, but trustees for sale, for their security was in that form, and they were, therefore, in a special position of trust. (Rakestraw v. Brewer, 2 P. Wms. 511 ; Re Bloye, 1 Mac. & 0. 488; Ex parte Rushforth, 10 Ves. 409; Smith v. Chichester, 1 Con. & Law. 488; Ex parte James, 8 Ves. 337 ■,.Doivnes v. Grazelrooh, 3 Mer. 200; Ex parte Hughes, 6 Yes. 617.) The case of Shaw v. Bunny, 13 W. R. 374, in which the Lords Justices differed, is the only authority against us. With respect to the ques- tion of value: the sale must be treated not as a sale between stran- gers, but as strictly as any other transaction between persons in a fiduciary relation. Mr. Giffard and Mr. Kay, for the defendants. — The sale was by auction, and perfectly fair and open. Strangers were present, and purchased several of the lots. The second mortgagees had noth- SEC. v.] KIKKWOOl) C. TIIO.Ml'SON. .'>7T in^' to do with ;;cttin^' up the sak', wliiih wns entirely mauagcd by the first inert gagt't's. The right of a second mortgagee to j)iin liasc from a first mort- gagee is establislied hy Slunr v. liunny, \'.\ W. H. 374. And then- is no distinction betui-en an ordinary mortgage and a security in the form of a trust for sale. In neither case does the mortgagee stand in a fiduciary relation to the mortgagor. {Parkinson v. Ilan- bury. 1 Dr & 8m. 113; s. c. on appeal, 13 \V. \i. 331; Dob.son v. Land. S Hare, 21(!; Knialtt v. Marjoribanks, 'I Mac. & (J. 10.) Mr. WUlcock, in reply. Tin; Loud Chancellor [Lord Cr.vnworth ). This case docs not ajipear to me to present any real dilliculty. In the first place, that a mortgagee can purchase from his mortgagor is a matter that is always considered as settled, though, I helieve, in some early cases there has been allusion to a doubt on the subject; and Sir Edward Sugden said that the relation between trustee and cestui (juc tnifil, although in some sense existing between mortgagee and mortgagor, has never been so held to exist as that the mort- gagee cannot purchase from the mortgagor.* That is not disputed. Then if that is so, why should there be any difficulty on this sub- ject ? The real reason why a person standing in the relation of trustee cannot purchase from the cestui qur trust is, that he cannot purcha.se that which he is to sell; he has a duty to perform and of course he cannot purchase, for that would be putting himself in a situation in which his interest would become an interest inconsistent with the duty which he has to perform. The next step is, can he purchase under a power of sale executed by a first mortgagee? It seems to me to follow as a necessary corollary, because the sale that is made* under the power of sale by a first mortgagee is substantially a sale by the m(»rtgagor, for it is a sale made under an authority given by the mortgagor jiaramount to the title of the second mortgagee. It seems to me, that on the princi|)le of the case there is no difTerence whatever between a j)urchase from a fii-^t mortgagee under a^iowi'r of sale and a pur- chase from the mortgagor himself. Kven if that were doubtful upon i)rineiple, I consider it to have been settled by authority in the case of i 'Soo 1 Sii.'drii. V. A 1'. iStli \m. o«l.) r.SO. ami iintr (i-). OVi EQUITY RELATIONS. [CHAP. II. decided ; and it is by Act of Parliament determined that the affirm- ance of a decree of the Master of the Eolls, or one of the Vice- Chancellors, by the Court of Appeal, is just the same as if it had been so decided by the full Court. I think it is clear that that has been so settled. Lord Justice Knight Bruce, in affirming the decision of the Master of the Eolls in Shaw v. Bunny, decided in favour of the mortgagee's title, "there being no special circum- stances" to prejudice his right : the only question is, whether there are any special circumstances here to vary the general rule. Xow the special circumstances relied on were these : First, the mortgagee was in possession. That makes no difference; being in possession could only make a difference if it created an obliga- tion between the mortgagee and the mortgagor which would not have existed if he had not been in possession. Nothing of the sort is suggested; no duty arises on being in possession, except, cer- tainly, to account to the mortgagor in a way onerous to the mort- gagee; but there is no duty which would prevent the relation between the mortgagee and his mortgagor different from what would have existed if he had not been in possession. Then it was suggested that this was not strictly a mortgage at all ; that it was merely a conveyance in trust to sell. It is true that it is in form a conveyance in trust to sell, but as between the mortgagor, the person conveying, and the person to whom it was conveyed in trust to sell, it certainly was a mortgage as far as he was concerned. He took possession, and he taking possession would be liable to account as mortgagee. It cannot be contradicted that between the parties conveying and the parties to whom it was conveyed it certainly was a mortgage. It is possible — I do not say whether that would be so — that there might have been differ- ent duties as between him and the mortgagor if he had sold than Avould have existed in the case of a simple mortgage. But what took place is something that comes in paramount and prior to the exercise of the duties as trustee; he never can sell, because persons having a paramount title to his title choose to exercise that right, and therefore prevent the possibility of his exercising his right, which is a trust only to arise if it was ever in his power to sell, which it was not, in consequence of the sale made by the prior mort- gagees. That being so, the next special circumstance that is alleged here is, that the parties stood in such a situation that we must take this as a sale at an undervalue. It was not ur-red, indeed it could not be urged, that here there was any undervalue as between third parties, so as to enable them to set aside the sale; but it was said the relation between these parties made that capable of being con- -»-'«•• v.] ii(ti,i;ii)«;i: r. (;i i.i.i;si'ii:. .JT'J Mvli-rcil ill a Court of I'Jiiiiiy an uinliTvaluf which would not have I'rii an undcrvaliu' as hctwccn straii^^M-rs. That Ix-f^'s the whole Mit'stion, bc'tiuist' the nionicnt you (Ictcriiiim' that this mort^a^'cc 1- tjiKini inort«jagi'C' was cntitk'd to purchase, you put him exactly 11 the position of a eoniinon stranj^er who purchases; so that there ■; jio reason to look at the (juestion of undervalue in a dilTeretii M\y from that in which you would have looked at | it | if any third parties had purchased. It would he out of the (piestion to talk of this as an undervalue; it was competed for at an auction. I agree with Mr. Willeock that hein<; sold hy auction would not be at all Miulusive of the value, hut there is no reason to treat this as a >ale that was not made in the best maniu'r possible; the vendors had the property valued, and precautions were taken tliat it should not be sold at an undervalue; it is perfectly true that sliortly after the sale it would seem that the persons who had purchased had so :.ir made a good bargain, — it was a very sjieculative sort of prop- ity. — that they had an opj)ortunity of selling it at an advance of lono/.. hut that is quite immaterial, and I think, if that objection Wi-re to prevail, no sale could Ix' safe, if after lying l)y for eleven years it was afterwards to be suggested in this way tliat the j)roperty was sold at an undervalue. I tliink, therefore, that the suggestion if undervalue fails entirely, and that that is not a matter that 'Ugiit to influence my judgment. I think the decision of the Vice- chancellor perfectly right, and consequently that this appeal ought to be dismissed with costs. IIOLIIIDCK V. (MLLESPIE. CoriJT oi" Cii ANciMiY OK Ni:\v Yoi;k. 1816. {•> Johns. Cli. ;{(».) The plaintilT, being pos.se.ssed of a lea.se from B. W. and others, of a farm of about 300 acres (parts of lots 8. !>, and 10. in Crosby's manor), dated in November, ISOH, for eleven years, subject to an an- nual rent of 7.") dollars, on the ".'(ith of May, ISOS, assigned the lease to the defendant Thomas Ciillespie. The assignment was absolute; but the assignee', at the same time, extvuted a di'feasaneo, declaring that the assignment was made to .secure a tlebt of 7-1 dollars anlrair wlircucr {'2 W-rn. HI, 2 I*. Wms. 1 1), the additional term comes from the same old root, and is sub- jtvt to the .same eciuity of redemption, (itht-rwist' hardshij) and op- jtresj^ion mi<,dit be praetiscd uj)iia Uu- m<)r(^M«,^)r. It is anab>gous, in prineij)le, to the case of a trustee hohling a lease for the bene- fit of the cestui que trust. Courts of eijuity have said, tliat if he lakes use of the inlluenee wliieh his situation enabk's him to ex- :rise to «,'et a new lease, he shall hold it for the benefit of the cestui lie trust. (1 Dow. 2(i\) \ 1 Ch. ('as. IIH; 1 Hro. Ch. Cas. 198.) ■^o, if a guardian takes a renewed lea.se for lives, the trust follows the actual interest of the infant, and goes to his heirs, or executor, ji>j the ease may be. (18 Vcsey, 274.) Indeed, it is a general ' imij)le pervading the cases that if a mortgagee, executor, trustee, iiant for life, &c., who havi* a limited interest, gets an advantage V being in possession, "or behind tlie back" of the party interested 111 the subject, or by some contrivance in fraud, he shall not retain ihi' same for his own benefit, l)ut hold it in trust. (Lortl Manners, in 1 Ball & Beatty, 4G, 47; 2 Ball & Beatty, 2i)0, 2i»S.) The doc- trine has been uniform from the decision of Lord Keeper Bridg- man, above referred to, in 1 ("h. Cas. 191, down to the most recent decisions. Xor do I think that the agreement of August, 1809, ought to form an obstacle to the redemj)tion of the whole. That jreement bears the mark of undue influence growing out of the list assignment; and contracts of that kind, made with the mort- gagor, to les. plaintilf. is enough to justify me in 't regarding that agreement a-^ a valid obstaele to the original ght of redemption. I shall, therefore, direct a reference to a master to take and state :; account between the parties, in which the plaintilT is to be 582 EQUITY RELATIONS. [CHAl-. II, charged with the 74 dollars and 12 cents mentioned in the original defeasance, with interest from that time, and is, likewise, to be charged with all sums of money justly due to the defendants for goods sold, or advances by them, or either of them, made to and for his use, and on his account ; and that the plaintiff is to be cred- ited with all payments made, or articles of produce delivered, or work, labor, and services rendered to the defendants, or cither of them; and that the defendants are to be charged with the net yearly value of the premises possessed by them, or either of them, during the time of their possession, after deducting the rent and taxes ac- cruing and paid during that period; and that the pleadings and proofs taken in the cause be received as evidence before the Master, and that the question of costs and all other questions be reserved until the coming in of the report. Decree accordingly. HYNDMAN v. HYNDMAN. Supreme Court of Vermont, 1845. (19 Vt. 9.) Appeal from the Court of Chancery. The facts, as they appeared from the bill and answer and the testimony taken, were substan- tially as follows: In 1832 the orator, being indebted to the defendant and William Hyndman, executed to them an absolute deed of his farm in Barnet and received back a writing of defeasance. The orator received farther advances from time to time, until 1836, when the parties reckoned together the amount due and found it to be $608.60, and then agreed that the defendant and William Hyndman should have the farm, free from the orator's equity of redemption, at eight hundred dollars ; and the defendant accordingly surrendered to the orator the notes due from him and executed to the orator a note for $191.31, and the orator surrendered his writing of defeasance; but it was at the same time verbally agreed between them that the de- fendant should sell the farm and the orator should have what was received therefor, above the sum of eight hundred dollars, after pay- ing the defendant for his time and trouble in the business. The orator continued to reside on the premises until the commencement of this suit; and the defendant, subsequent to 1836, leased the premises from year to year to different persons and received the «K^'- \'l JIVNDMAN /•. UVNUMAN. ''S.'} rt'iit, until March .)»), ISIO, when flic j)artics c\ccuic' - i" the defendant before the commencvment of this suit. Tiie orator prayed that an account might be taken of the amount justly due to tlie defendant, and of the rents and i)rotits of the prem- ises received by the defenchuit, and that the orator might be permit- ted to redeem the ])remises. The Court of Chancery, Khdimki.I). Cli., dismissed the bill wiiji costs from which decree the orator appi'aK'd. The ojiinion of the court was dclivi'red by Heufikld. .1. Tlii-; is an a|t|»cal from a decree made by the chancellor of this circuit. When the case was heard in the Court of Chancery, it a|)peared to me to be one of so much doubt that I did not feel justified in e.xjxtsing tlie jiarties to the expense of taking an account of so long standing, until the necessity for such expen-c was fully established by the decision of this court. In that viiw I understand my brethren fully to concur. We by no means justity the practice, sometimes adojited in the Court of Chancery, of allow- ing apjieals ujion merely fonnnl (K-erees, without Ucaniuj. Such a course is only calcidated to increase tlie number of chancery ap- peals in this court and delay the final di.sposition of many of them, without any ade«iuate saving. Every ease should 1m' futlij heard in the Court of Chancery; and then, no doubt, the chaneellor may, in his discretion, make a decree with a view of .-saving needle-s expense to the parties, in ca-e the Supreme Court should be of opin- ion the orator cannot pn-vail. But upon a full hearing of this ca. |)ayment of $2,()4«), in ten years from the date thereof with annual interest, which mortgage contained a further condition in these words: "and shall also pay all tissess- iMcnts, taxes and charges on the said j)ri'misi's to In- charged on the same, and in case of default in paying the .same, the said parties of the second j)art and their representatives may discharge such assessments, taxes and chargi-s, and collect the same with interest from the time of such pavnient under this mortgage, in the man- ner particularly s])ecilied in the condition of a certain bond or oldi- gation bearing even date herewith, itc." The condition of tin* bond, ■^o far as it relates to the rpu'stion in this case, was in these wonls : "and shall also pay all as.sesstnents, taxes and charges on the prem- ' .s'/rr V. Manhatlnn Co., 1 l*ai;,'p (X. \ .) -IH (1S2.S): Jirnhnm v. Rotcr. ■1 (ill. .1S7 (1S.V2) : Mapps v. Shnrpi. Wl 111. l.» I IS(i.l) ; Carlnnd v. U'aMow. 7-1 .Ma. .123 (ISS.T). nmnil. Coniimro \fnnlniiur v.Dnirrs, 14 .Mlon ( Mn<«««. ) :W.) (1S(17). and I'liir v. Hroim. 40 Iowa. 20!) (1S7.*)). Soo Th,- Hntmnis V. I)nvi.t, t( Tox. 174 ( IS.-.l) ; Triimn v. Mnrsh. r>4 N. Y. '^'M (1H74). s. » papp 2il!). siiiiKi, anil New York Coilc Civ. I'ror. § 2304. for the ctnitrary • l«M-ed rela- 588 EQUITY RELATIONS. [ClIAP. II. tion of agency between the apparent purchaser and the incum- brancer of the land. There would be no safety for him if he were not allowed to redeem ; because the ostensible purchaser could trans- fer the certificate to a bona fide holder and subject him to great em- barrassment and perhaps to the loss of his land. A mortgagee who desires to pay oif taxes or assessments and charge them on the mort- gaged premises has a very plain course to pursue. At any stage of the proceedings he can step forward in his character of mort- gagee and pay the assessment or redeem from a sale before the purchaser's title has actually ripened by a conveyance under the law. It is no hardship to require him to do this in a plain and distinct manner, so as not to embarrass the title of the mortgagor or owner. When, however, he purchases at a tax sale and takes a certificate as purchaser, that is an election on his part to occupy the relation of purchaser, with all the rights and incidents which the law attaches to it. He becomes then the owner of an undis- charged lien, which the owner of the land may discharge in the manner provided by law. But it is insisted that the purchase and taking of the certificate by a mortgagee, who has the right by the terms of his mortgage, or under the general statute, to pay off taxes and add the amount so paid to the lien of his mortgage, is by operation of law, ipso facto, an extinguishment and discharge of the tax. To support this proposition the familiar principle that a person who is placed in a situation of trust or confidence in reference to the subject of the sale, or has a duty to perform which is inconsistent with the charac- ter of a purchaser, cannot be a purchaser on his own account. (Torrey v. The Bank of Orleans, 7 Paige, 6-49; Van Epps v. Van Epps, 9 Paige, 257; Burhans v. Van Zandt, 3 Seld. 523.) But this principle has never been carried so far as to prevent a junior mortgagee from purchasing the subject matter of the mort- gage at a sale under a prior lien; nor has it been held that a title fairly purchased at such sale was held for the benefit of the mort- gagor. A mortgage is a mere security for a debt ; and there is no such relation of trust or confidence between the maker and holder of a mortgage as prevents the latter from acquiring title to its subject matter, cither under his own or any other valid lien. The defendant had no duty to perform to the plaintiff or toward the mortgaged premises that precluded her from buying at the tax sale. Slie was under no obligation to pay the taxes. The plaintiff had covenanted that she might do so at her option, and thereby acquire certain rights; but she had not undertaken to do it nor subjected herself to any burthen or obligation whatever in respect to the assessments or taxes. She might pay them or not, as she •'^Kf. v.] \\1I.L1A.MS r. TOW NSKNU. 581> chose, or she might ^liuul uj)<)n her gciuTal rights aiKi purchase at the tax sale, as others could do, for the purjjoses <)f investment or protection. Rut if this wen- not so, all that tln' princijdc -ought to be invoked would rccpiire is that as purchaser ^h»' >houId take a redeemable interest only which never could ripen as against tlu' mortgagor into a greater one, and not that the lien she j)urchased should he discharged or extinguished, leaving her to no nniedy except the jiossibly inade(|uate one under the covenants of the honil and mortgage. It is my oj)inion, therefore, that the purchase at the tax sale did not operate to discharge the assessment and deprive the plaintilT of his right of redemption under thi' statute. But it is urged that the failure of jtlaintiir to pay tiie tax was a breach of the condition of the mortgage, and gave defendant a right to foreclose and collect the whole amount secured. There is no clause of the mortgage making the whole sum due on failure to pay the interest, or on breach of any condition. The l said jud<,Miieiit. and tliercforc Stewart oxccutcil a l)()nd, dated the 1st day of .June, IStiO, and {jrocured tho sanie t() he exeellled hy (leiiri^e |\ . Johiison and the defendant Hlisha C. Liti'hiiehl, as his sureties, in tiie penal sum of $')()()(), e(»nditioni'd to protect said ('onj,M'ess Hail property a;,Minst the jud;,'nient last ahove mentioned, whieh hond was delivered to Crai;,', and he then justilied as surety to the undertakinfj; .(;!», whieh jud^'mont Ijtchlield paid to Crai.i:-. On the ITth of Decendjer, ISKiO. the Congress Hall property was sold on an execution issued upon said .iu(l<;ment in favor of the Madison County Bank, and was hid olT at such sale I)y the defendant Crai.ir for the sum of five dollars. On the 17th of March. ISC-i. Daniel \V. Powers, hy virtue of a judfrmont recovered hy him a^^iinst Stewart on the 2(Uh of January, 18(10, for $1481.78, redeemed the Congress Hall property from said sale, and on the 31st of March, \S(Vi, the sherilT, in completion of such sale, oxeeuted a deed of said property to Powers. On the 7th of May. 1S()4, Powers, in- deed of that date, conveyed said property to the defendant Craig, in consideration of the .sum of $175;{..")3 jiaid by Craig. The judgment under which Powers redeemed had hei'n sold and assigned hy him hefore the redemption, and on the 10th of April, IXtiO, to Oliver M. Benedict, of Hoehester, in con- sideration of the amount then due on the judgment, paid by Bene- dict to Pow('rs at the time. On tlie day of the redemption, to wit, the 17tli of March, 18(>3, Benedict reassigned the judgment to Pow- ers, without any valuahle or valid consideration. At the time of each of those assignments, and for several years next preceding that time, Benedict was the attorney of Stewart, and was his confld(>ntial ad- vis<'r. He ))urcha.sed said judgment and took the a.ssignnient of it in his own name, at the recpiest of Stewart. .\nd the money which he |)aid for it to Powers was furnished i)y Stewart, or was replaced hy him immediately after such payment, in pursuance of an arraiigi iiiciii between him and Benedict made before the money was paid by lienedict. There is no evidence that the a.ssign- ment of the judgment from Benedict to Powers was authorized by Stewart, or thai he knew of it. Craig, when be took the dcvd from I'owers, had knowledge of the facts as to the relations between liencdict and Stewart, and as to the a.ssignment of the judgments. On the 37th of .\pril, ISCO, Stewart and Ids wife conveyed "Con- gress Hall" to Henry K. Sanger, by deed. sul)ject to tlie several mortgages above stated, excvpt the indemnity mortgage. SanpT died previous to July. ISC I. leaving a will by whieh be gave to bis 593 EQUITY RELATIONS. [CHAP. II. wife all his estate, real and personal, and named her as sole executor. She, as devisee and executrix, conveyed Congress Hall to the plain- tiff Henry Ten Eyck, hy deed dated 3d of January, 1867. On these facts the court decided as matter of law, among other things, that the defendant Craig, on entering upon the collection of the rents on the assignment of the lease of the Congress Hall property, was in the i30sition of a trustee for Stewart, in respect to the leased property, and his purchase of the same while he occu- pied that position inured to the benefit of the cestui que trust, at his election. That when Benedict held the judgment under whicli Powers redeemed, he held it in trust for Stewart. Powers, as the assignee of Benedict, without consideration, took Benedict's right in the judgment and no more. When Powers redeemed he took the land subject to the trust which attached previously to the judg- ment in his hands. That Craig was chargeable with notice of said trust. That Stewart, while he owned the Congress Hall property, had the right to redeem the same, on paying to Craig the amount of his liens and advances, over and above his receipts. That the plaintiff Ten Eyck, by means of the successive conveyances above stated, has succeeded to such right of Stewart to redeem said prop- erty, and is entitled to redeem. Andrews^ J. ... It will be convenient in examining the questions which arise in the case to leave out of view for the present the facts relied upon as establishing a trust relation between Craig and Stewart, which disabled Craig from acquiring a title to the prop- erty hostile or adverse to Stewart or his grantee, and to consider the ])osition of Sanger and his relation to the property after the sale and eonveyance by the sheriff, upon the assumption that Craig as pur- chaser on the sale and the grantee of the redemption title was unaf- fected by any special disability, and acquired the same rights through the sale and the subsequent proceedings as if at the time of the purchase he had been a stranger to Stewart and Sanger, owing them no duty and bound by no obligation to protect the equity of re- demption. It is not claimed that there was any fraud or irregular- ity in the sale on the bank judgment. The judgment was unpaid ; the sale was open and fair, and so far as appears was not procured by the intervention of Craig. The sum bid, so far as appears, was at the time the full value of the interest of Sanger in the property. There is nothing which in any manner tends to impeach the bona fides of the sale. It is claimed, however, that the redemption was void, on the ground that the judgment under which it was made had been paid by Stewart, the judgment debtor, before the redemp- tion, and was not at the time a lien upon the land.^ ' The discussion of tliis point is omitted. The learned judge reaches tlie conclusion that no light of redemption remains in Stewart or his grantees. «K<'. ^'■] ti:n KVtK r. ( kakj. r)!i:> The next and ])riiK'ii)al question to bo consicU'rcd is,wlietlH'r C'rai^'. at tlu' tinu' of the sale, occuj>i('d siu-h a relation to the property, or to Stewart or Sanger, that he was disahlt-d from pureliasing f([uity, and may be enforced at any time witiiir» the ])eriod allowed by the statute of limitations, or the rule of courts of equity regulating the jurisdiction. The rule which prohibits a trustee from purchasing the property of a cestui que trust stands upon the proposition stated by the chan- cellor in WlticJicote v. Lawrence, 3 Ves. 740; that one who under- takes to act for another in any matter shall not in the same jnatt r act for him.states, by reason of infancy, infirmity, or other cau.ses, are intr\isted to the jnanagemont of others. The rule is not limited in its application fo those who are trustees stri<'tly. holding the legal title to the thing purchased. {Van Epps v. Vnu Epps. I'aige. ?r?7.) It applies to agents and j>crsons stan<^:*' \| Ti;\ i;v( K /•. cu.vKi. .'»9r) (Icrt'tl. that the plaintilT may hocoino tlu' purdiasor. (IJulf 7:5.) Ami he may Imy in any outstanding' title and hold it a<;ainst tlj<' iMoit,<,M;;or {('unti'ron v. I ruin, .') 1 1 ill, "^SO; Williums v. Totrnsrnil, .\\ N. V. -ll,"); .^V<(/«- V. //»/»«//. i;{ Wi'ck. K. TA ; s. < .. •.' I)r C, .J. \- S. 4(18.) TluTi' is, in truth, no relation anahi^on- hi ih;ii oi tru-i«c and ci'siui (jnr I rust hctwcon the niort^Mj;or and mortjra;;*'!' created l)y the execution of the mort<,'a<^'e. The mortga^^ec is not a trustee of the le<,'al title, hecause, under our law, he luis no title whatever. { l\(trlrif/lil V. i'lulij, 'i\ X. Y. .'M'?, and cases cited.) lie may deal with the niort^'a^'or, in respect to the mort;ra<;e(l estate, upon the same footing; as any other person; he may huy in incundirances for less than their face, and liold them aj^ainst the mort^M;zor for the full amount ; he may do what any other person may do, and his acts are not suhject to impeachment, simjily hecause he is mortgagee. ( Parcif V. II (ill. 1 \'ern. 4S; k'ni(/kl v. Mdrjorilmiilrs, 'i Mac X. »!v: (J. 10 ; Chambers v. Waters, 3 Sim. 4:.' ; 3 Sug. on V. and P. n"!.) Xor is the mortgagee converted into a trustee hy taking posses- sion as mortgagee of the mortgaged |)rojt(rty, so as, \n general, to ]>revent his purchasing an outstanding title, or under another lien. Tnder the English law he has the right to the possession, hecause he has the legal title to the land. Under our law he cannot ohtain possession until foreclosure, c.vcejjt by the consent of the mortgagor, hecause until that time he has no title. .\ mortgagee is often called a trustee, and in a very limited sense this character may be attrib- \ited to him. There may be a duty resting upon a mortgagee in jiossession to discharge a particular claim against the land. If in such a case he omits to do it, and allows the land to be sold on such ,-i claim, and becomes the |iurchaser, he would hold the title in trust for the mortgagor. .\ mortgagee in jjossession is allowed, ami it may be his duty to pay ta.xes on the land out of the rents and jirotits. If he sulfers the land to be sold for ta.xes in violation of his duty, and purchases on the sale, he would n\Mn\ general i)rinciples ho ♦ leemed to hold the title as trustee. So, if a mortgagee is allowed to take possession and undertakis to pay the inten-st on other liens out of the rents and jirotits and fails to do so. he could not purchase the land for his own iH'nefil in hostility to the mortgagor on a fon' ♦ losure of an incumbrance for non-payment of interest which In* was bound to pav. .\ mortgagee in possession is bound to account for till' rents and |)rolits; and in that respect, as was said by Shaw, ('. .1.. in Kin;/ v. Insurance Co.. 7 ("ush. 7. ln> may Ik* denominattHl a trustit'. Biit. exccjit in some special sen.se, that is not the relation he bears to the mortgagor. The relation of mortgagor and mortgagtH> is explained in the admirable judgment of Sir Thomas Plumer. in 596 EQUITY KELATIONS. [ciIAr. II. the leading case of Cholmondelcy v. Lord Clinton, 2 Jac. & Walk. 183. He says : "It is only in a secondary point of view and nnder certain circumstances, and for a particular purpose that the character of a trustee constructively belongs to a mortgagee. No trust is expressed in the contract ; i is only raised by implication in subordination to the main purpose of it, and after that is fully satis- fied its primary character is not fiduciary." And again: "The mortgagee when he takes possession is not acting as a trustee, but independently and adversely for his own benefit." A mortgagee in possession may purchase from a prior mortgagee and get an irre- deemable title. {Kirk wood v. Thompson, 2 De G., J. & S., 613, and cases cited; Parlcinson v. Ilanbury, 2 D. & S. 143; s. c, -^ De G. & S. 450; see also, Shaiv v. Bunny, supra; Knight v. Marjoi- hanks, supra.) Lord Cranworth, in Kirhwood v. Thompson, refe. ring to the fact that the mortgagee at the time of the purchase wa in possession, says : "That makes no difference ; being in possess:' could only make a difference if it created an obligation bet ; ' the mortgagee and mortgagor, which would not have existed ii had not been in possession. Xothing of this sort is suggested; duty arises on being in possession except to account in a way one' to the mortgagee." A mortgagee in possession is sometimes spoken of as a tena as having the legal rights of a tenant. (3 Wash. 150.) The a , is not very close between the two relation ; but it is difficn- any reason for denying the right of a mortgagee to pure' '■ hold adversely to the mortgagor in a case when a tenant i sion would be allowed to purchase and hold against the- '^ and yet a tenant may purchase the demised premises on .. execution against the landlord, and when his title is perf "'^ set it up in bar of a recovery for rent thereafter accn lease. {Nellis \. Lathrop, 22 \Yci^d. 121.) , ^^® .^ The first ground stated upon which it is claimed tha, ^..x. ^ ' disabled from purchasing on the sheriff's sale, viz., tha/^^,.^-was c. mortgagee in possession, cannot, I think, be support.>df; ahd it re- mains to consider whether such disability existed b} x :.ocn of th(^ agreement of April 24, 1860. The purpose of that ■'^- neut wa-; to secure Craig for becoming surety for Stewart on '" on the appeal from the Dehon judgment. This j mttso- in the instrument. The object was'the protectior ^ ...^, and if any trust in favor of Stewart resulted from the visions of the instrument it was incidental and collateral to its mary intent.^ I am unable to discover any duty arising out o 'le contract of April 24, 1860, or the circumstances resting upon -aig which de- 'Tliis part of tho opinion is omitted. ■'■'^^'- ^1 Ti:\ KYCK r. (KArc. 507 barn.l him fnnii purchasing, on his own account, on tlio execution !:;ilt'. He was, in sonic sense, a trustee of the rents received under the arrangement, and was hound to dispose of them as required hy the agreement, and this was the extent of his duty. H<> was not bound to protect Stewart aga' ,.-t the loss of the rents through a t^ale of the hind on the hank judgment. If a mortgagee in pos- session may purchase for him.'^elf on a foreclosure of another mort- gage, or buy in an outstanding tith*, then a fortiori couhl a person in the position of Craig. The mortgagee under the English law has the entire legal title, and so far as he is regarded as trustee, the trust is the whole interest of the mortgagor. Craig at most was a trustee of the rents for a term oidy. He had hy the agreement no .terest as trustee or otiu'rwise in the fee wiiieh he purchased on the ^ixocution sale. , The conclusion which I have reached is adverse to the existence her in Stewart or Sanger of a right to redeem, and it becomes 'rn'cessary to consider whether, assuming such right to exist, the utifT, as grantee of ;Mrs. Sanger, succeeded to it. The rule !ch avoids purchases made in violation of his duty {,t the election he rrsiiii tjuc trust is a valuable one and ought not to be im- d l)y engrafting upon it exci>ptions, or indulging in subtle re- i\ nts and distinctions to withdraw a particular case out of its tr/ ce. But after cnreful consideration, I am unal)le to perceive tax-" ^ facts of this case bring it within the rule, and am therefore tain )n that the order should be airirmed, and judgment abso- gag^«^'> n for defendants, pursuant to stipulation, with costs. of tl. cur, except Church, Ch. .1.. not voting. F(»lger, J., not of h '■"'•> ' or'ti'i Order a/finnci], inul itulamcnt arroriliiuili/.^ 550:t(' ^ ■ the d fronoially aro nrcnnl. But «oo Ifarrifton v. Robrrtfi, (» Fin. 711 to ,1! tlKill's h'xrs. V. h'ins, M Ala. !)2 (IS'jiU. and h'ohnts v. FItm- fl,,' •' ^". ^5"' (1><70), srmblv, limiting; tlio doctriiu' 1 ill. VM) y 18t>;>). •t 598 " EQUITY RELATIONS. [CIIAP. II. HALL V. WESTCOTT. Supreme Coukt of Kiiode Island, 1886. (15 R. I. 373.) Bill in equity to redeem a mortgage and for an account. Durfee, C. J. The bill states that on October 23, 1873, Walter J. Reynolds, being the owner of a lot in Providence, mortgaged it for $800 to Stephen H. Williams ; that subsequently the lot passed by mesne conveyances to Charles W. Adams, who, December 30,. 1874, gave two mortgages thereon to Hiram C. Pierce, to wit, one for $3250, and one for $500, subject to the mortgage for $3250 ;. that the mortgage for $3250, though taken solely in Pierce's name,, belonged equally to him and the complainant Harriet Hall; that Pierce assigned the mortgage for $3250 to the defendant Charles A. Westcott, who thereupon, January 23, 1875, gave the complain- ant Harriet Hall a writing in which he declared that he held said mortgage as to one-half in trust for her; that said Pierce sub- sequently assigned said mortgage for $500, and his interest in said mortgage for $3250 to said Harriet, and that said mortgage for $500 contained a power of sale under which, in January. 1882, said Harriet duly sold the estate, buying it hersei' under notice as authorized by statute. The bill alleges that tie defendant is in possession, and contains other allegations. It asks for an account and for leave to redeem. The defendant sets up. several defences.^ The third defence is that the mortgaged lot was sold for the non- payment of taxes, and bought by and conveyed to the defeiiiant. This raises the question whether a mortgagee or his assignee-, arc of possession, can become a purchaser at a tax sale with the same efect, as against the mortgagor and other mortgagees, as if he w^re a stranger to the estate. There is some conflict of authority on this point. All the cases agree that there are persons who stand in sidi relations to tlie estate that they cannot purchase as if they were strangers. Xo person whose duty it is to pay the tax can be per- mitted to purchase at a sale for its non-payment, and acquire a good title as against others who are interested in the estate, since to per- mit him to do so would be to permit him to profit by his own default. Under this rule mortgagors, mortgagees in possession, life tenants, and tenants obligated by contract to pay the taxes, are incapacitated to become purchasers. The incapacity has likewise been hold to extend to tenants in common, for, if the estate is sold for taxes to one of the tenants, it is sold for his default as well as- ^Tho consideration of the first and second defenses is omitted. KK<'- v.] II vi.i, 1. \vi;sr('(»Tr. AMI) for (he (1. ■fault of his po-tonrtnts. (l'//(r. i;} Midi. t.'!l*^; (%,oh',/ v. ir«/r;-/»f/«, Ki Mich. 'MU\ ; Cook'}' (HI Tii.vation, iMil, ;M7.) So a jmtsoii who occupit-.s a fnhi- ciary rehition as regards the I'statc, cannot purchase it for himself. The tnist in tlie one half of the inortga<^e for .^iJ^oO is protected un(h'r this rule. .\iid there are easts wliich enounce, or at lea.st j)resuppose, a still hroader doctrine, which may he stated thus, namely: that a purchaser who has an interest in the estate, such as would entitle him to redeem it if sold to another, will he presumed to have purchased it for the j)rotection of that interest, or to save it from sacrifice, and will he required to hold it, even after tile statu- tory period for redemption has cxpircfl, simply as security for liis reimhursement. We find this doctrine nowhere more clearly as- serted than in Fair v. liroini. in Iowa, 209. The defendant there was interested in the estate hy juduiiic(I in fiivor of the ollirrs that In- made thr [»iir- «lin.>it' for the toiiiiuoii protection.' Wo think a ca-c is shown which entitles the coniplainants to relief. 'Srihiirk V. h'rlli)/. ss In.l. 1 1 J (1882), accord. Compare Vedley v. rili- ott, 02 III. O.V1 (1872). CHAPTER III. EXTENSIOIST OF MORTGAGE. VANHOUTEX v. McCARTY. Court of Chancery of New Jersey^ 1843. (4 N. J. Eq. 141.) The Chancellor JPenningtonJ^ In 183G, during the rage for speculation in real estate, the complainant sold his farm, in the neighborhood of Paterson, to the defendant, Jolin McCarty, for thirteen thousand dollars ; the conveyance was made on the twenty- seventh of April, 1836, and, to secure so much of the considera- tion money, the defendant executed to the complainant a bond and mortgage, in the same day, for ten thousand eight hundred and twenty-two dollars and fifty cents, on the premises, payable in the following manner: one thousand dollars on the twenty-ninth of September, then next; two thousand dollars on the first of May, 1837, and the residue on the first of May, 1838, with interest from the first of May next after the date of the bond, payable on the first days of November and ]\Iay in each year. On the same day that McCarty got his deed, he conveyed the property to Kirk, Johnston and Copland, and they, under an agree- ment made by McCarty with Edward N. Rogers and John A. Stim- ler for a large advance, conveyed the property to them, by deed dated the twenty-fourth of September, 1836. Since the last deed, Edward N. Rogers and John A. Stimler have conveyed to Archi- bald G. Rogers, who has also conveyed to Nehemiah Rogers, in AAdiom the equity of redemption now resides. The bill is tiled for the foreclosure and sale of these premises, under the mortgage made by ^McCarty to the complainant. A decree pro confesso was taken against McCarty and wife, Ed- ward N. Rogers and Stimler. Archibald Rogers and Nehemiali Rogers have filed separate answers, upon which the cause has been put at issue, and depositions taken. The first ground of defence set up is that the transaction is usuriou.s, and the bond and mortgage therefore void.^ ^ The opinion only is given. - The discussion of this point is omitted. The learned Chancellor reachea the conclusion that the evidence fails to establish a case of usury. *'"-^''- '"•] VAN ll(tlTI.\ r. Mci'AIlTY. GUIj Tho next |iniiit taken arises frr live years for the payment of the money, after jjettin;^ his deed, harned for the lirst time, from the eomphiinant, tliat the liond and mort,iia;,'e were payal)Ie at an earlier (lay; lie expressed his surprise, and told tin- eomphiinant that he should look to -MeC'arty and those concerned with him to make ;rood their alainant. 'i'he evidence then proceeds to show that the complainant is jiuilty of a hreach of this agreement; and it is insistecl hy the answer that the defendant, Xehemiah IJogers, is entitleement and controversy nsjiecting ihe land hetween tiie complainant and all the inter- mediate owners down to ami including the pn'>ent, and tliat. too, whi'tluT the mortgage has any connection with them or not. This agn^Mnent is not made with the mortgagor, hut with Kdward X. l?ogers. an internu-diate owner, and is deelan-d to have heen en- teretl into long after the mortgage was made, and for purposes connected with th(^ property growing out of the manner in which sail's wcri' pro|)osed to l)e !na«h'. The ilefenthint must, in my opin- (iU-t EXTEXSION OF MORTGAGE. [CHAP. III. ion. be left on this agreement to his remedy at law. The complain- ant is able to refund in damages, as it is stated, for any amount in which he may be Justly chargeable, and there is no safe mode in this court of settling questions of this character; it is properly a ease for a jury to asseoo the damages, and not for investigation before this court. The e^-jdence would lead me to believe that the complainant has not rega^-ded, as he should have done, the position of men who had purchased property at so expensive a rate, and who had no way of remunerating themselves but by selling off lots; still, I do not see how the defendant can avail him'self of such a defence in this action. C^an this court decree a specific per- formance against the complainant of his agreement in this action? There is no precedent for such a course of practice, and to attempt to settle the damages incident to a breach of such an agreement would be equally against the course of procedure. I am, there- fore, of opinion, that this defence cannot avail the defendant in this action. The last objection is, that the time of payment for the princi- pal was extended l)y the compl'ainant for five years from the twenty-seventh of April, 1837, and the bond and mortgage will of course not be due until the twenty-seventh of April, 1842. This is clearly established, from the evidence, and the defendant is entitled to this time before payment can be demanded. Edward N. Rog- ers expressly so swears, and the whole evidence, as well as the state- ment in the complainant's bill, go to show such an understanding. It is well settled, that the time for payment may be extended by parol. (Chitty on Contracts, 27, in note; 1 John. Cases, 23; 3 John. 528; 2 Wendell, 587; 14 John. 330; 1 Green, 165; Saxton, 280.)^ There must, therefore, be a reference to a master, to ascertain and report the amount due the complainant for interest on the ]»ond and mortgage, after deducting a fair compensation for the use and oe^iupation of the farm; and also, whether a part of the premises can be sold without material injury to the rest. The justice of this case, as far as I am able to reach it in this suit, as it appears to me, is to consider the time of payment for the princi- pal of the bond enlarged to the twenty-seventh of April next, leav- ing the interest payable half yearly. The contract made for comjjlainant's enjoying the possession free of rent, is part of the one for releasing a portion of the lands, subsequently made with Mr. Eogers, and must be settled with that. ^Tompkins v. Tompkins, 21 N. J. Eq. 3.38 (1871), IIJAI'. lU.J VAN S^CKl.I. /■. ()'|II;A1{X. GOo \an SVCKKI. v. olIKAKX. CouHT OF ('ii\.\(i:i;v (»F NiAv .Ikiiskv. \H'J2. (.■)(» .V. •/. A'7. 1;;!) On final hearing on {)k'a(lings and jjiooI's. BiiiD, V. C. Tlie t'oinj)lainants in this case liled their bill to foreclose a n\ortgage which was lu Id hy the testator, in his lifetime, on lands in the l)ill descrihi-d. The hond which tiie mortgage was given to secure had been due for many years. The bill was filed on the 25th day of November, 18«)1. In the month of March, 18!>1, the then owner of the premises entered into negotiatif)ns with Fat- rick O'llearn, one of the defendants, for the sale to him of the said premises. O'llearn was willing to purihase the premises, provided the testator, who was then living, would not recpiire tlu; j»aymcnt of the mortgage, which he then held, for one year from the 1st of Aj)ril then next ensuing. Both parties to the said negotia- tions requested Mr. WyckofT, a counselor at law and intimately acquainted with the testator, to procure the consent of the testator that the time for payment of liis mortgage should be extended for one year from the 1st of April, 18«)1. lie did procure such con.^ent. Thereu|)i)n the negotiations for the sale and purchase of the prem- ises were carried through. There being no doubt as to the amount of money actually due uj)on the bond which the mortgage was given to secure, the only question is whether the complainants had a right to commence their suit to fonvlose said mortgage before the expiration of the one year from the first day of A])ril, ISDl. The complainants say that the obligation being in writing and under seal, the time for the performance thereof cannot be enlarged by a parol agreement. 1 think all of the authorities, in this State at least, hold the time for ])erforn>anee of every such contract may be extended by parol. (BiCfClow V. RonimcU. !• ('. K. Or. 1 I •") : Tompk\n< v. Tompkins. (*» ('. E. Or. 338; Mnn/oll v. Unilnii. <; ('. K. (Jr. 3S1 ; <'o.r v. lininrlf. 1 Or. K;."); Vniihoiiicn v. MrCarh/. 3 (Jr. Oh. Ill ; Slii/Wr v. Vnii- (hrhi'll, 1 Dutch. -IS?; Hell v. lioniniiir. 3 Stew. Kq. 28; Sluirp v. Wyrl-off, 12 Stew. Va\. 37(5; Mrnsiirall v. I\',irr,'. \ Atl. Hej). CuS; King V. ytorford. Sax. 274; Stoutcnhurgh v. Tomkinn, 1 Stock. 332; TinhUrln v. ^^altvr. 8 Paige, 173; hilliinnn' v. Ifnrsm. If Johns. 32!).) Again, the comi>lainants say that if the time for performance of a written contract may be extended or enlarged by parol, sonu» consideration must bo shown therefor l)efore the court will cnforco such parol contract. The prop'>sition tlms stated is supported by 606 EXTEXSIOX OF MORTGAGE. [CHAP. III. the authorities. {Parl-er v. Jameson, 5 Stew. Eq. 222; French v. Grij]in, 3 C. E. Gr. 279, 281.) But a court of equity will sometimes prevent parties from dis- regarding their promises, even when no consideration has accrued to them upon the making of such promise. If a party asking the aid of the court waive strict performance of his contract and makes promises to the defendant upon which the latter has acted and altcrecl his position, and it should appear to the court to work a hardship to the defendant to allow the complainant to with- draw his waiver, a court of equity always applies the doctrine of es- toppel. In such case, although no consideration or henefit accrues to the person making the promise, he is the author or promoter of the very condition of affairs which stands in his way; and when this plainly appears, it is most equitable that the court should say that they shall so stand. (Martin v. Fighter, 2 Stock. 510; Church v. Florence Iron Works, 16 Yr. 133; PhiUipshurg Bank v. Fulmer, 2 Yr.«55; King v. Morford, supra; Huffman v. Hummer, 3 C. E. Gr. 83, 90; 8tryl-er v. VanderbiU, supra; Miller v. Chetivood, 1 Gr. Ch. 208; Cox y. Bennett, 1 Gr. 165; Lee v. KirhpatricJc, 1 McCart. 264, 267; Continental National Banl- v. National Bank Com., 50 N. Y. 575; Garrison x. 'Garrison, 5 Dutch. 153.) The bill should be dismissed with costs. DODGE V. CHANDALL. Court of Appeals of Xeav York, 1864. (30 N. Y. 294.) Appeal from a judgment of the Supreme Court. ^ Wright, J. The mortgage sought to be foreclosed by action was, in the winter of 1858-9, held by the administrator of S. Y. R. Mallory, deceased. The premises covered by it had, after its execu- tion, and about the 23d February, 1856, been conveyed by the mortgagor to the defendant Ilolcomb, who assumed the payment of the mortgage as a part of the purchase price of the premises. Thn mortgagor had i)aid the interest, and $266.66 of the principal sum secured by it, before the sale and transfer of the premises to Ilol- comb. Afterwards Tfolcomb paid the interest. The whole prin- cipal became due and payable on the 1st March, 1858. Shortly ^ The staten>ent of facts is omitted. < "•^'■- '"•] DODGL i. CIt.VMJALL. 007 Ix'fon" thf "^^stli February, l.s.")!) (tlic administrator of Mallory l)i'iii^ about to fon-elose tlie inortga^a'), Ilolcomb entered into an a^'reenient witli the plaintilF's tt'stator, wliereby the latter agreed lo purchase the mortgai,'!' of Mallory 's administrator, who then held the same, and ('xtcnd the time of j)aym<'nt five years, or give that atlditional time from tlu* time he took the assignment, to pay the balance due upon the l)ond and mortgage; in consideration of which, Ilolcomb agreed to pay him fifty dollars, which he did j)ay, and llolberton took the assignment of the mortgage, and continued to bold the same, and receive |)ayments of interest thereon up to his death. The bond and mortgage were assigned to the plaintiff's testator on t2Sth February, IS")*!, and the time agreed to be givcTi to Ilolcomb to make payment would not expire until the 28th Feb- ruary, lS(iL This foreclosure suit was brought \n -June, 1S<)2, and the question is whether the executor of llolberton is entitled to sustain it, not- withstanding the contract of his testator to purchase the mortgage, and forbear foreclosing it for fivi' years; or, in other words, to <-.\ti'nd the time of j)ayment of the debt secured to be paid by it, and which was due, for five years from such purchase. If Holberton, in the face of his contract, was not entitled to maintain an action to collect tlie principal secured by the mortgage by a foreclosure tlu'reof before the five years elapsed, it is very clear his representa- tive is not. The ground taken at the trial was that the contract was void by the statute of frauds, not being in writing, and being an agree- ment that by its terms was not to be performed within one year from the making thereof. (2 R. S. 13"), ^ *>, sub. 1.) I am of the o|)inion that it was not affected by the statute. The statute applies lo executory, and not to executed contracts; and the one in question, 1 think, was of the latter description. It was certainly executed by Ilolcomb; and it seems to me the purchase of the mortgage by the ]'laintifF's testator was an execution on his part. llolberton agreed in substance to j)urchase the mortgage, and forbear to fonnlose it for five years, in consideration of fifty dollars. lit' did purchase, and take an assignuient of it, and Ilolcoiub paid him the fifty dol- birs. Tims, the contract was fully executed. Nothing further re- mained to be done by either party. llolberton had simply to wait live vears for his money. Ilolcomb had j)aid the consideration monev, and llolberton had entered upon the contract by nveiving the money and p\irchasiug the mortgage, and neither party could rescind it. Neither \'i.) And so, I sup- pose, under the jiresent system the same evidence may be given under a general denial, as it goes to controvert what the j)laintitT is bound to establish by his evidence, to wit: the existence of a de- mand due at the commenci-ment of tlie action. In such a case the sub.-ie([Ui'nt agreemc^nt o|)erates uj)on the instrument, where the de- mand is evidenced by writing, and becomi^s part of it, so that tlie obligation, instead of becoming due according to its terms, is only due at the exjjiration of the extended time, and until that happens, no action can be maintained iijmn the instrument. The subscipient agreement does not operate to destroy the original agreement, but only to modify it in respect to the time of payment. It is claimed, however, on the part of the plaintiff, that this j)rin- ciple has no application to instruments \indi'r .seal, and that in re- gard to instruments of that character, it re(iuires an agrei-meiit in writing of e(|ual solemnity to etTect a change or modilication in any material particular. This seems to be the rule in such ca.ses, before any breach of tlie specialty, and where the sul)se(|uent agreement i^ executory UK-rely. It was so held in AUrn v. Jntitiisli. 21 Wend. fi2S, and in Kthli/ v. Graves, 23 id. 84. cited in the opinion of the court in this case at general term. Ii\it it is. I think, etpially well settled that after the breach of a sealed au'reement it may l»e mollified in any reLMsTi:\ii I. i..\iiMi:i{. (ill IS!)(i, iiKxlih iii^f and. a- iiiiidifird, allinuiii^ a jiid;^mt'iU entered ii()oii a decision of the (■(•iirt on trial at Spcoial 'rcriii. in August, ISTS, one .lolm (i. LatinuT ('xccutrtl Ids Itond with a niort^'a^^'c on a lot and l)uildin>j: on Allaidir stn-et. Hrooklyn, to sc- . HIT tlu' Sinn ot" $1S,n()0 JKirrowcd l»y him. 'Tlic plaintiff snhsc- ijiimtly aniuircd that hond and inorl;,M^t'. in I SKI Latimer died int«'>tate, seised ol the nior(;;a,i:ed premises, leavin;; a widow and four lirothers (the three defendants and one .lames D. Latimer), his only heirs at law. Letters of administration were issued on the I -tate of Jolin (J. Latimer, and upon ."Settlement of the estate it ,[)peari'd that the piTsonal estate was I'xliausted i)y the payment I the dehts and expenses of administration, leavin;; a deficiency in Me amount due for administrator's fees. The deceased left real I -tate of considerahle value, all of which was, prior to the com- mencement of this action, sold hy the three defendants Latimer, as heirs at law, for the a;,'frrej:ate sum of $r)7,r)00, the value of the willow's dower in which was estimated at $8, -!'.?(), leavin;; the not value of the lands sold in the hands of each of the defendants at the time of the trial at $12,'2()S.r)(), outside of the mortpi«red prem- ises. The latti'r were conveyed, during the years 1888 and 188!), to Fre(lerick li. Latimer hy hargain and sale deeds, each recitinir the ( cinsideration of one dollar, .\fter Frederick had accpiiretl all the interest of his hrothers in the mortgaged prennses, he and the [•laintitr executed the following agreement [October 15, 1801] : "We agree that the time for the paynu'nt of the Bond and Mort- gage for $18,0(10 on '201 and "io;? .Vtlantic .\ venue, Brooklyn, made hy .John (i. Latinu-r to the executors of Xoah T. Tike and recorded in the Kogistor's oflice of Kings (Vmnty in Liher H'i') of Mortgages, page 17, August 'M. 1878, heing the date thereof, shall he and lierehv is extended to May 1. 18!),"i, subject to the same terms and tuuditiiMis, including tax. insuraiu-e and interest clau.«ies, as at pit'sent." In .\pril, is:i'.\ a lin- (xcurred in the buildings on the mortgaged }»r<'mises, by which they were jiartially inj\ired. Tn an attemj)t to restore the buildings they collapsed and became a total loss. By this accident the vahie of the mortgaged j)remi. C. I.AIIMKU. (',].] ..f -iiid iioir until the fir.-t iLiv (if Ajtiil, ]9,y,, ;in(;: h'rifiKjIds v. W'unl. ."i Wend. .'tOI : F>iTh>„ v. .]f(if(li>'irs. 1.', .lohn. -\:V.]. A dissent in^-^ opinion was written l)y Judiie Davies, who two or ihree years later wrote tlie ])rincipal ojiinion in Ifiillidni/ v. Ifurt, '•" X. ^. 17 1. In tlial t-Ar a period of soitie months, and claimed that the etrect of such xti'nsion was to discharge the sureties from liahility. The authori- iies bearing upon the question were very carefully considered, and the court tlecided that a partial payment hy the maker on account f an overdue note is not a valid consideration for a ))romise of iiltearance as to the residue so as to discharge the indorsers. .\ '•noiirring opinion was written l»y Judge Iloirehoom, in which '■>• says: '"The sureties wi-re not discharged. There was no nilid greenient for the extension of the time of payment. 'i'lu*re was no payment of any sum which the ))arty ))aying was not ol)lig«>d to j)ay. The performance of an nn* X. Y. ('.01. The action was upon a hond given hy Ivly, as princi|>al, with Par- ■Monter, as surety, conditioned that Ely should, before a given date, ike uj) and deliver to the plaintifT two mortgages ivxeeutcd by him, mounting to ten thousand dollars. The action was brought gainst the jiersonal representatives of the surety, the principal laving uivty. The court, recognizing the 614 EXTENSION OF MORTGAGE. [CHAl'. III. principle that a creditor by a valid and binding agreement between himself and the principal debtor, extending the time of payment without the consent of the surety, thereby discharges the latter from liability, said that in order that an agreement shall accomplish that result it must have a sufficient consideration, so as to prevent the prosecution of the debt by the owner, and to prevent the surety from compelling him to enforce it. It was claimed by the plaintiff that he was induced to enter into the agreement, and take notes extending the time of payment, by the fraudulent representations made by the principal debtor, and it was held that the court prop- erly left it to the jury to determine whether the notes were imposed on the plaintili' by fraud, and if so that their receipt by the plaintitl' under the agreement did not operate to extend the time of payment of so much of the amount of the bond as their face value repre- sented. It was also held that the judge properly charged that in any event the extension of the time of payment did not discharge the surety as to the residue of the bond beyond the amount of the notes. In Parmelce v. Thompson, 45 N. Y. 58, one of the makers of a promissory note after maturity paid to the payee a sum equal to the amount due thereon and took possession of the note. Subsequently he brought suit against another maker, who gave evidence tending to show that while the payee held the note an action was brought thereon in the Supreme Court, and that it was agreed between the defendants and the plaintiff therein that the suit should be discon- tinued, the defendant to pay the costs and have until the ensuing December to pay the note; that the costs were paid and the suit discontinued, after which the plaintiff became the owner of the note and brought the action before the expiration of the time agreed upon, and the trial judge held that there was no valid agreement to extend the time of payment. The judgment was affirmed in this court, the opinion being written by Judge Allen, in which he said : "It is competent for the parties, by a parol agreement, to en- large the time of performance of a simple contract. . . . But a promise to extend the time of payment, unless founded on a good consideration, is void. A payment of a part of the debt, or the interest already accrued, or a promise to pay interest for the future, is not a sufficient consideration to support such promise." (Citintr Miller v. llolhrooJ,-, Gibmii v. rienno. and Kellogg v. Olmsted, supra. ) In Powers v. Silherstein. 108 N. Y. 1(J9, the action was brought upon a promissory note made by the firm of Joy & Bowman and in- dorsed by the defendant Silberfitein. who alone answered, setting up as a defense that the note was indorsed l)y him for the accom- modation of the makers, and that the time of payment was extended ''"•^''- "••] «»i,msti:ad c. i.vtimkk. G1,"> by an a;;rc'cin('ii(, made wiilioiii his c-onsciit, Ix'twccn the makers and tlie plaintill'. 'I'lic jilaintiir had jud^Miicnl in tlie trial eourt, which was allirnu'd at the (JcntTal 'rcrin, hut reversed in this eourt on the ;,M<)un(l that there was evich-nce tending to establish tliat the phiintiir, after the maturity of the note, a^^reed with the makers, .Joy i'lL' Bowman, to forhear the ectlleelion of it if they wouhl continue phiintilT's son in tlieir emj)U)yment, and that Joy & How- man consenti'd and did retain him in their service ui)on this e.)ii- sideration. In the course of the opinion the court cited Luu-nm/t V. Yates, supra, upon the proposition that a mere indulgence by a creditor of the principal debtor will not discharge the surety, and that the agreement for an extt-nsion, made without the consent of the surety, must be upon a valid consideration, such as will preclud • the creditor from enforcing tiie debt against the principal, but argued that the ])laintifT did not deny that the employment of his son was an inducement to the original loan, or that the subject of his continuing employment was referred to in his conversation with the makers of the note after matui.ty, and that, taken in con- sideration with the fact that the loan was allowed to remain stand- ing for three years after the maturity of the note, presented a (jues- tion f(n- tlu' jury a> to whether there was an extension of the time ujion a good consideration. Our attention has not been called to any authority in this court in hostility to the jxisition taken in the decisions we have referred to. The rule laid down by them has been followed in many cases in the trial courts, and among tlu-m may bi' found the comparatively re- cent cases of Mdiicheslcr v. Vdii linnit. l!i X. Y. Suj)p. 085, anil Bahcock V. Kuntzsch, 85 Hun, i!]."). The ri'asous assigned by the learne so flrndy grounded that it may not now l)e (piestioned. The judgment should be reversed as to the defendants Henry .\. and Hrainanl (!. Latimer, and that of the Special Term moditi-il by striking out tlie direction to the reforpo to pay co.sts to Hrainard Ci. and Henry .\. Latimer, and so further modified as to adjudg'' that the defendants, Frederick H. Latimer. Henry .\. Latimer and Brainard (J. Latimer, each |»ay to the plaint ilT one-quarter of any ()lfj EXTENSION OF MORTGAGE. [CHAP. III. deficiency that may arise on the sale of the mortgaged premises under said judgment, and as thus modified affirmed, with costs. All concur. LOOMIS V. DONOVAN. Supreme Court of Judicature of Indiana, 1861. {17 I nd. 198.) Appeal from the Cass Common Pleas. Perkins, J. Suit to foreclose a mortgage, which was the sole written evidence of the debt, no note or bond having accompanied the mortgage. The suit is against W. A. Parry and C. C. Loomis. The mortgage was given by Parry to Donovan. After it became due, Donovan agreed by parol with Parry and Loomis, all three being together, that if Parry would sell, and Loomis would purchase Parry's equity of redemption in the mortgaged premises, assume Parry's mortgage debt, and pay $50 down upon it, he would extend the time of payment of the balance, and the foreclosure, until July 1, 1861. The agreement was concluded between the three. Loomis made the purchase of the equity of redemption, assumed Parry's mortgage debt, and paid $50 upon it. Donovan did not delay the foreclosure suit till July 1, 1861, and Loomis, one of the defendants, sets up the foregoing facts in answer to the action. The court below held them no bar, and gave judg- ment of foreclosure and sale. Was the ruling of the court right? This is the only question. The point is this. A creditor who holds a sealed obligation for the debt, past due, agrees with the debtor, by parol, for a valuable consideration, viz., that he procure a third person to perform an act, that he will extend the time of payment ; and ho agrees, in like manner, with such third person, that, if he will do the proposed act, time shall be given on the debt, as to him. Here, then, is an agree- ment by parol, with an existing and, substantially, a new debtor, for a consideration which is executed, at least in part, to give time, as against both of them, on an existing bond debt, till a given day, and the question is, will a court of equity give effect to it? It does not involve the question of discharging sureties; but of how far the debtor and a new surety can have the benefit of an agreement for time. (See, as to giving time where sureties are concerned, Halstead '^"Al-- III.] LOOM IS r. DONOVAN'. Gl7 V. liroirn. post, j). 202; and wlicrc tlifv arc not, Mcndenhall v. Lcn- >r,'l/, :, Black f. 125.) It is st'ttlcd law that Riving time to the principal by a binding,' contract, though made after broach, dischar<:('s the surety. Why? Because it is .•^aid that the surety has two rights under the contract ;i«; originally made, at coininon law, viz., to j)ay otT the del)t a.s soon IS it becomes due, or at any tinu' afterward, and then immediately -ue the principal to recover back his money; or, to apply to chancery tor the collection of the debt l)y the creditor, in which suit the < reditor and principal debtor are brought before the court imme- diately; and that a valid contract by the creditor, extending the lime of payment to the i)rincij)al, ties up the hands of the former, -o that he can not enforce payment of the contract when thus brought into ihancery, and that the surety can not enforce it, and, iieiue, is injured by the act of giving time. (Ijcading Cases in \-A[\ui\\ Vol. 2, Part 2, p. 3G2, side p. 71(5.) It is evident that c(piity will not enforce a contract upon which time has been validly ^iven, till the extended time has elapsed. And this doctrine of dis- charging sureties becausi' of the extension of time to the principal, in a contract which forbids its enforcement within such time, was of chancery origin (Dirkersun v. Tlte Hoard, tl'-r., G Ind. 128), and Ix'longed intrinsically to equity. (1 Eden on Injunctions, 3d ed., 1>. (!.">.) And it made no difTerence that time was given by parol upon a contract under seal. (T-,eading Cases in E([uity, Vol. 2, Part 2, top p. 3(;!i; Burge on Suretyship, p. 212.) Later, the doc- trine was applied at law to the extent of releasing the sureties, but not to the extent of suspending the action at law against the princi- )ial. where the new contract was made after breach of the original. {Pit kv ISO II V. The Hiuird, S:r., supra. But see MrCuinb v. A'i7- liidijr, 14 (). Hep. IMS. And see Rigshce v. liowlrr, ante, p. 1G7.) I'erhaps e(|uitv would grant an injunction to restrain the action at law again.st the princi])al till the extended time had elapsed. (Hurge on Suretyship, p. 2n(;.) "This doctrine (says th»> Su- preme Court of Verm(mt). which is derived from chancery, is f«)untled on the obligation which the contract for delay imposes \\\wn the con.; it w;is paid to Wlicclcr ; In- cfinvcvcd the laiul to the aj)- ])C'llants on Manli .inih, ISTT; ami tlicv coiivryt'd it to the a])iH'lk't's liy an al)>oiiitc dfcd, dated .Fnnc IKtli, is'T. TluTc ^^'as ovidcnco ttMidin;; t<» >\un\ tlial, l»y tlic aj^'rcemt-nt, the appollees were to execute a hoiul to the appi-llants for a recon- vevancc of the land on the repayment of $1,H(K> and interest, in two jiionths from the date of the bond, hut there was no proof of the execution of the bond, and, on the 2(\ <»f Au;iust, 1S7U, more than two years after the date of the deed, the prinei|>al and all tlie in- terest beinj:; unpaid, tills suit was commenced. The issues joined were tried by the Court, who found for the appellees, that they were entitled to foreclosuri- for $'.*,0.'i-.' ; the a))])ellants' motion for a new trial was overruled; jud^'incnt was rendered upon the finding, and this appi-al was taken. Several errors were assi},mcd, but only one is discus.-^cd in the a])pe]Iants' brief: the others are therefori' waived. The error relied on in the brief is, sustaining the a|»pellee-' de- murrer to the second j)aragraph of the appellants* answer. That answer is pleaded to the entire complaint. The lirst para- graph of the complaint avers that the deed was executed to .seeun; the payment of $1,S00. of wliieh $1,400 was the purchase-money of said land, paid by plaintilFs, and that there is now due an not executed to secure the money and ten per cent., but to .secure the consideration therein expressed, antl six per cent., which .-ix j>er 620 EXTENSION OE MORTGAGE, [CHAP. HI. cent, was paid before suit brought, and that, on x\pril 1st, 1879, the appellees agreed that if appellants would pay to them six per cent, interest yearly on said $1,800 they would extend the time of pay- ment two years from April 1st, 1879, and that appellants, in con- sideration of such extension of time, faithfully undertook and prom- ised to pay the appellees said six per cent, yearly, which they are ready to do as the same shall mature. Wherefore the defendants say the money secured by said conveyance is not yet due. So far as this plea alleges that the interest was to be six per cent., and that no interest was due at the commencement of this suit, it is embraced in the general denial already pleaded. So far as it states an agreement in April, 1879, to extend the time of payment two years further, in consideration of the appellants' undertaking to pay six per cent, interest yearly, it amounts to nothing; this un- dertaking is not averred to have been in writing and was not to be performed within a year, and there was no consideration for it ; the money, already past due, bore six per cent, interest, without any agreement. In substance, the plea states an agreement not to sue for a limited time, and states no consideration therefor; but such an agreement, even if founded on a sufficient consideration, can not be pleaded in bar of an action within the time. {Irons v. ^VoodfiU, 32 Ind. iO; MendenhaU v. Lcnivell 5 Blackf. 125; 33 Am. Dec. 458; Berry v. Bates, 2 Blackf. 118; Newlirh v. Neild, 19 Ind. 194.) The Court, therefore, committed no error in sustaining the demurrer to the second paragraph of the appellants' answer. Its judgment should be affirmed.^ Per Curiam. — It is therefore ordered, on the foregoing opinion, that the judgment of the court below be and it is hereby in all things affirmed, at the costs of the appellants. ^ Aijers V. Hamilton, 131 Ind. 98 (1801), accord. Contra, that a valid agreement to extend the time of paj'ment enlarges the period of redemption and suspends the right of foreclosure: SchoonJwrcn v. Pratt, 25 111. 379 (1861); Union Central Life Ins. Co. v. Bonnell, 3.5 Oh. St. 365 (1880); doodall V. Boardman, 53 Vt. 92 (1880). And see Seymour v. Bailey, 66 111. 288, 306 (1872), and Alhcrt v. Crosvenor Investment Co., L. R. 3 Q. B. 123 (1867). AssK.NMKN'r oi' M()ii'i'(;.\<;i-:. Section I. Mum: ok 'ri(AN>,i-i:u. LAW1{KX(1-: V. K\AI'\- MKNZKV. SrriiKMi: Coiim- ok 1-j;i;oi;s oi- ( '(txxiicrK ri-. ITHl. ( 1 A'oo/. -.M.S.) Petition in chaneerv, shewing thai Lownsbiiry was indcljt.'d to Plat, for whieh he gave his note and a mortgage as eoUatcral se- eiirity. which deed was recorded. Phit was indebted to HunfiT, and for a vahni])h' consideration assigned said note to him (anomf way quieted in his right to said lands. This cause was twice argued. The court now granted the peti- tion and passiMl a decree against ^Fenzc^v (Ktiap having d«'eeased j)en(ling the suit) for him to reh^ase all his right to said mortgage.l jtremises, upon the principl(> that the petitioner owned the debt for which said mortgage was given as collateral security — that hi> who is entitled to the debt, which. is the principal thing, hath right to all the collateral .securities given to ensure the j)ayment of the <1ebt ; especially as in this care intended as collateral security for the payment W poilioTi of llic opinion, rclatinj,' to the qiiostion of usury, is omitted. ***^"-'- "vl CiHKKN V. IIAKT. Ov'.'] liii.-(iii, as his iru^lcc. .lolui.-oii, ilicivfun-, in (.'ViT} niuital)k' point of view, was holli the niakt-r of the note ami jiiurtga^'or, as the niort<;age was executi-tl, hy his direction or pro- curement, \)\ his ini>tte, who has disehiiinetl all other interest than siuii as \n' hol(I> as irii>trr, and respecting' whose interi'st the parties tlo not iliU'er. The endorsement of the note hy the appelhmt to the respondent was aeeompanied \)\ th( delivery of the mort^'a^'e. If the note was >aiisHed, it involved the satisfaction of the mortji;af,'e, for the exist- ence of the mort«,M;^'e, hy express reference, dependetl upon that of the note. In its essence, and by act ami operation of law, it was parcel of the same contract, executed at the same time, directed to the same object, and to be satisfied ijy the same means. The doctrine laid down by Lord Mansfield in the case of Martin, c\ dem. Weston v. Moirlin, 2 Burr. IMi!), which was cited in ar;;u- mmt l)efore me, apjilies to this jioint with much force. The ques- tion in that case arose on a bill between the representatives of the real and the repivsentatives of the personal estate of the testator. In definin-,' the sjiecies of property of a mortjra^'or. Lord ^h^ns- titld observed : " .1 ntorffjaye is a clianje upon the land, and ivhat- ner irill giro lite nioncij ivill carry the estate in the land along iritk tt. to every purpose. The estate in the land is the same thing as the money due upon it. It will be liable to debts; it trill go to ex- ciutors: it u-ill jxtss hy a will not made and executed with the solem- nities required by the statute of frauds. The assignment of the drlit, or forgiving it, will draw the land after it, as a consequence; nay, it would do it. though the debt were only forgiven by parol; for the right of the laud would follow, notwithstanding the statute of frauds."^ The receipt of Ki)hraim Hart designates the mortgage as deliv- ered, but not assigned. This, it apjiears to me. was merelv descrip- tive of its situation at the time of its delivery. It had no fonnal a^-ignment ; but if it was intended not to be assigned, its delivery l<• .TikIl'c Tmwlii i.")1 (lSl-2), '/wru in part, viz/mi p. 21. (j2-i ASSIGNMENT OF MORTGAGE. [CHAl*. IV. 1st. That the respondent having, in his bill of complaint, inter- rogated the appellant as to the consideration for the note and mort- gage, his answer, in relation to the usury, becomes evidence in the i-ause, and is not disproved. 2d. That it was not Green's intention to transfer the mortgage to Hart; and had it been so, nothing passed by the mere delivery, as the statute to prevent frauds and perjuries requires a deed or note in writing. 3d. That the decree is erroneous in directing the whole amount of Johnson's note and mortgage to l)e paid to Hart, inasmuch as it Avas a security to him for $1,191.11 only, the difference between which and Johnson's note being clearly due to Green. With respect to the first point, it is to be observed that the re- spondent was in possession of Johnson's note as endorser; and the fact of the absolute endorsement by Green was prima facie evidence of a full and adequate consideration paid for the note. The re- spondent was under no necessity of inquiring into it; but he did allege that the consideration was a full and valuable one. Tliis the appellant might have denied; and had it been incumbent on the respondent, he must have proved liis allegation, or failed in the suit. The burthen of showing that the consideration was illegal or inadequate rested on the appellant. When he goes into a charge of usury he departs from the question put to him, which admitted only of an affirmative or negative answer ; and it was wholly imma- terial whether it was the one or the other. I view, therefore, the appellant's answer, charging usury, as insisting on a distinct fact, by way of avoidance. The respondents having replied, and given him an opportunity to prove the fact, and he having failed to do so, his answer is no evidence of the fact. This is a well established prin- ciple in Aancery proceedings, and will be found recognized in every treatise on evidence in that court. Courts of equity consider mortgages according to the essential nature of contracts, and give them operation according to the in- tention of the parties : the debt is, consequently, there esteemed the principal, and the land the incident; and whenever the debt is dis- charged, the interest of the mortgagee in the land ceases of course. There is, then, a manifest distinction between absolute estates in fee and conditional estates for securing the payment of money. Mortgages are not now considered as conveyances of lands within the statute of frauds; and the forgiving the debt, with the delivery of the sccuritv, is holden to be an extinguishment of the mortgage. (Powell, 3d edit., Mort. 54; Barnard, 90; Eichard v. Sims, 2 Burr. 079.) If, however, a mortgage was within the statute, the circum- etanees of this case would exempt ii from its operation. In case of ^^^- '■■! (ii{i:i:.\ r. jiaki'. 62.> tliL- payiiicm ni ihr iiu.iu'V siriiivd by inorlgagf, in I'ljuity a trusl arises for tlic bcndit of tlio mortgagor; so, whoro the debt thus se- lured is tran.-lVrrcd by the inortgagtr, he l)eeoiijcs a trustee for the benefit of the person having an ini'Tesl in tlie del)t. {2 Anstruther. 4:]S.) In the ease of Mmiiit v. ]foirlln. v! Burr. !>T;», I^rd Mans- field lays it down as an '-tablishcd principle, that the assignment of the debt will draw the land after it ; and 1 cannot agree that this was an obiter did inn of tlie iud-M'. In the jiresent case the mortgage was delivered to the assignee of the debt. Had it not been delivered, nor anything said about it, I should have eonsidc red the resj)ondent, on the failure of Joimson to pay the note, entitled to the aid of the mortgage. It was compe- tent to the jtarties to agree that the mortgage should not be resorte I to by the holder of the note; but the i)roof of such agreement lie-^ on the appellant, and it slKMild be cxplieit. The receipt furnishes no evidenee of such agreement ; it describes the real situation of tlu- mortgage as not a.ssigned. Rut this expression falls far short of an agretMuent that it was not to be assigned. It does not appear that the appellant had any rights prejudieed by the assignment of th • mortgage; and it is impossible to evade the force of the fact of hi. depositing it in the resj)ondent's hands. It speaks a language in- capable of being misunderstood, and is decisive of the question. An issue to investigate the intention of the parties, on that act, would have been useless. T th<»refore think that the respondent ha.l an equitable interest in the mortgage equivalent to tlie amount of the principal and interest of his note against CIreen. I shall be very brief on the last j)oint, because I understand the chancellor as saying, in assigning his rca.cessarily or absolutely adjudged on the former appeal ; and I am, therefore, disinclined to allow anything heyond the tax- able costs. Jiiflgmrnf of nffirmnni-r} ^Southrriii v. \(rn.')), urmni. 626 ASSIGNMENT OV MORTGAGE. [CHAP. IV. WAEDEN V. ADAMS. Supreme Judicial Court of Massachusetts, 1818. (15 Mass. 233.) This was a writ of entry by the said Warden, as assignee of a mortgage made by the said Adams to one John Earle. The action came on for trial before the Chief Justice at the last April term in this county, and the parties agreed that the follow- ing facts should be considered as proved in the case, viz. : The said Adams made and executed the mortgage deed declared on, con- ditioned for the payment of six promissory notes made by the said John and one Lewis Adams, payable to the said Earle or his order. Afterwards the said Earle became insolvent, and from the 15th of November to the 5th of December, 1815, was in failing circum- stances. Previously to the assignment hereafter mentioned Earle had pledged one of the said notes to a person not interested in this suit, but did not assign or deliver over to him the mortgage deed as security, and he afterwards redeemed the note, which he had since transferred to one Sewall Hamilton, but not until after the execution of the assignment to Warden. On the 20th of November, 1815, he deposited with a scrivener two of said notes, and also the mortgage deed, for the purpose of having an assignment thereof made to Warden to secure a debt due from Earle to him. On the 27th of the same November, Earle endorsed one of the said six notes to said Hamilton, as part security for a debt due him from Earle, and at the same time assigned said mortgage deed and the premises therein mentioned to Hamilton, by his deed duly ac- knowledged and recorded on the same day: the said assignment being made on a separate piece of paper, and referring to the mort- gage. On the 28th of said November, the said Earle executed an assign- ment of said mortgage deed, on the back thereof, to said Warden, as security for his said debt to him and of some debts due from Earle to certain other persons, which Warden was to assume. This as- signment was not acknowledged or recorded. The mortgage deed and the two notes, left with the scrivener for the purpose of having an assignment made, remained in the scrivener's hands until the actual execution of the said assignment to Warden. Hamilton re- covered judgment for possession of the mortgaged premises against Adams, and possession was delivered to him by the proper officer: and Adams afterwards entered and continued in possession by a parol lease from the assignee of Hamilton. ^*'-'- '•] w .\i;i)i;\ /'. AiiA.Ms. 021' The (li'iii;iii(I;iiil otTcrcd to jn'ovr. \)\ the tc.-t iiiioiiv of Earlc, that wlicii lie iiiiiilr the assignnuMit to Ilaniilton. and prior to that time, Hamilton kiuw that the ori^'inal inort^ia'rc (Iml was in the hands of the scriveniT, for the i)uri)os(' of an assignment Ijein;,' maih- to tlu' *S, that " a mortgage is a charge upon the land: aJid whatever would give the money will carry the estate along with it, to every iturjHise. The estate in tlie land is the sanu' thing as the money due uj)on it." '' The assignnu'Ut of the debt, or forgiving it, will draw the land after it. as a con.sequence ; nay, it would do it though the debt were forgiven only by parol : for the right to the land would follow, notwithstanding the statute of frauds."' This doctrine is recognized and confirmed by the Su])reme Court of Xi'W York in the ca.se of Green v. Harl. 1 .Tohns. TiSO; see also Powell on Mortgages, 18G to lf)0; 11 Mass. Hep. 47:). Then the second assignment by Earle to Hamilton, with the knowledge of the latter of tlu' prior transaction, was frauduU-nt aiul void as to the demandant. And if we should be debarred from fixing this knowledge upon him, we contend that lu' mu-t be presumed, from the facts found in the case, to have known of the delivery of the deed to the scrivener, and the purpose of such delivery. The ab- s«'iu-e of the mortgage deed should have jtut Hamilton on his guard ; and he is chargeable with fraudulent motives in taking an assign- nu'Ut under sucli circumstances. It can make no dilTerence that but two f)f the six notes were endorsed to the denuindant. The nitirtgage was given as security for these two notes, and might legally and e(|uitably be assigneil with them. That Karle was a cojupetent witness, we refer the court to the <'asos of Loker v. Uatjnes, 11 Mass. Kep. II)S; The Inhahilants of Worcester v. Eaton, ibid. 3(58, and ///'// v. Paifson tf- nl., 3 Mass. "638 ASSIGNMENT OF MORTGAGE. [CUAI". I\% Eep. 559. He was not offered to impeach his own deed, but merely to postpone the security intended to be given by it. Newton for the tenant. — The assignment to Hamilton was prior to that to the demandant, and being in every circumstance con- formed to the requisitions of the statute, must have the preference. The assignment of a mortgage is a conveyance of the rents and profits. (11 Mass Hep. 474, Goodivin v. Eichardson, Adm.) Then the assignee has such an interest in the land as cannot pass without writing. The dictum of Lord Mansfield in the case of Martin v. Moivlin has been completely put down by Judge Trowbridge in his tract upon mortgages (8 Mass. Kep. 557, and seq.) ; and it may well bo presumed that if the judges, who agreed in the decision in the case of Green v. Hart, had read that tract, they would not have given the opinion they did. That decision was, however, in chancery, and is no precedent for the government of this court. If the fact proposed to be proved by the testimony of Earle were legally in evidence, it would not better the demandant's case. (See 12 Mass. Rep. 523; 11 Mass. Rep. 312; 5 Mass. Rep. 133.) Ham- ilton had the first legal assignment of the mortgage, and there was no fraud in the transaction: for Earle had a right to prefer making him secure, rather than another. All that the demandant can com- plain of amounts to nothing beyond a violation of a promise or un- dertaking, on the part of Earle, to give him the preferenee. (5 Mass. Rep. 144.) By the Court. By force of our statutes regulating the transfer of real estates and for preventing frauds, no interest passes by a mere delivery of a mortgage deed without an assignment in writing and by deed. An assignment, made by a separate deed, without the delivery over of the original mortgage deed, conveys all the interest of tbe mortgagee, and makes the grantee the assignee of the mortgage. The knowledge imputed in this case to Hamilton, the assignee, of an intention on the part of Earle, the mortgagee, to assign the mortgage to the demandant, does not impair the tenant's title: he being a bond fide creditor, and having a right, by his vigilance, to secure his demands in this way : just as he would have had by an at- tachment, although he might know that another creditor in- tended to make an attachment, and had taken incipient measures therefor. The nonsuit is not set aside. ^ hSmith V. Kellcy, 27 Me. 237 (1847), Adams v. Parker, 12 Gray (Mass.) 53 (1858); Cottrell v. Adams, 2 Biss. (111.) 351 (1870); Williams v. Teachey, 85 N. C. 402 (1881), accord. ***'• '-^ JACKSON r. UUONSOV. G2!) JACKSON V. BKONSOX. SliMU'MK CoiiiT (»!• .hincATcifi; OF Ni;\v ^'oi;k. 1822. (lit J alt U.S. :]2rj.) Kjoftmcnt for land in Onondaga, tried before Mr. .Justice Yates Jit the Onondaga Cireuit in -lune, IM'^I. The lessor of the plaintiff proved a tith^ nnder Ahijah Karl, for a lot of sixty acres, by a det'(| to him, dated ;5(1 of March, l^'(ll, duly recorded on the same dav. and that the defendant was in possession of six acres of the land. The defi'ndant proved a mortgage from Curtis to Earl, dated March, 1801, of the wliole lot. to secure i)ayment to the State of ij^Kto.fit^. and to indemnify Karl. Also, a deed from Karl to the defendant for the premises in (piestion, dated 5th of June, 1804. .\ verdict M'as taken for tlie plaintifT, subject to the opinion of the Co\irt. on a case which was su])mitted to the Court without argii- nicnt. Pir Ciirlinii. It is now well settled, that the mortgagee has a nu'ri' chattel interest ; and the mortgager is considered as the pro- prietor of the freehold. The mortgage is deemed a mere incident to the I)ond or personal security for the de])t ; and the assignment of th'^ interest of the mortgagee in the land, without an assignment of the debt, is considered in law as a nullity. In tlie case of Rnni/nn v. Mn-ticrrnn. 11 J(»hns. l?ep. 5:14, it was decided that the mortgager, or a purchaser of the e(piity of redemption, may maintain trespass against the mortgagee, or a per- son acting under his license. There the defendant pleaded lihrrum tfiii'iiirnftiw : and tlie jilaintifT (the purchaser of the e(|uity of re- demjition) replied, that tlie freehold was in him.self ; and there was judgment for the plaint i IT. Tfere the fpiestifui is, whether Curtis, the mortgager, can maintain an appear.*! as a grantee, by deed in fee-simple, under the mortgagee. We are of opinion that tlic^ plaintifT is (>ntitled to jiulgment.^ ^FUisoii V. Dnniiln, 11 N. 11. 274 (1S40), Prtrrs v. .himr.sloirn liruhv r„. r> f'al. .335 (1S55), acconl. Soc al.so Mtrrilt v. liartholivk, 30 N. Y. 44 (ISrtT). G30 ASSIGNMENT OF MORTGAGE. [CIIAP. IV, PAGE V. PIEECE. Superior Court of Judicature of New Hampshire^ 1853. (26 N. H. 317.) Writ of entry^ brought by the plaintiffs to foreclose a mort- gage made by the defendant to Hiram Mnnger, and which they claim to hold by virtue of the sale and indorsement to them of a note secured thereby. The case was submitted to the court upon papers exhibited by the parties. The first was a mortgage deed conveying the premises from the defendant to Hiram Hunger for the security of five notes for $100' each, payable to Manger or order at different times, one of which,, being the last payable, was indorsed before maturity to the plaintiffs. The four other notes were, together with the mortgage; assigned by Hunger to Pliny Cadwell by an instrument under seal, which was duly recorded. The notes so assigned were afterwards paid by Pierce to Cadwell, who thereupon gave a written discharge of the mortgage, which was also duly recorded on the margin of the mortgage record.^ Woons^ J. It is settled in this State that the assignment of a. debt secured by a mortgage of land is ipso facto an assignment of the security also. (Son.theriii v. Mendum, 5 X. H. Rep. 420; Rigney v. Love joy, 13 N". H. Eep. 247, and cases there referred to.) And it is also settled that the interest of a mortgagee is incapable of being conveyed by him, except in connection with the debt se- cured by the mortgage, and as a mere incident or appurtenance to it. {Ellison V. Daniels, 11 N. H. Pep. 274, and cases there cited.) It was held in Rigney r. Love joy, before referred to, that the parol assignment of a negotiable note secured by a mortgage, although it did not authorize the assignee to sue for the debt in his own name,, carried with it the mortgage interest, and enabled the assignee, by his writ of entry, to assert his claim to the land in his own name. As a corollary to the doctrine that an assignment of the debt car- ries with it the mortgage, it has been held that where the debt con- sists of several bonds or notes the assignment of each operates, pro tanfo. an assignment of the mortgage. In Loive v. Morgan. 1 Bro. C. C. 268, the mortgagee had assigned to a trustee in trust for three persons who had contributed equal proportions of the money. One of the three brought a bill to foreclose, and took a decree. But the cause stood over to enable him to make the other two parties, be- This luicf sfatoiiiont of facts is abbroviated from that given in the re- port. '*^-'-'- 'J TAtiK r. I'iKiici;. G:n causi' it was deciucd iinpossiblc for out- to foreclose without the others. In Cooper v. Ulinan, Walker's Mich. Ch. [{ep. ',!.') I, it was held that the assi;,Miiiicnt of one of sevenil notes secured hv nu)rt- ga^'e carries with it a proportional interest in the niort;;aj,'e, unlegs it is aji^reed between the parties at the time that no interest in the mortgage is to pass to the assignee. In Slcvcnsun v. lihuk, Sax- ton's N. J. Hep. ;{;]8, it was held that where tiic mortgage is made to secure several bonds, and the mortgagee assigns them to different persons, and the mortgage to one of them, the several assignments of the bonds operate, pro tanto, an assignment of the mortgage. And if he to whom the assignment of the mortgage and of one of the bonds is made buys in th(» eipiity of redemption, the mortgage is extinguished as to the bond held by him, but will continue as a security for the residue of the bonds. In Crane v. March, 4 Pick. Kep. 13G, the same general principle is involved in the conclusion to which the court arrived. In lieiz v. Ilcphncr, 1 Penn. 280, it was decided that an assignee of one of the bonds took the benefit of the mortgage made to secure it, although at the time of the assignment he did not know there was such mortgage; and that he should not be postponed to subsequent assignees of the other bonds, to whom the mortgage likewise was assigned, although the latter (li or more of the assignet>s. In Liintplon S- a. v. Keith, 9 Verm. '?0!>, of the several notes se- cured by the mortgage, all but one was assigned with the mortgage, to one from whom the defendant received them. The material part of the first assignment was in these words: '' We do hereby grant, bargain, sell, transf«'r ;.nd make over to said H., his heirs, \"e.. the above mortgage deed and premises therein describ(>d, and the notes in the condition mentioned, except the fifty-five dollar note," &c. The defendant, after he became pos.ses.^ed of the notes and mortgage, made further advances to the mortgager, and trM>k a .second mortgagi' <»f the same property. .\nd the question was. whether the fifty-five dollar note named in the first mortgage, and excepted out of the assignnnMit. shotiM take precee<|iient piircha.ser without notice, and no mesne iiuiimljrancer, who hy the princiitlcs of that ca>e, rould inter|»o>e l)etween this |dainlill' and the security. Bill here the plaint itf, the assiirnee of one of the notes, is entitled, I'ven upon the theory of that case, to an interest "in the niort<^age. 'I'he j)arty again>t whom he seeks to enforci' it is tlu' mortgager himself, and the makt r of tlie note. He did not, like the defi-nd- aiit in Lamjilun v. k'fllli, advance money upon the land in faith of an assignmeni of the mortgage to Catlwell, and of Cadwell to him- self, and in ignorance that the other note was outstanding and un- ]>aid, which was the strong feature in that case. On the contrary, when he took from Cadwell the formal dischargi* of the mortgage, he knew it was not paid ; that hefore he could rightfully hold the land, there was a note of $100 with which he liad himself charged it, still outstanding against him, which he must pay. He eould not, therefore, have supposed that any di.scharge which Cailwi-ll ^ould give him wonid exonerate the land, and without imputing a sini.(harge. to give any such effect to it. The conclusion therefore is, that the plaintiffs were, from and nfter Deccmher 11, ISoO. solo assignees of the mortgage of the liremiscs, hy virtue of the purchase of one of the nottN secured by it. and the pp.-!nent of the others, which had been a.ssigned to Cad- well. When two or more are interested as mortgagees or assignees of a mortgage, it has been held that they are all necessary parties to a bill to foreclo.s,.. (Pahiirr v. Carlish'. 1 Sim. & Stu. 43:^; Lotrr v. Murgnn. before cited.) But where the interest of all but one has heen extinguished, there stvms no rea.son why he may not proc«vd alone. (King v. Ilarrinqtnn. 2 .\ikcn, .U.) The plaintitTs in thi.>? case are joint assignees of the mortgage, and as such are entitled to maintain this action to foreclose the mortgage.' ,7u(l(jnuiit for till' ftlaiiitiffs. I'htlan V. Olnri/. t] Ciil. 47!» (IS'iO), turord. C'oinpar.' K> ;i>-< v. W'ihhI, 51 Vt .^r?! (1840). 634 ASSIGNMENT OF MORTGAGE. [CHAP. IT. BAKEETT v. HINCKLEY. Supreme Court of Illinois, 1888. (124 /Z/. 32.) Appeal from the Superior Court of Cook County; the Hon. Joseph E. Gar}', Judge, presiding. Mr. Justice Mulkey delivered the opinion of the Court : Watson S. Hinckley, claiming to be the owner in fee of the land in controversy, on the 26th day of February, 1885, brought an action of ejectment, in the Superior Court of Cook County, against the appellants, George D. Barrett, Adalina S. Barrett, William H. Whitehead, and others, to recover the possession thereof. There was a trial of the cause before the court, without a jury, resulting in a finding and judgment for the plaintitf, and the defendants ap- pealed. The evidence tends to show the following state of facts : In 1870 Thomas Keanis was in possession of the land, claiming to own it in fee simple. On August 3 of that year he sold and conveyed it to William H. W. Cushman for the sum of $80,000. Cushman gave his four notes to Kearns for the balance of the purchase money, — one for $12,500, maturing in thirty days; three for $16,875 each, maturing, respectively, in two, three and four years after date, and all secured by a mortgage on the premises. The notes seem to have all been paid but the last one. In 1878 Kearns died, and his Avidow, Alice Kearns, administered on his estate. Previous to his death, however, he had hypothecated the mortgage and last note to secure a loan from Greenebaum. Subsequently, and before the commencement of the present suit, Greenebaum, in his own rights and "Mrs. Kearns, as administratrix of her husband, for value, sold and assigned, by a separate instrument in writing, the mortgage and note to the appellee, Watson S. Hinckley. This is, in substance, the case made by plaintiff. The defend- ants showed no title in themselves or any one else. The conclusion to be reached, therefore, depends upon whether the case made by the ])laintiff warranted the court below in rendering the judgment it did. It is claimed by appellants, in the first place, that much of the evidence relied on by appellee to sustain the judgment below was im])roperly admitted by the court, and various errors have been assigned upon the record questioning the correctness of the rulings of the court in this respect. They, however, go further, and insist that, even conceding the facts to be as claimed by appellee himself, ^'^^' ^-J IJAliltKTT C. lil.\(Kl.i;V. Go5 tlu-y ari' iiol .-uHicitiit in law to sustain I he ad ion. As the jud;,'- mt'iit bi'low will have to he rcv.TsctI on the ;,M-oun(| last sug<,'t'stfle for the purpose of passing to the assignee the etpiitable title to land as an instrument under .seal. Such being tlu' ea.se, we would clearly not be warranted in inferring that the assignment was under .seal from the simple fact that the witness gives i( as his opinion that the instrument was "a full a.-?signment" of the land, which is noth- ing more than the witness" opinion \ipon a qiu'stion of law. There '•it being sulVicicnt evidence in the record to show that the assiirn- 63G ASSIGNTMEXT OF MOKTGAGE. [cUAP. I\\ luvnt was under seal, it follows that even conceding the legal title to the property to have heen in Mrs. Kearns and Greenehaum, or either of them, it could not have passed to the appellee by that in- strument, and if not by it, not at all, because that is the only muni- ment of title relied on for that purpose. This conclusion is, of course, based upon the fundamental principle that an instrument intei- partes, in order to pass the legal title to real property, must be under seal. But this is not all. Even conceding the sufficiency of the assign- ment to pass the legal title, the record, in our opinion, fails to show that the assignors, or either of them, had such title ; hence, there was nothing for the assignment to operate upon, so far as the legal estate in the land is concerned. Having no such title, they could not convey it. Nemo plus juris ad aliutn transferrc potest qiiam ipse habet. That the legal estate in this property was not either in Greenebaum or ]Mrs. Kearns at the time of the assignment to plain- tiff, is demonstrable by the plainest principles of law. Let us see. Thomas Kearns was the owner of this property in fee. He conveyed it in fee to Cushman. The latter, as a part of the same transaction, reconveyed it, by way of mortgage, to Kearns. By reason of this last conveyance, Kearns became mortgagee of the property, and Cush- man mortgagor. According to the English doctrine, and that of some of the States of the Union, including our own, Kearns, at least as between the parties, took the legal estate, and Cushman the equi- table. According to other authorities, Kearns, by virtue of Cush- man's mortgage to him, took merely a lien upon the property to se- cure the mortgage indebtedness, and the legal title remained in Cushman. For the purposes of the present inquiry it is not im- ]iortant to consider Just now, if at all, which is the l)etter or true theory. It is manifest, and must be conceded, that the legal estate in the land, after the execution of the mortgage, was either in the mortgagee or mortgagor, or in both combined. Such being the ease, it is equally clear, appellee, to succeed, must have deduced title through one or both of these parties. This could only have })een done by showing that the legal title had, by means of some of the legally recognized modes of conveying real property, passed from one or both of them to himself. This he did not do or attempt to do. Indeed, he does not claim through them, nor either of them. Not only so, neither Mrs. Kearns nor Greenebaum, through whom appellee does claim, derives title through any deed or conveyance executed by either the mortgagor or mortgagee. Nor does either of them claim as heir or devisee of the mortgagor or mortgagee. As the assignment of the note and mortgage to appellee did not, as we hold, transfer or otherwise affect the legal title to the land, it si:('. i] h.\i;i;i;tt c. iiin id. 'M\'l.) \> to the mort- gage, it is well settled that could not he assigned, like negotiable pa- per, so as to pass the legal title in the instrument or clothe the assignee with the immunity of an innocent holder, except under certain circumstances, which do not apply here. {Cliicaffo, Dnn- villc and Vinccnnes RoiUcaij Co. \. LorircnlliaJ, !>3 111. 433; Ilniiiif- ion County v. Lubnkcr, 51 id. 415; Olds v.CMHJmiHgs, 31 id. 188; Mclntyrc v. Yates, 104 id. 491 ; Forticr v. Dnrsl. 31 id. '^13.) But that the mortgagee, or any one succeeding to his title, might, by deed in the form of an a-signment, pass to the assignee the legal as well as the equitable interest of the mortgagee, we havt! no doubt, though there is some conflict on this subject. (2 Washburn on Iteal Prop., p. 115, and authorities there cited.) Yet the assignors in the case in hand, not having the legal title, as we have just seen, could not, by any form of instru- ment, transmit it to another. If, however, the rules and principles which obtain in courts of equity are to be a[)plie entire legal es- tate passed to the mortgagee, and unless it was expressly provide, in allowing a redemption after a forfeiture of the legal estate, uniformly required tho mortgagee to reconvey to the mortgagor, which was, of course, necessary, to make his title availal)le in a court of law. In maintaining these two systems and theories in England, there was none of that confusion and conflict which we encounter in the decisions of the courts of this countr\', resulting chiefly from a failure to keep in mind the distinction between courts of law and of equity, and the rules and princii)les api>licalile to them, respec- tively. The courts there, by observing these things, kept the two systems intact, and in this condition they were transplanted to this country, and became a part of our own system of laws. But other causes have contributed to destroy that certainty and uniformity which fonnerly prevailed with us. Chiefly among these cause."? may be mentioned the statutory changes in the law in many of the States, and the failure of the courts and authors to note those ihanges in their expositions of the law of such States. Perhaps another fruitful source of confusion on this subject is the fact that in many of the States the common law forms of action have been abolished by statute, and instead of them a single statutory form of action has been adopted, in which legal and equitable rights are administered at the same time and by the same tribunal. Yet the distinction between legal and e»|uitable rights is still preserved, so that although the action, in tlu'ory, is one at law, it is nevertheless subject to be defeated by a purely equitable defence. Under the influence of these statutory enactments and radical chunges in legal procedure, by which legal and equitable rights an'' given efl'ect and enforced in the same suit, the equitable theory' of a mortgage has, in many of these States, entirely superseded the legal one. Thus, in \ew York it is said, in the caao of Tnt.'i{rf.< of I'liion CnJIcffr v. WhrrJrr rl nJ.. HI X. Y. SS. that "a mortgage if" a mere chose in action. Tt gives no legal estate in the land, but is simply a lien thereon, the mortgaeor renuiinini: both the legal and equitable owner of the fee." Following this doctrine to it< logical results, it is held by the courts of that State that ejectment 040 ASSIGNMENT OF .MOUTliA(,;K. [c'll.U'. iv. under the code will not lie, at the suit of the mortgagee, against the owner of the equity of redemption. {Murraij v. ^Yall•er, 31 IST. Y. 399.) In strict conformity with the theory tliat the mort- gagee has no estate in the land, but a mere lien as security for hi< debt, the courts of New York, and others taking the same view, hold that a conveyance by the mortgagee, before foreclosure, without an assignment of the debt is, in law, a nullity. {Jachson v. CurlU, 19 Johns. ."525; ^Vilson v. Trovii, 2 Cow. 231 ; Jaclson v. Willard, 4 Johns. 41.) And this court seems to have recognized the same rule as obtaining in this State, in Delano v. Bennett, 90 111. 533.- The New York cases just cited, and all others taking the same view, are clearly inconsistent with the whole current of our de- cisions on the subject, as is abundantly shown by the authorities already cited. The doctrine would seem to be fundamental, that if one sul juris, having the legal title to land, intentionally delivers to another a deed therefor containing apt words of conveyance, the title, at law, at least, will pass to the grantee; but for what pur- poses or uses the grantee will hold it, or to what extent he will be able to enforce it, will depend upon circumstances. If the mort- gagee conveys the land without assigning the debt to the grantee, the latter w^ould hold the legal title as trustee for the liolder of tln' mortgage debt. (Sanger v. Bancroft, 12 Gray, 307 ; Barnard v. Eaton, 2 Cush. 304; Jackson v. Willard, 4 Johns. 40.) It is true, the interest which passes is of no appreciable value to the grantee. Thus, in the case last cited, Chancellor Kent, in speaking of it, says : " The mortgage interest, as distinct from the debt, is not a fit subject of assignment. It has no determinate value. If it should be assigned, the assignee must hold the interest at the will and disposal of the creditor who holds the bond." In 4 Wait's Ac- tions and Defences, page 5G5, the rule is thus stated : " By the com- mon law, a mortgagee in fee of land is considered as absolutely entitled to the estate, which he may devise or transmit by descent to his heirs." In conformity with this view, Pomeroy, in his work on Equity Jurisprudence (vol. 3, page 150), in treating of this sub- ject, says : " In law, the mortgagee may convey the land itself by deed, or devise it by will, and on his death, intestate, it will de- scend to his heirs. In equity, his interest is a mere thing in action. assignable as such, and a deed by him would operate merely as an assignment of the mortgage: and in administering the estate of a deceased mortgagee, a court of equity treats the mortgage as per- sonal assets, to be dealt with by the executor or administrator." We have already seen, that under the decisions of this court, and by the general current of authority, a mortgage is not assignable at law by mere indorsement, as in the case of commercial paper; but. «C. I.] BAHUKTT f. IIINCKLKY. 611 on (he other hnud, the estate ami iiiifn-st <»f tin- mortgagee may be convcyef] to the lioUler of the iiulehlfdiie-s, or I'ven to a tliird party, hy deed, with a]»t words of coiivi-yaiKe, ami the fad that it i.s, in form, ail assignment, will make no diilerenee. ('i Washburn on ll(?al Prop. 113, 11(1.) Sueh an assignee, if owner of the mortgage indebtedness, might, no doubt, maintain ejeetment in his own name, for his vwn use; or the aetion might be brought in his name, for the use of a third party owning the indebtedness, {hilyour v. Gockleij, 83 HI. lOi).) So in this case, if the aetion had been brought in the name of Kearns' heirs, for the use of Hinckley, no reason is perceived why the action might not be maintained. It must not be concluded, from what we have said, that the dual system respecting mortgage's, as above explained, exists in this State precisely as it did in England prior to its adoption in thi.» country, for such is not the case. It is a conceded fact, that the (•(juitablc theory of a mortgage has, in process of time, made in this State, as in others, material encroachments upon the legal theory, which is now fully recognized in courts of law. Thus, it is now the settled law that the mortgagor or his assignee is the legal owner of the mortgaged estate, as against all persons I'xci'pt the mortgagee or his assigns. (Hull v. fjinic'. 'i'y 111. ",?■)(), "^TT ; Kinonj v. Kciij- han, 88 id. 482.) As a result of this doctrine, it follows that in ejectment by the mortgagor, against a third party, the defendant can not defeat the aetion by showing an outstanding title in the mortgagee. {Ifoll v. Ldiicc, supni.) So, too, courts of law now regard the title of a mortgagee in fee, in the nature of a base or determinable fee. The term of its existence is measured by that of the mortgage del)t. When the latter is paid off, or l)eeomes barred by the Statute of Limitations, the mortgagee's title is extin- guish'd by operation of law. {Pal lock- v. Mdlsaii, 11 111. r>\i\\ Har- ris v. Mills, 1>H i,l. 11 ; Gihson v. Rrcs. ")() id. .18:5.) Hence the rule is as well established at law as it is in eipiity, that the debt is the [irineipal thing, and (he mortgage an incident. So, also, while it is indisjx usable in all cases to a recovery in ejectment, that the plaintilT show in himself the legal title to the proj)erty. as set forth in the declaration, except where the defendant is estopped from denying it, yet it does not follow that because one has sueh title, lu' may, under all eireumstane(>s, maintain the action. — and thi>J is particularlv so in resjx'et to a mortgage title. Sueh title exist-; for the benefit of the holder of the mortgage indebtedness, and it can only W enforced by an action in furtherance of his interests. — that is, as a means of coercini: pavment. If the mnrtgagtv, there- fore, should, for a valuable considera(ion. assign (he mor(gage iii- debtedne-:-; to a third parfv. and the latter, after default in pav- . beinjj: tcniint for life of real estate?, applied to Wallwyn Slicplicanl, wiio was his ijoiicitor. to j)roeiire him the sum of :*00()/. Shoplicard accordingly procured .lohu Baker to ad- Nance that sum upon the mortgage of the estates, of which Mat- thews was tenant for life, and an assignment of a policy of in- surance for 2000/. made by Matthews for his life in January, 1788. Tliat mortgage and assignment, dati'd the SOtli of May. 1788, were '. xtcutid accordingly to Baker, his executors, administrators and assigns, for ninety-nine years, if Matthews should so long live, sub- ject to redemption; with a covenant, that Matthews would keep the said sum of 2000/. insured for his life. Baker having beiMi aftiTwards paid by Shepheard. Matthews gave ^iie]»heard a bond for -2000/., dated the 'iMU of March, 17!>1. and V indentures of the same date the mortgage and the jjolicy of in- ^u^an(•e were assigned to Shepheard. In January, 171)**', Shep- lu-ard borrowed from llercy and Co., bankers, the sum of *^000/.; and on that occasion he deposited with them the indentures of the 50th of May, 1788, and the 2*)th of March, 1701, and the bond and the policy of insurance, and a note, under his hand, declaring that the said instruments were de|)osited as a security for that s\>m with interest. In March, 17'.'l. llercy and f'o. calling for re- l)ayment. Shej)heard applieon the projiosed security and the fartlier security of bis note. On tlie 21st of March. 17<»i. they ad- vanced him the sum of 1000/. for the purj)ose of redeeming the se- G4i ASSIGX:N[EXT of :MOIiTGAGE. [CHAP. IV. curities; and upon the 24:th of ]\Iarcli he deposited all the said securities with them, and gave them his promissory note at three jnonths for 2000Z. and interest, and he wrote a note declaring the purpose of the deposit. Afterwards, before the 24th of June, 1794, ho drew upon them to the amount of 1431/. 9s. 4:d. exclusive of the lOOOL originally advanced. They received upon his account only 600/., and, upon the 24th of June, 1794, when his note became due, the balance due to Wallwyn and Co. was 1856/. 13s. 5(/. In January, 1795, Shepheard became a bankrupt. By indentures^ dated the 39th of September, 1797, executed in pursuance of a de- cree made at the Bolls upon the 14th of June, 1797, upon a bill filed by Wallwyn and Co. in December, 1794, the assignees of Shepheard assigned all the said securities to the plaintiffs in that cause. Mat- thews was made a defendant in that suit; but before the hearing the plaintiffs had the bill as against him dismissed with costs. Shepheard, as the attorney and solicitor of Matthews, was in the- habit of receiving and paying large sums of money upon his ac- count, and the premiums upon the policy of insurance were paid by him, and charged in account with Matthews. Upon the bank- ruptcy of Shepheard, Wallwyn and Co. paid one premium upon that policy, which became due in January, 1795. By an account settled and signed by Matthews and Shepheard upon the 11th of. October, 1794, a balance of 4100/. appeared due to Shepheard.^ Matthews had no notice of Shepheard's transactions with Hercy and Co. and Wallwyn and Co. as to the securities assigned to him by Matthews, till the bill was filed against him in December, 1794.. This bill ^^-as filed l)y Matthews against Wallwyn and Co. and. against the assignees of Shepheard, who was dead, praying that the assignees of Shepheard may be decreed to come to a fair settle- ment of accounts depending between the plaintiff and Shepheard ; and that the plaintiff may be at liberty to redeem the mortgaged premises, if any thing shall appear to be due from him upon the settlement of accounts in respect of the said mortgage; and that the defendants Wallwyn and Co. may re-convey and re-assign to the plaintiff the mortgaged premises, and deliver up the said securi- ties to be cancelled; and that they may bo restrained by injunction from proceeding at law— the plaintiff offering to ]iay what, if any thing, shall appear to be due from him upon the aforesaid settle- ment of accounts on account of the said mortgage. The bill cliarged that the plaintiff, having been informed by. some of Shephoa'rd's friends that he was in an embarrassed situa- tion, but that, if the i)laintiff would give him a security for the. ])ala'nce then due to him, it would be of infinite service to him^ in enabling him to settle with his creditors, and the plaintiff being" ^^••- "I .M \iriii;\\s I . w Ai.i.w^ N. GIO willing In a.-.-i.-i Slit'iilifiird. ami iinn|,'inin^ liiin^clf lo be inort- in ih'bt to him llian ho ivallv was, proiuisi-il lo cIk m», when the account I'.oiiltl III' pidjK'iiv iiiat-lc out and settled. In a few hours Shep- lieard imtdiRrd an .urount, and retjuested the jdainiiir to .si{,Mi it: and the |)laintitT did si^ii it at his earnest solieitatit»n, and upon his a;fre<'in,i; to permit the plaintiir to take it into the country for the purpose of examininij: it and nniking such alterations as sliouhl he jtroprr. The j)lainti(T lia- since discovered lliat Shepheard previous thereto had received for tlie phiintilT's u-f divers sums of money, for which he had not iriven tlie phiintilT credit in the ac- "unt; and that if such sums to<^ether with several sums received !*y liim since siijninfr the account were deducted, a considerable bal- ance woiUd be due to the plainlilT; espi'cially as he has also discov- rcd that several sums, with which he was charged in the account .- haviuLT bei'U paid by Shepheard. were not paid by him. The defendants Wallwyn and Co., by their answer, submitted tiiat Shepheard beinj,' the plaintilT's attorney was sunicient notice to him, and that they are entitled to a specific lien upon the mort- aired premises and securitic«: in re-;pect of the sum of ISoil/. 13.s'. "'on the 24th of .hine, 17!)4. whether the said sum of •.*()(»(>/. was or wa- not due from the ])laintin' to Sbej)beard when the defrndant> advanced the -aid '2000/. upon the said securities, or whether the same was or was not afterwards sati-fied or ])aid to Shepheard by the jdaintilT, or by reason (>f monies received by She|)heard upon his account ; and that they oussion. The assi<;nees of Shophoard by their an of the mortjiajro but f. iv_ to raise money for Matthews ; but he thought fit to assign the mort- gage without the privity of the mortgagor, and the assignee now claims to hold the mortgage to the full extent of the sum appearing due upon the face of the deed. When the cause came on before me, a case was referred to in which, it was supposed, I^ord Thurlow had entertained an idea, but not decided, that a mortgagor having permitted the mortgage deed without any indorsement upon it to be in the possession of the mort- gagee, an assignee taking from that mortgagee might have a right to hold that mortgage to tbe full extent of it against the mortgagor who permitted the mortgagee to deal with and to make a security upon it. It was also supposed that in practice there is no occasion to make the mortgagor a party ; and in some cases it may not b? possible to make him a party to the assignment ; and that to hold that the assignee of a mortgage is bound to settle the accounts of the person from whom he takes the assignment, would tend to em- barrass transfers of mortgages. I have got all the information I could, and I think I have got the best. The result is that persons most conversant in conveyancing hold it extremely unfit and very rash, and a very indifferent security, to take an assignment of a mortgage without the privity of the mortgagor as to the sum really due; that in fact it does happen that assignments of mortgages are taken without calling upon the mortgagor ; but that the most usual case where that occurs is where it is the best security that can be got for a debt not otherwise well secured, and it is not in the course of transferring mortgages, l)ut of raising money upon such securities ; but no conveyancer of established practice would recommend it as a good title to take an assignment of a mortgage without making the mortgagor a party and being satisfied that the money was really due. With regard to the case that was quoted, I believe that from the circumstances of the first order that was made, there might have been some doubt expressed at the time upon the point. The bill was filed by Lnnn and others, assignees of Lodge, a bankrupt, against St." John. According to the state of the case T have had. Lodge made a mortgage to Pitman, who, being indebted to St. John, made an assignment to him for a sum less in fact than tbe sum due upon the mortgage. It was stamped and signed, but not sealed. Lodge and Pitman both became bankrupts. The bill was filed, insisting that nothing was due upon the account botweon their estates. The defendant St. John insisted that the plaintiflF- must redeem him, who was a fair mortgasree, and had notbincr tr» do with the account. Lord Thurlow in the decree gave special di- rections to the Master to inquire what was due at the time of the SEC. 11.] .MATTIIKUS C. WAI.I.U V\. iJ 1 T iiiorlpi^'c, what was (hii' at the time of tlic a that it is not an ab-o- lute conveyance of the term or legal estate, but as a security for a debt; and the real transaction is an assignment of a debt fmm A. to B. — that dei)t collaterallv secured by a charge ui)on a real «'s- tate. Th(> debt therefore is the principal thing; and it is obvious that if an action was brought upon the bond in thi> nanu* of the mortgagee, as it must be. the mortgagor shall pay no more than what is really diic u|ton the bond; if an action of cov- enant was brought bv the covenantee, the account must be settled in that action. Tn this court the condition of the assignee cannot he better than it would b(» at law in any mode he coiild take to re- cover what was due uj)on the assignment. Th(>refore the plaintitT must be at liberty to redeiMu iipon p'lv- ment of what the blaster shall find due upon the original inortgaL''" from hiju to Shepbeard. T will direct the account exactly in tlii- same wav as Lord Thurlow mad«' the direction in the ca4 (1804). The reference is to the decision of Lord T-ough- borough (subsequentlv created Lord Rosslyn) in the principal case. •'<'■•«■ "J WlAiH C. COMMl.S."ilONLU8 OF lIKItNi; HAY. <)l*« that the ovidciuv failed in shewing that no consideration liad l>t'rn ^'ivrn for thi- mortgage. Mr. Lloyd and 3/r. Lorock Webb, for Phillips, argued that he was a purchaser for valuable consideration without notice, and that he was entitled to hold the deed until he had been paid what was due to him; that the mortgagor, having enal)led Clarke to obtain money on the faith of this deed, could not st-t it aside without jiaying what had been actually advanced on it by Phillips. The following authorities were cited in the course of the argu- ment: Powell on Mortgages, \o\. 2, p. 580 ((1th edit.) ; Walley v. Witllcy. 1 \vvu. 4S4 ; Tht' Karl of Ahlborough v. Fri/r, West's Kep. '^•*l ; T CI. & Fin. 130; George v. MUhanke, <) Yes. lOO. The cases of Rcynell v. ^pryc, 8 Hare, 222 : 1 De G., "NL & G. G60 ; and Cockell v. Taylor, 1.5 Beav. 10:5, were also referred to. Tin-; M.vsTKK of tiik Hoi.ls [Sir Joir\ Homii.lv] : I am of oj)inion in this ca.se, that the deed must be delivered up. The first question to be considered is whether the deed is not void, l)cing a mortgage deed for which no consideration was given, and having been obtained from a person in j>rison, under promises to release him, which were never realized. This, I am of opinion, is the state of the cai?e: — [His Honor here I'.xamined the evidence and proceeded:] — The result is that in my ' pinion it is proved that no consideration was given for the mort- _-age deed and, as against Clarke, it must be delivered up to be can- . riled. With respect to Phillips, T am of opinion he could only take what Clarke could give him, and that he cannot stand in a better situa- tion than Clarke himself. Phillips must therefore deliver up the dreds. and his only remedy will be against Clarke. WEBB v. CO:\[^rTS>:iOXKT:S or HKT^XE B.\Y. Conrr or Qi'Kf^n'.s Bkn'cii. 1S70, (L. ir r> Q. 7?. r,12.)' .\n action commenced by writ, with an indorsement that the p1aintifT>^ intendrd to claim ;i writ of manihimus to command the defrndants to apply all the moiKn' rai-;ed or to he raised under or l»y virtue of '^ ;iiid I Wm. TV., e. ."».". iji the mannr.ultsf ilntci] for tlnit ;;iv<'ii in tho ropnrt. C50 ASSIGNMENT OF MORTGAGE. [CHAP. IV. s. 123 of that act. At the trial a verdict was taken for the plaintiffs, subject to a case. The defendants are a body corporate, incorporated by the said act for the purpose of local improvement, and empowered by the act to levy rates and to borrow money at interest, mortgaging the rates and issuing debentures for that purpose. The form of the de- bentures was prescribed by the act, which also made them capable of assignment in the form provided. Further, the commissioners were declared incapable of taking or entering into any bargain or contract under the act, and a penalty was prescribed for so doing. In 1835 the defendants bought large quantities of bricks of David Halket, one of the commissioners, who was a brick and tile manu- facturer, and in payment therefor issued to him certain mortgage securities of £100 each, in the form prescribed by the act, and which were duly registered. The mortgages were in the form of grants of the rates levied by the commissioners to David Halket, his exec- utors, administrators and assigns. No money was actually paid by Halket to the commissioners. The mortgages so granted to him were duly transferred to the testator of the plaintiffs, who had no notice of the circumstances under which they were issued. Xo part of the principal or interest of the mortgage debt has ever been paid. Section 123 of the act above referred to authorizes the com- missioners to apply the money to be raised by them in discharging such interest and principal. The questions for the opinion of the Court were : — 1st. Whether the plaintiffs are entitled to recover in this action any and, if so, what sum as damages in respect of arrears of interest on the six mortgages or any of them. 2nd. Whether the plaintiffs are entitled to a writ of mandamus in the form endorsed on the writ. CocKBURN, C. J. By 3 & 4 Wm. 4 c. cv. a local Act, which pro- vided for the paving, cleansing, lighting, and improving the town of Heme Bay, certain commissioners are appointed: and by s. 110 the commissioners have power to mortgage the rates which they are empowered to levy under the Act for the purposes which they as such commissioners are to execute; and the present plain- tiffs sue upon certain debentures which were issued by the commis- sioners under that section ; and they also claim a writ of mandamus requiring the commissioners to apply the money raised or to b(' raised under the Act to the purposes of the Act. In order to construct certain buildings necessary for the purposes of the Act» the commissioners required a quantity of bricks, and Halket, to whom the debentures were originally given, supplied the bricks in question, and instead of being paid in cash he was paid by deben- ^F^*^'- "•] \\i;iuj c. COM \ii>>iu\i;i;> oi' iii;km; iiav. i'>')\ tuns. It is said that tlif traiisatiidii in rrsprci (»!" wliicli tin- dr- lu'iituns were issiu'd was illci^al under s. Id <»f tlir local Act, inasnimh as hy that scrtion any jRTson uctin;^' as a coinMiissiontT is prohihitt'd from I'lilcrin^f into any contract with the coniniis- -ioncrs; and that, thcrcfon', tht' sale of the hricks hy Ihdkct to the coniinissioners, he himself Ix-in^' a commissioner, was an illegal transaction. It may he that the clTcct of this section was to render the transaction illejj;al as repirds the contract hetween the lommissioners and Ilalket. lUit as the commissioners have had the heneflt of the contract, the 4, is im- mediately a|tpliiable to the ])resent case, as well alwn in the judgment of this Court in the • asc to which my Brother Blackburn referred.' //»■ lUihin ninl S^H Francisro Uij. Co.. L. Ic :? (>. B. .*>SI. In that ca^- a railwav company had been deceived into registering shan's and granting certificates of registration, whereby innocent persons were induced to purchas*' those shares under the l)elief that the vendors were registered shareholders, and it was held that the company were estopjx'd by their e< of tht> shares to be registered as share- liolders. T think the principle of all those ens»'s Is strictly 'I'pon llio jirf^iiDcnt, Hir report of which is omittol hero. Go2 ASSIGNMENT OF MORTGAGE. [CIIAP. IV. applicable to this. I Low is a person who takes for a valuable con- sideration such debentures as these upon an assignment, regular in form, to know under what circumstances they were issued? Tlie commissioners might be wrong in allowing these debentures to go forth, knowing that they might come into the hands of an innocent holder for value, but according to the principle of the cases cited, they are estopped from alleging that the debentures were illegally issued. The debentures on their face import a legal consideration, namely, the advance of money. The defendants issued the debentures with the knowledge that they were capable of l)eing transferred, and- would very likely be transferred to a holder for value; how can it lie in their mouths to say that the transaction in respect of which they gave these debentures was illegal? I think on the sound principle of the doctrine laid down in the cases which I have cited, such a defence cannot be made available. I confess I cannot see any difficulty in the other points made, namely, that the first purpose to which moneys raised by the com- missioners is to be applied is that of paying the costs and charges of getting the Act. It is true these expenses have been met partly by debentitres which are still unpaid; but that is no answer to an application for payment on the part of the present holder of these debentures. It was further contended that the mandamus claimed by the plaintiffs will not lie, because it is possible that rates may not hereafter be raised, and the form of the mandamus ought to have been to levy rates out of which to pay the interest on the de- bentures; but it appears that up to the present time rates have from time to time been levied, and if the rates l)e levied, inasmuch as the commissioners are bound ttnder the Act to pay interest upon the debentures which they have issued, the mandamus will operate and compel payment of the amounts claimed in this action. If, owing to the form which this mandamus assumes, the commis- sioners desist from levying the rates, the consequence will be that a further mandamus will bo rcqttired, commanding the commis- sioners to levy a rate for the express purpose of paying the interest ; ])ut I think we are fairly entitled to presume that that which has been done, and which is a part of the duty of the commis- sioners to do under the provisions of the Act, will continue to be done. Blackburn, J. I am of tlie same opinion. The plaintifPs claim in the present action a writ of ]nandamus commanding the defend- ants to pay any money raised or to bo raised under and by virtuo of 3 & 4 Wm.. 4 c. cv., in the manner proscribed by s. 123 of that Act. Tliat is the dutv thov nMiuiro the commissioners to fulfil HKC. II.] WEUB l\ C0:\[MISSI()M:IIS ol lli;i;\l KAV. ij'>'\ stating that the plainlilTs arc iicrsonallv iiilfrcstcd in tlu' fulfiliin in of it. Wht-n we turn to s. I'^'.i w.' fiinl it rciiuiri's tlic ik'fi-ndants t<» apply so nuuh money as may In- rai.-td umltT thr Act, in the first phicc in defraying its cnim-mscs, in the next phicc in paying Ihi' interest ujxin the l)nnds and (U'l)entures, and afterwards in paying for the works and purposes of the Act. The jihuntilTs are person- ally interested in having the money ap|)lied as provided by the Act ; and if the commissioners have departed from their duty of propi'rlv applying the money and canning the interest to be paid, the plaintills are entitled to a mandamus. It is said that the commissioners will not raise any money in future; and if the plaintifTs had anticipated that, they might have come to the Court for a mandamus not only to command the com- missioners to apply the money, but to levy rates to raise it; but I see no objection to granting a mandamus in the limited form in which it is asked for, though probably the ])laintilTs may be entitled to demand another in a ditferent form at some future time. The next question ie\ are the ])laintifl's personally interested in the fulfilment of the duty created by the statute; nr, in other words, are they the holders of the six debentures in such a manner as to have the right to have them enforced against the defendants? By s. 110 the commissioners are authorized to borrow and take up at interest any sum of money upon the credit of the rates authorized to be raised under the Act, but so that there shall not be owing upon the securities at any one time more than 500(V.. and (otics qin^lics, to pay off and renew the loans, and the form of mortgage is given in the .\et. .\nd that form commences with the statement on the face of it that the commissioners have borrowed a particular sum of money of a particular individual upon the credit of the rates. Section 120 jirovides the mode in which a person who has the mortgage may assign and transfer it; s. r.M enacts that there shall be no preference by reason of i)riority of the date of the mortgages. S. 122 requires that a book shall be pro- vided in which copies of the mortgages, securities, and transfers shall be entered and registered, to be op(Mi to ins])eetion; and then it enacts that, after such entry, every such transfer "shall entitle the person to whom the same shall 1h^ made, and liis exec- utors, administratfirs. and assigns to the benefit of the security thereby made or transferred." So that the efTect of the statute is this, the commissioners may borrow money and give a form of mortgage which, on the face of it, states expressly that they ha L'ive any jntl,uMiient on that |)<)iiit. Mki.i.oI!. .J. I wish to rest my jinl^rmeiit in this ease on the ^•^■•iieial (lociriiie (tl' e|»|if!. I (ainiitl (listin<;uish it in principle Iriim III re Huh in niitl S. .'tS;'). which is founded im the very sahitary decision of Frrcimui v. Coohc. '2 Iv\. ii">l. The local Act contemplates the horro\vinn brought by tlie original mortgagee, the eommissioiu'rs could have set up any di'- fence against the claim ; becau.«!o the defence, namely, his incapacity to contract at the time by reason of his filling the olHce of eommis- -ioner, cannot be set up against the j)laintifTs, his transferees. Th»> mortgage security itself makes the money jjayable to Halket or his assigns. Tiie Act of Parliament says that any person entitled to any .security nniy transfer it in the terms specifi'd in the .\et, and further that when that transfer has been made and registere shall be made to the benefit of the security therebv t ransfi'rred. Xow the effect of those sections, I think, is to make tht\se mortgage-? negociable securili(>s and to attach to them the incidents of ne- gociable scnnrities; one of which is that an innocent holder for value, as it is admitted the i>lainti(Ts are, accpiins a title of hi^ own. G56 ASSIGXMEXT OF MORTGAGE. [CIIAP. IV. unaffected by any infirmity to which the title of his assignor might have been subject. Upon that ground, I think tlie plaintiffs arc entitled to judgment. Then as to the alleged defect in the prayer of the mandamus, I think it is quite enough to say that the complaint against the commissioners is not that they do not make rates, but that thoy apply the proceeds in a different way than that directed by the Act of Parliament. It is to be assumed they will go on making the rates as they have done. The mandamus is directed to the misappropriation. If it turns out to be needful to compel them to do what they have hitherto done — to make the rates — then a mandamus may be applied for for that purpose. Judgment for the plaintiffs. BICKERTON v. WALKER. Supreme Court of Judicature — Chancery Division, 1885. (L. R. 31 Ch. D. 151.) Elizabeth Goulston, who died in 18')2, bequeatlicd to trustees a sum of £1000 upon trust to invest it and pay the income to Eliz- abeth Bickerton, the wife of John Bickerton, for life, and after her death upon trust for such children of hers as should be living at her decease, and being sons should attain twenty-one, or being daughters should attain that age or marry, and for such issue of any children dying in Mrs. Bickerton's lifetime as should be living at Mrs. Bickerton's death, such children to take their parent's share. T'he legacy was invested in £975 New £3 per Cent. Annu- ities. In 1879 Mrs. Bickerton was a widow with three children, all of whom had attained twenty-one. Emily Bickerton, spinster (here- inafter called Miss Bickerton), w^as one of them. On the 10th of February, 1879, Mrs. and Miss Bickerton exe- cuted a mortgage deed by which, in consideration of the sum of £250 therein expressed to be paid to them by Ebenezer Bates, " the receipt and payment of which said sum of £250 they, the .'iaid E. Bickerton and E. Bickerton the younger, do hereby ac- knowledge, and from the same and every part thereof do hereby release the said E. Bates, his executors, administrators, and as- signs," they jointly and severally covenanted with Bates for the II.J JlK'KlilM'nN r. WAI.KKU. (;.*i; ]);iyiiR'iit to him of £'.':»0 uilh iiitrn'st at C7 per cent, on the 10th of August thill next. Mrs. Bickcrton then u.ssigned to Bates licr life interest in the £975 stock and a policy of assurance for £100 elTeeted by her on her own life, and Miss Biekerton assigned to Bates her reversionary share in the i':iT."> stock and a polii.y of assurance for .i;;500 ell'cctcd hy her on her own life, sul)je<:t, a< regards all the interests assigned, to redeiiijition on payment of £250 with interest at £7 per cent, on the 10th of August tlieii next. Indorsed on (he deed was a r('cei])t in the usual form, signed hy Mrs. and Miss Biekerton, acknowledging the receipt of £'■*:}(). Astley acted as solicitor for hoth parties in this transaction, and the deed was left in his hands. On the 11th of March, 1870, the mortgage was transferred hy Bates to Hunter, who acted bv his own solicitor. Walker, and gave full value for the mortgage as a mortgage for £250, without making any imjuiry from the mort- gagors. This action was commenced by Mrs. and Miss Biekerton again-t Walker, Bates, Astley, and Hunter, alleging that the plaintiffs had only received sums amounting to £i)l IT.s-. (](/. instead of £250. that Bates was the nominee and trustee of and for Walker, and that Bates and Astley acted under his directions, and that Hunter liad notice of the above facts when he took his transfer. Th.- ])laintifrs asked that the mortgage might be caneelled. they offering to pay the sum really advanced and the interest thereon, and that the transfer might be declared void against the plain- tiffs, or in the alternative that the mortgage might stand as a security for what had been really ailvaiieed and interest, and that the plaintiffs might have redemption on that footing, or as another alternative, that they might have redemj)!ion on the mortgage deed as it stood. It was clearly slu'wii that Walker was not inteie-ted in the mortgage, and had simply acted as Hunter's solicitor, and no ground was shewn for affecting either of them with notice that the plaintiffs had not received the whole £250. Vice-Chancellor Bacon considered the plaint ilf's case not to be proved, and gave a judgment dismissing the action with costs as against Walker, and dismissing it with costs as against Hunter, except so far as it sought the ordinary judg-ment for redemption. The usual order in a re- demption suit was made against Hunter, with a direction that the account was to be taken on the footing of £250 liaving been ad- vanced to the plaint ilTs. The plaintiffs appealed, and the appeal was heard on the ICth and 17th of Xovember, IR'^5. The evidence ns to the cirium- stanccs under which the mortgage was executed was gone into, and G58 ASSIGNMEXT OF MORTGAGE. rcHAP. TV. ill the opinion of the Court of Appeal was such as would, if there had been no transfer, have made it proper to decree redemption on payment only of what should be shewn to have been actually ad- vanced. Astley was abroad and Bates did not appear, so the material question was whether a decree of that nature could be made against Hunter. Seward Brice, for the appellants: — I contend that a mortgage can only be enforced by a transferee to the same extent as it might be enforced by the original mortgagee. {Parker v. Clarice, 30 Beav. 54.) The transferee takes subject to the equities which affect the original mortgagee. {Norrish v. Marshall, 5 Madd. 475.) [Fry, L. J. : — That case only deals with subsequent transactions between the mortgagor and mortgagee, the mortgagor not knowing of the transfer.] The principle is illustrated by MaWictvs \. Wallwyn, 4 Ves. 118, wliich decides that a transferee takes subject to the account between the mortgagor and mortgagee. The principal thing in the transac- tion is the assignment of the debt, as said by Lord Eldon in that case. The debt, until the recent change in the law, was only assignable in equity; the assignment is subject therefore to equita- ble principles, and passes nothing but what is justly due on the instrument. Williams v. Sorrell, 4 Yes. 389, follows the same prin- ciple. The true view is that the transferee is bound by all equities affecting the mortgage transaction, not merely by the state of the account. Stnith v. Paries, 16 Beav. 115, shews that the assignee of a debt takes subject to all equities. [BowEX^ L. J. : — Are you not estopped by the deed and the re- ceipt upon it from saying that the whole sum was not advanced? (Goodwill V. Poharts, 1 App. Cas. 476.)] That was the case of a document which by custom is a negotiable instrument. The present is the case of a mortgage which is not given with a view of its passing from hand to hand. [BowEX, L. J., referred to In re Agra and Masterman's Bank, L. R. 2 Ch. 391.] The present case is more like Jn re Natal Investment Company, L. E. 3 Ch. 355, in which the Agra Bank Case was referred to, and which is a strong authority in my favour. There is no estoppel from a recital in a security unless it is shewn that the recital is in- tended to be shewn to third parties to induce them to act upon it; and the fact that no prudent person takes a transfer of a mortgage without an inquiry from the mortgagor, shews that the recital is not intended to be acted on. (Roll v. White, 31 Beav. 520, and A fheno'nm Life Assurance Socidy v. Pooley, 3 "De G. & J. 294, sup- port my contention. I say then that the mortgage ought to be cut •**»-'• "•] niticrnxoN- r. wat.ki-ii. G.'jO down as against IIuiiUt. No i»ru(lc'nl transferee of a mortgage over takes liis transfer witliout intjuiring from the mortgagcjr, and it is negligenee to do so. The case is quite dilTerent from that of an absolute sale, because there an in(|uiry would not l)e made of the original vendor unless there was sonu-thing to raise suspicion. Millar. {). ('.. and Lainy, for Walker and Hunter: — As iigainst Walker there is no ease: he ought never to have been nuule a party, and the dismissal as against him must stand. As regards llunti-r, assuming that the whole ii2M) was not advanced, we say that he is not alfecled hy that. If a person takes a transfer of a mortgage without inquiring riom the mortgagor, lie does so at his own risk as regards tlu' stati' of the account, hut the mortgagor is estopjjed from saying that any statement made by himself is untrue. The transferee has a right to act on any such statement. l\veryb(»dy knows that the sum due on a mortgage may have been reduei-d by \):\r{ jiayment, and if a transferee makes no incpiiry from the mortgagor tlu- mortgagor gets the benefit of jjrevious ])art ])ayments as against him. By saying tliat a less sum than tlie original principal is now due he is not contradicting anything in the mortgage deed, but here tlie mortgagor is alleging as against a honCi fide purchaser without notice tiiat the statement in the mortgage deed as to the sum advanced is not true. That cannot be allowed, lluider v. 11'^//- ttrs, L. K. 7 Ch. To; H'c*/ v. Jones. 1 Sim ( x. s. ) 20r» ; /'»Vc v. liice. 2 Drew. 73. Tn Shroii-ihirr Union liailirdi/s and Canal Com- fiany v. The Qiirrn. L. 1{. 7 II. L. U)(), ')()!), Lord Cairns refers to liice V. Rice with approbation. The |)rinci|)le is not contined to cases where A. makes a written representation to B. with the intention that it shall be shewn In ('.. for bi)tli Lord Cairns in the last-men- tioned case, and Lord Ilatherley in Ihinhr v. Wallers, lay it down broadly that a receipt for money estops the party giving it, as be- tween him and a third jier.son who has ai-ted on the faith of it. I FiiY. L. J.: — .\n assignment of a chose in action is subject to all equities. Do you say that the receipt is an assertion that there are no such ecpiilies?] 1 say that at all events it makes the e(|uitie-. une(pial ; a person who has given a receipt stating that lie has nxviveil money, an»l then Ch. :?.").")?] In that ease there was no receipt, and no one buying n deben- ture in th(> market buys it on the faith of the whole of the money having been advanced, it biMug notorious that debentures are often OGO ASSIGNMENT OF MORTGAGE. [( It.vr. IV. issued below par. In none of the cases cited against us was there any indorsed receipt. White v. Wakefield, 7 Sim. 401, is strong in our favour. The judgment of the Court (Sir James Hannen, and Bowen and Fry, L. J J.) was delivered by Fry, L. J. :— In the year 1879 a sum of £975 Xew 3 per Cent. An- nuities was standing in the name of a trustee under the will of a Mrs. Goulston, upon trust for the plaintitf, Mrs. Bickerton, for life, with remainder in equal shares to her children living at her death and the issue of children then deceased. She had three children, of whom the plaintifP, Miss Bickerton, is one. By an indenture bearing date the 10th of February, 1879, the plaintiffs assigned to the defendant Bates their interests in these annuities to secure a sum of £'350 and interest at 7 per cent, pay- able on the 10th of August, 1879. On this mortgage there was indorsed the usiuil receipt for the sum of £250, which was signed by both plaintiffs. The plaintiff's allege that svims amounting to £91 17.§. 6d., and no more, were paid to them in respect of the £350; and though the evidence adduced by the plaintiffs is far from satisfactory, we are of opinion that as against the defendant Bates the plaintiffs have established by evidence a case for reducing the mortgage; or, in other words, that as against Bates the plaintiffs w-ould be entitled to a declaration of their right to redeem on payment of what should be found to have been actually advanced on the mortgage, with interest. On the 11th of March, 1879, the defendant Bates assigned this mortgage security to the defendant Hunter, and it is not disputed by the plaintiffs but that this defendant has shewn that he paid the full consideration of £250 for the assignment, and that he took the assignment without actual notice of any equity subsisting be- tween the plaintiffs and Bates except the equity of redemption according to the form of the mortgage deed. The plaintiffs, however, contend that inasmuch as the assign- ment of their interests in the legacy was an assignment of a chose in action, the defendant Hunter is now liable to all the equities which the plaintiffs had at the date of the aspis^nment against his assignor, Bates. This the defendant Hunter denies. As the legal interest in the legacy was and is vested in the trustee of Mrs. Goulston's will, it is evident that the interests botli of the plaintiffs and of the defendant Hunter are equitable inter- ests only, and the real question for our decision is, what are the relative merits of these persons havinsr adverse equitable intorests? If the merits of the one are greater than those of the other, the Hf:.\ II.] !U( Ki:i!T<>N ;•. WAiKi:i:. O'^'l Court will givf the jtriority to tlic greater merits; if and only if llic merits are e(iual, it will give the priority of right to the one who is prior in point of time. The plaintitlV execiiled a deed wliicli rcciti'd that they had received the whole sum of £2.")0, and which stipulated that their right of ri'demption .should be on payment of the sum of £250 and interest, they signed a receipt on the hack of the deed stating that they had in fact received this sum of £2')(\ and they permitted Bates, or Astley, who was acting with or for him, to have pos- session of the deed containing these false statements. That the plaintifTs were in a moral point of view excusable for these acts is beyond doubt, and that they were deceived l)y those whom they trusted, and as such are objects of sympathy, is eipially clear. But they were inexact and careless, and placed in the hands of Bates or Astley the means of deceiving other persons, and these are in the view of a Court of Erpiity demerits. Was Ilunti'r guilty of negligence or want of care in his part of tlie transaction? He must, on the evidence before us, be taken lo have advanced his money on tlie faith of the production of the mortgage deed and receipt signed by the plaintifTs; and if the a>signment by the plaintiffs had been, not a mortgage but an ab- .Milute conveyance, it would, we think, have been clear that there would have been no negligence whatever on the part of the de- fendant TTunt'-r in not inquiring of the plaintifTs as to their rights 111- claims. But it has been argued before us that there is a wide dilTerence in this respect between a mortgage and an ab.solute con- veyance, because it is said, and said truly, that in the ordinary c^nirse of business a prudent assignee of a mortgage, before paying his money, requires either the concurrence of the mortgagor in the assignment, or some infornuition from him as to the state of ac- counts between mortgagor and mortgagee. The reason of this course of conduct is however, in our opinion, to be found in the fact that an a.ssignet^ of a mortgage is afTeeted by all transactions which may have taken place between mortgagor and mortgagee sul)se- «|Uently to the mortgage, and the assignee is bound to give credit for all moneys received by his assignor before he has given notice of the assignment to the mortgagor. But in the present ca.se the assignment was mi\(\o very soon after the execution of the mort- gage, and before the time for pavment had arrived; so that, whilst it was possible, it was not probable, that any payment would have l>oen made either of principal or interest; and we are of opinion that if an assign is willing to lake the risk of any pavment having been made afttT the date of the mortgage he is not guilty of care- l^snesR or negligence if, in tlie ab.sence of any circumstances to C)G2 ASSIGNMENT OF MORTGAGE. [CHAP. IV, arouse suspicion, he relies upon the solemn assurance under thi^ hand and seal of the mortgagor as to the real bargain carried into etTect by the mortgage deed, upon the })Ossession of that deed by the mortgagee, and upon the receipt for the full amount of the :nortgage money under the hand of the mortgagor. The presence of a receipt indorsed upon a deed for the full amount of the consideration money has always been considered a highly important circumstance. The importance attached to this circumstance seems at first sight a little remarkable when it is remembered that the deed almost always contains a receipt, and often a release, under the hand and seal of the parties entitled to the money. But there are circumstances which seem to justify the view which has prevailed as to its importance. A deed may be delivered as an escrow, but there is no reason for giving a re- ceipt till the money is actually received, unless it be to enable the person taking the receipt to produce faith by it. A deed is Qot always, perhaps rarely, understood by the parties to it, but a receipt is an instrument level with the ordinary intelligence of men and women who transact business in this country, and which he who runs may read and understand. Our decision follows, as will be obvious to those who are familiar with this branch of law, the general lines laid down by Kindersley,. V. C, in Bice v. Rice^ 2 Drew. 73. For the solution of the particular question which distinguishes this case from that, viz., whether there is for this purpose any difference between a mortgage and an abso- lute conveyance, we have not been aided by any authority cited to us at the bar. For the reasons already given we dismiss this appeal Avith costs. OLDS V. CUMMINGS. Supreme Court of Illinois, 1863. (317ZZ. 188.) Writ of error to the Circuit Court of Bureau county; the Hon. M. E. Hollister, Judge, presiding. This was a bill in chancery exhibited in the Circuit Court by Justin H. Olds against Preston Cummings, Cynthia Cummings, his wife, and others, asking the foreclosure of a mortgage. It appears that on the 21st of November, 1857, Preston Cum- KKC. 11.1 OLDS V. ( r.MMlN'GS. M'-\ min<^s cxcfutfd to the order of Charlfs L. Kflscy liis two cortaiii promissory notes, both payable sonic mnnths iheroafter. On tlw same (lay on wliicli the notes were executed, Treston Cuminin^^s, with his wife, Cynthia Ciinuiiin^'s, to secure the payment of tiiesc notes, executed and delivered to Kelsey a niortjia^e upon real es- tate. The notes were assigned to Olds, the eom|)lainant, by Kelsey, the payee, as the bill alle*;es, before their maturity. Olds, the as- signs sou^'ht by this bill to foreclose the mortiiape mentioned. Cumminre- vent the defendants setting up the defense before mentioned. The record contains voluminous proofs upon these contested ques- tions of fact ; but it is not important to consider the evidence, as the point determined arises out of the facts as insisted upon by the complainant himself. The Circuit Court held that the (>quity of the case was with the defendant, Preston Cummings, and that there was usury iu the notes sued upon, of which usury the comjtlainant had notice, and that he was not entitled to recover the same, but only the principal and interest in the notes, after deducting the usury which they con- tained : and a decree was rendered accordingly. Olds, the com- ])lainant below, then sued out this writ of error, and questions the correctness of that decree, because, among other grounds, the Cir- cuit Court sustained the defense of usury as against him. Mr. Chief Ji'stick C.vtox delivered the opinion of the court : We do not find it necessary to determine the (pu'stion whether Olds was a bona f\ih purcha'ser of this mortgage or not. In a case submitted subse(|uent to this one we have been called upon to ex- amine the question as to how far the rights of the assignee of a mortgage, purchased for a valuable consideration before due. and in ignorance of any ecpiities or defense, shall l)e affected by >\\c\\ defense; and, as this record also presents the question, and as the conclusion at whidi we have arrived decides the case, we shall here consider this question and none other. By the common law choses in action were not assignable, l-'or the convenience of commerce, by tlie statute of Anne, in England, certain cho.ses in action were made assignable, .so as to vest in the assignee the legal title, as promissorv notes and bills of exchange We have a stat\ite, al.so, making certain choses in action assignable. prescribing a particular mode in which th<>y sliall be assigned. Our (JG4 ASSIGNMENT OF MORTGAGE. [CIIAP. fV. statute provides that any promissory note, bond, bill, or other in- strument in writing, whereby one person promises to pay to another any sum of money or article of personal property, or sum of money in personal property, shall be assignable by in- dorsement thereon. iSTow, the mortgage, to foreclose which this bill was filed, was given to secure the payment of two promissory notes which were assigned by the payee and mortgagee to the complain- ants. This was, in equity, an assignment of the mortgage. The notes were assignable by the statute, but the mortgage is not, nor is it assignable by the common law. Tbe assignee of a mortgage has no remedy upon it by law, except it be treated as an absolute conveyance, and the mortgagee convey the premises to the assignee bv deed; and upon the question whether this can be done, the au- tiiorities are conflicting. Even our statute, autborizing foreclos- ures of mortgages by scire facias, has carefully confined the right to the mortgagee, and does not authorize this to be done by as- signees. But it is said that tlie assiiiument of the notes carries with it the mortgage, which is but an incident to the principal debt. That is true in equity, and only in equity. Courts of equity will not Ije confined to legal forms and legal titles, but look beyond thc-^c to the substantial, equitable rights of parties, and allow par- tics who have equitable rights to enforce those rights in their own names, without regard to legal titles. The assignee of a judgment, ovi'U, may, in his own name, enforce it in equity. But while courts of equity thus enforce equitable rights, they do it with a scrupu- lous regard to the equitable rights of others. Thus, if the assignee of a judgment attempt to enforce it in equity, no matter how much he paid for it, or how ignorant he might have been that it had been paid, or that there was other reason why it should not be collected, tlie court of equity will look into all the circumstances, and will not enforce it in his favor, if it ought not to be enforced in the hands of the assignor. He who buys that which is not assignable at law, relying upon a court of chancery to protect and enforce his rights, takes it subject to all infirmities to Avhich it is liable in the hands of the assignor; and the reason is, that equity will not lend itself to deprive a party of a right which the law has secured him, if such right is intrinsically just of itself. We have not met with a single case where remedy has been sought in a court of chancery, upon a mortgage, by an assignee, in which every defense has not been allowed which the mortgagor or his representatives could have made against the mortgagee himself, unless there has been an express statute authorizing the assign- ment of the mortgage itself. There are many cases in which the assignees have been protected against latent equities of third per- >'►-'■• "1 (H.D- r. riMM INCS. (I .«»iiH, wIioM' li^flils, or cvi'i) iiaiiR's, do iiul iijn»r;ir on the i.icf oi me iiiorl^M.^c. And (111- ri'iison is, that il is the duty of the purcliasi-r of a miiit;4a^ui' (o iiKiuiri' of [\\v inort;,M_ir(ir if tlieri' l)t' any reason why il .-lioulil not he paid; hiit he shoukl not he reciuired to infjuirL' of the wliole woild, (o sic if some one has not a latent equity which nii^'ht he inti'ifere, for instance, a ifslui ijur Inisl. We shall refer lo a few of the many ease.s to he met with on thi.s ^uhje<•t. In Miiinni \. LijUiuni. 'I J. C. H. 441, the (juestion arosi; upon a hill to foreclose a mortgaj^e hy the assignee, and riiancellor Kent said : '' Tt is a general and well-settled principle, ttat the iissignee of a chose in action takes it sni)ject to the same equitii-s it was suhject to in the hands of the assignor. Rut this rule is gcn- <'rnlly understood to mean th" ecpiity residing in the original ohligor, and not an eijuity residing in some third person, against the assignor." .\nd for tliis distinction he assigns the reason al)Ove stated. Again, he says, in the satne ease: '' But honds and mort- gages are not the subjects of ordinary eommeree." Here is ex- )>ressed the very essence of the reason of the law. ^fortgages are not commercial i)aper. Tt is not convenient to pass them from hand to hand. ]»erforming the real ofTice of money in commercial transactions, as notes, hills and the like. When one takes an ol)li- gation secured hy a mortgage, relying upon the mortgage as the .-ecurity, he must do it deliherately, and take time to inquire if any reason e\ist< why it should not he enforced ; while he mav take I lie mer<' pronii.aper, and di'- |n nd upon the personal securitv of the parties to it. It may ho -aid to he a distinguishing characteristic of commercial paper, that if relies ujion jtersonal security, and is l)ased upon per.lf, though seeun^l hy a mortgage, is still nimcrcial paper: and when the remedy is sought upon that, all the rights incident to eonimercial j)aper will Ik* enforced in the «'onrts of law. But when the remedy i.s sought through the me- eper into the transaction, and see if there he any equitable reason why it should not he (^nforced. He who Imlds a note, and also a mortgage, holds in fact two instruments for th(> security of flu' debt : first, the note with its personal securitv. which i< comm(>rcial j)aj)er, and, as such, may he enforced in the <}C() ASSIGNMENT OF MORTGAGE. [CHAP. IT, courts of law, with all the rights incident to such paper; and the other, the mortgage, with security on land, which may be enforced in the courts of equity, and is subject to the equities existing be- tween the parties. The right of an assignee to set at defiance a defense which could be made against the assignor is an arbitrary statutory right, created for the convenience of commerce alone, and must rely upon the statute for its support, and is not fostered and encouraged by courts of equity. In Westfall v. Joties, 23 Barb. 10, the Court said : " Does the plaintiff, being a bona fide purchaser and assignee of the bond and mortgage, stand in any better condition than the person from whom he derived his title? It is a well-settled principle that the as- signee of a chose in action takes it subject to all the equities which existed against it in the hands of the assignor." In this case thr defense to the foreclosure was that the mortgage was given without consideration, and to defraud creditors, and the Court refused to- enforce it, but left the assignee, as it would have left the mortgagee, where their contract left them. The case thus decides that the term equities, as here used, means defenses. The opinion of the Court proceeds : " But I am prepared to hold that the plaintiff has no other or greater rights in relation to this bond and mortgage, and stands in no better position, than Parsons, the mortgagee." So, in Pennsylvania the same rule was held. In Mott v. Clarke 9 State E. 399, the Court said: "He (the assignee) takes it (the mortgage) subject to all the equities of the mortgagor, but not to the latent equities of a third person;" holding the same rule pre- cisely as the case first referred to, as decided by Chancellor Kent ; and such also was the case of Prior v. Wood, 31 Pa. State E., where the Court protected the assignee of the mortgagee against the latent equities of third persons against the assignor. And this is as far as any Court has gone in the protection of a bona fide assignee of a mortgage, when the proceeding was on the mortgage itself, and in the absence of any express statutory provision authorizing the as- signment of the mortgage. We find the law to be, both upon principle and authority, that the assignee of the mortgage in this case took it subject to the de- fense which the mortgagor had against it in the hands of the as- signor. Of the sufficiency of that defense, to the extent admitted by the Circuit Court, no question was made. The decree must be affirmed. sKc. II.] iiAiLV r. SMITH. 6G7 liAILV V. SMI ril. Sri'itKMi: Coil!!" <»r oiiio. ISCM. (14 Oil. SI. :5'.»r,.) Error to llio District Court of Lorain county. The case is stated in the ojiinion of the court. It.WNHY, J. On the Hth day of October, \H').], the plaintifT gave to the defendant, Charles 11. liolles, his negotiahh' iiromissory note for the sum of $5:370, and ])ayahk' two years after date, with in- terest. Prior to tlie 1-lth of Dcccinhcr. in the same year, sundry payments had been made and iiidor-cd thi-reon, leavinj? then due the sum of $•^^*^(>() ; and on that day tiie jjUiintilf executccl and deliv- ered a niortgai^e upon real estate situated in Lorain county to secure this balance. ( )n the I'lh of dune, 1850, he filed his amended jK'tition ajjainst BoUes, the original payee of the note, Kendall and Lucas, through \\hose hands the note and mortgage had passed by assignment, and Smith, the then holder, to compel the delivery and cancellation of the> were oI)laine(l by fraud, and that every subseiiuent holder thereof took them with lull notice of the fraud and want of con- sideration. Smith alone answered the iirtition. and claimed to have pur- chased the note and mortgage from L\icas shortly before they fell due, without notice of any fraud or want of consideration, ami to 1k' a bona fiilc holder thereof for value, and eiititlecl to be protected as such. Xo bill of e\ce|itions embodying tile evidem-e having been taken upini the trial in the court below. w<' have oidy to consider whether the facts found by the court ju-tilicd the judgment which was ri'U- dered. If any state of the evidence, consistent with the pleadings, would justify the findings of fact which the court nuide. we are bound to pnsume, in support of the judgment, that such evident was given, {hlr v. Cliiinliill. tiiilr. p. 37^*.) The plaintilT obtained the relief demande«l in his petition for ever^-thing beyond the amount paid by Smith for the note an originally secured, and equally entitles the holder to recover upon thai A sum of money due upon the note, from Baily to Smith, is an indispensable predicate upon which to found a judgment npon the mortgage; and as no personal judgment w^as rendered or attempted, and as both note and mortgage, until they came to the hands ot Smith, are found to have been fraudulent and void, it is equally evident that he can sustain his judgment only upon the assumption that the attributes of negotiability belonged to the mortgage as well as the note, and if this can not be done, that the finding upon the note falls with the judgment rendered upon the mortgage. Without such finding, there can be no such judgment; and with tho finding, there still can be no judgment, if Smith only succeedec't to the rights of his assignor in the mortgage. [The learned judge here considers at length the objections urged by plaintiff's counsel, in opposition to the finding of the court below that Smith was a bond fide holder of the note and mortgage for value, and comes to the conclusion that there was no error in the finding.] The remaining question is one of much importance, and for the first time presented in this court. As it was supposed to be in- volved in other eases upon our docket, we have given opportunity to counsel in those cases to be heard, and after full argument, we have bestowed upon it very careful attention. Does the fact that a ^i:<- II.] iiAii.Y r. s.Mrni. <>'• ' note, obtained by fraud, lias j^asscd into the hands - tion now before us. This is not because the purchase and assign- ment of mortgages is a new thing. On the contrary, scarcely any business transaction has ber-n more common and familiar, or has uftener engaged the attention of the courts. Nor has the nature of this instrument, and the rights of jiarties growing out of its assignment, either alone or in connection with a non-negotiable security, escaped attention, or failed to reccMve very full ami accu- rate illustration. In such case, the universally acknowledged doe- trine from the case of Pnvics r. Austen. 1 Vi-s. 217, to Hush v. Lathrop, 22 Xew York H. ."i.')"), has been, that it is to be regarded as a chose in action, and, as expressed Iiy Lord Thurlow. *' the pur- chaser must abide by the case of the person from wliom he buys:** but during all that long jierioil. neither in Knglaiid nor in any of the old states of the Tnion, dm's the (piestion seiin to have been ])rcscnted, whether it might not have a dilTen-nt elTect upon its assignment when made to secure a negotiable instrument. This may be accouiite nuiny times Iwen taken to secure negotiable bills and notes, fraudulently transfi-rri'd. and if such a distinction was thought to exist, it seems very singular that the holders should never have made the attemj)t to avail them.selve': of such securities. Tn Xew York the attempt has been frecpiently made to confine the principle that the jnirehaser nnist abide by the case of the seller, to the original debtor, allowing him to make the same defense against the assignee that he could against the as- signor, but ]>rotecting the assigiu'(> without notice from what have been denominated latent equities, or interi»sts in third person^, not in tlie apparent chain of title. .\nd tliis for the very plaiisible rea- son that one proposing to purvhase such an instrument might in- G:0 ASSIGXMEXT of mortgage. [chap. IV. quire of the debtor whether he pretended to any defense, and make his answer estop him from afterward asserting any, but that no amount of diligence would enable him to protect himself from such latent equities. But, after some vacillation in judicial opinion, the Court of Appeals, in Bush v. Lathrop, repudiated the distinction, and held that the purchaser in such cases must rely upon the good faith of the seller, that he could " take only such title as the seller had and no other," and that if mortgages were " to l)e further assim- ilated to commercial paper, the legislature must so provide." But the direct question arising upon mortgages given to secure negotiable paper has arisen in two of the new states of the west, whose courts are entitled to high respect for their learning and al)ility, and it has there been held that the quality of negotiability is so far imparted to such mortgages as to make them available in the hands of a bona fide indorser of the paper, without any regard to the equitable rights of the original parties. {Reeves v. Scully, Walker's Ch. Rep. 248; Dutton v. Ives, 5 Michigan Rep. 515; Fisher v. Otis, 3 Chand. Rep. 83; Martineau v. McCoIlum, 4 Id. 153 ; Croft v. Bunster, 9 Wisconsin Rep.- 503.) In the first of these cases, decided by the Chancellor of Michigan in 1843, no reasons are assigned or authorities cited; and in Dutton v. Ives, decided by the Supreme Court in 1858, the doctrine is again advanced upon the authority of Beeves v. Scully, and the two Wisconsin eases, reported in 3 and 4 Chandler. On referring to the first case de- cided in that state {Fisher \. Otis), we find it professedly based on authority, and it serves to show upon what a slender foundation a line of decisions may be made to rest. The court say : " This doc- trine is sustained by respectable authorities, and by the reason and sound policy which have long ruled in relation to commercial pa- ])er;" and Powell on Mortgages, 908, and note are cited. Mr. Powell certainly did suggest the question whether such a distinc- tion might not be made. ITis exact position is thus stated by Mr. Coventry in the note : " When it is said that a debt is not assignable at law, "it must be understood with this restriction, that if it be secured by a negotiable instrument, such as a bill of exchange, the legal interest will pass by indorsement, and this has induced the learned author, in the next paragraph of the text, to suggest whether, in such a case, the rule as to the mortgagee's liability would apply."' The rule here referred to is that announced by Lord Loughborough in the leading case of Matthews v. Walhryn, 4 Yes. 120, that the assignee of a mortgage takes it subject to all equities which could be asserted against his assignor. Xow, it may l>e fairly assumed that Mr. Powell supposed that such a distinction could be judiciously made: but it must be admitted that he had SEC. II.] UAILY i. SMITH. ^IT 1 tlu'ii iio autliority to base it upon, that neither the judicial record- of Knj,'hiii(l, nor in any of the old States, furnish any cvich-nec that it has ever l)een a(h>j)led, and that it was first aetcd ujton, nearly lialf a century aftiT the suggestion was made, hy a new State upon another continent, lender such circumstances, it can not he rea- somihly claimed that we are at liberty to rerv correct to speak of a mortgage as an incident t»^ th(> (^ebt it is created to secure; but the importance of this niere term nuiv he easily overrated. It <'ertainlv is not one of the incidental cfTccts of the cn\ition of the G73 ASSIGNMENT OF MORTGAGE. [CIIAP. IV. debt itself, and it can only 1)C made to have relation to the deht by the force of the contract contained in the mortgage; and is inci- dent to the debt only in the same sense that every independent contract, having for its object the payment or bettor security of Ihe debt, is incidental to it. The existence of the debt is the occa- bion out of which they arise, and the subject of their various pro- visions; but they embrace all the elements of a perfect contract in themselves, and are enforced by appropriate remedies, according to their own stipulations. At law, a mortgage effects the conveyance of an estate upon condition ; but in -the view of a. court of equity, where alone the rights of an assignee can be enforced, it is a chose in action, having no negotiable quality, and not diflt'ering in char- acter from collateral personal agreements, designed to effect the same object. Any of these collateral agreements may be entered into for the purpose of securing a debt, evidenced hy a negotiable instrument ; and if they are not obtained by fraud, and rest upon a sufficient consideration, in the absence of any agreement to the contrary', they undoubtedly enure in equity to the l)enefit of any owner of the debt. But the question here is, whether one of these collateral agreements, made to secure a negotiable note, loses its character of a mere chose in action, and has imparted to it the qualities of negotiability, so that upon the transfer of the note it may be enforced, although obtained by fraud? This question has been repeatedly answered, in respect to a class of collateral agree- ments, much more intimately connected with the negotiable instru- ment than is the mortgage deed. We refer to guarantees indorsed upon the note itself. Passing by those which have been claime reinemluTed that the one ordinarily guarantee.^ the partieiilar instnmient si)eeilie(l in it, and docs not survive a renewal or other ehange of the evidence of indebtedness; while the other secures the debt, whatever changes may intervene, until it is paid ; and, even a positive statiitory bar which j)recludes a recovery uj)Oji the note, it has been held, does not j)revent tiie en- forcement of the mortgage. {Fisln'r v. Moftsnidii. 11 Ohio St. Rep. 42.) In order to sustain the judgiiinit rendered in this case, it is indisj)ensably necessary to athrm — eitlier that the mortgage, when made to secure a negotiable note, contrary to its general na- ture and qualities, becomes a negotiable instrument or that the transfer of such a note, without the aid of any statute, or of any judicial decision, except those of very recent date, has an cfTect beyond the note itself, and draws after it, and witiiin, one of the most ijuportant incidents of negotialiiiity, a collateral contract hav- ing relation to the same debt. A vi-ry careful consideration of tlie whole .er is oidy allowed in tlv interests of conmitTce. and " pos.'«cs«ing some of the attributes of 1374 ASSIGNMEXT OF MORTGAGE. [ciIAP. IV. money/' to answer the purposes of currency. Lord Mansfield, in answer to the " ingenious" argument of Sir Richard Lloyd that the plaintiff could take nothing by assignment from a thief who had stolen paper, said the fallacy of the argument consisted in com- paring bank notes to what they did not resemble. " They are not goods," he said, " not securities, nor documents for debt nor are so esteemed ; but are treated as money, as cash, in the ordinary course and transaction of business, by the general consent of man- kind ;■" " the course of trade creates a property in the assignee or l)earer," and they can not be recovered " after they have been paid away in currency, in the usual course of business." This was said, it is true, of bank notes; but the same principles, and for the same reasons, were afterward applied by the same learned judge to every description of negotiable paper, and the case of Miller \. Race is still the leading authority upon this branch of commercial law. Now, mortgages are not necessities of commerce ; they have none of the " attributes of money," they do not pass in currency in the ordinary course of business, nor do any of the prompt and decisive rules of the laAV merchant apply to them. They are " securities," or " documents for debts," used for the purposes of investment, and unavoidably requiring from those who would take them with pru- dence and safety, an inquiry into the value, condition and title of the property upon which they rest ; nor have we the least apprehen- sion that commerce will be impeded by requiring the further inquiry of the mortgagor, whether he pretends^ to any defense, before a court will foreclose his right to defend against those which have been obtained by force or fraud. Against any amount of mere theory advanced to sustain the posi- iion that commerce requires these instruments to be invested with negotiable qualities, may be successfully opposed the stubborn fact, that in the first commercial country of the world, as well as in the great commercial states of the American Union, they have never been used for such purposes, or heard of in such a connection. It is quite immaterial whether this has arisen from the cause supposed — that they are never made to secure negotiable paper — or not ; since it equally shows that no necessity for their use has ever been felt. A long experience has demonstrated that they are not neces- sary instruments of active trade and business ; and we but follow in the footsteps of the ablest and wisest judges when we say that the harsh rule which excludes equities, and often does injustice for the benefit of commerce, should not be applied to them. This re- mits them to the position they have so long occupied — that of mere choses in action ; and whether standing alone or taken to secure negotiable or non-negotiable paper, they are only available for what *=£<"• "•] CAHPKN'TKU V. LON(iAN'. GT") was honestly duo from llu- luortxa^ior to tlio mort^Mjjjeo. If tliey ail' assi^'iicd, citlicr cxpn'ssly or by legal implicalioii, tlu' assignee Takes only the interest which his assignor had in the instrument — aiquires i)ut an e(|uity, and, upon the long-estahlished doetrine in courts of e<|nity, is hound to submit to the assertion of the prior e»|uitable rights of third persons. To hold otherwise is to engraft legal incidents upon a mere equitable title; to give to the transfer (if negotiable ])aper an effect beyond what it imports, or is neces- sary in tlu' a((oin))lishnient of its legitimate purposes; and, finally, to invest with negotiable qualities a class of instruments, neither \ised I'or nor adapted to the trade and commerce of the country, and thereby to de])rive the mortgagor of the just right of defending against fraud, without sub.serving any public jwlicy wliatever. These views necessarily lead to the conclusion that, upon the facts found in the court below, the plaintifT was entitled to have his title cleared from the incumbrance of this fraudulent mortgage, and that the court erred in giving the affirmative judgment of fore- i losure in favor of Smith. For this error that judgment is re- versed, and the cause remanded for further pi'Ocecdings. Peck, C J., and Bkixckeiuioff, Scott and Wildeu, J.J,, con- curred.^ CAKPEXTET? v. LOXOAX. Supreme Court of thk rxiTHn Stati-s, 1872. (16 Wall. 271.) Appeal from the Supreme Court of Colorado Territory, Mi{. Justice Swayxe stated the case, and delivered the opinion •of the court. — On the ')th of March, l.^(»7, the ap|)ellce, Mahala T^on- gan, and Jesse B. Longan, executed their jiromi'^sory note to Jacob B. Carpenter, or order, for the sum of $080, payable si.\ months after date, at the Colorado National Bank, in Denv(>r City, with interest at the rate of three and a half j)er cent. ]ier month until ]»aid. At the same time ^fahala Tiongan executed to CarpentcT a mortgage upon certain real estate therein described. The mortgage was conditioned for the payment of tlie note at nuiturity, according 10 its effect. On the 21th of July. 1807, more than two months be- fore the maturity of tlu^ note, Jacob B. Cari)enter, for a valuable '•/<)?i»i., "jN ; ('Intlh' v. fioi/nler. 'i Midi. iJM ; Pierre v. J'litiine, 1* Miiinc. .">(>T ; Pnhner v. )'iiles. '.] SniKU'onl, l.'{7; Taylor \. I'(t(/r. (I All.n, Sd; C/r^/ \. I! Wis. :)(»:;: Cornell v. //i7r/i- (//>-. II ///. .).").■!.) Tlic colli liict iN rc^'iinls iIk' uoW \vji.-< that llif iiiakt r slioukl pay it ;it niatiirity to anv bona fide indonsoo, with- «mt n-ri'i-cnci' to any drrcnii's to wliidi it ini;:lit liavf been liai)li' in the lian(l< of ilic jiaycc. The niorl;;a,L'o was conditioned to socurc tiu- I'liKilniciit of that (oiitraci. 'W* hi in such a tlcj'cncc against ~iuh a hoMcr wouhl In- a dear dciiartiirc fr()ni the agrcnnont of tho mortgagor and nun'tgagcc, to which the assignee suhse(|uently, in good raitlu l)ccanie a party. If the mortgagor desired to reserve sudi an advantage, ii' sliould !iave given a non-n<'got ial)le instru- ment. If one of two iiiiKKcnt person.; nuist snlfer l)y a (h'ceil, it is more eo!\sonant to reason that lie who '* pnts trust an;er rather than a stranger." {Hern \. \irli„ls. I >;alkd(l. -.'Sli.) I pttn a hill of rorcdosuce tiled hy the assignee, an aecount must he taken to ascertain the amomii i\\\o n))on the instrument secured by the mortgage. Here the amount due was the face of the note and interest, and that eonld have been recovered in an action at law. Ivpiity could not find that ]i'>s was due. It is a ea.-e in which ♦•(piity must follow the law. .\ decice that tln' amount due shall Ik" paid within a s|)ci-iricd time, or that the mortgaged premi>(N shall be sold, follows necessarily. Towdl, cited siipni, . poliev of the law to avoiil circuity of action, and parties ought not to he driven from one forum to obtain a remedv whicli cannot he denied in another. 678 ASSIGNMENT OF MORTGAGE. [CHAr. IV. The mortgaged premises are pledged as security for the debt. In proportion as a remedy is denied, the contract is violated, and the rights of the assignee are set at naught. In other words, the mortgage ceases to be security for a part or the whole of the debt, its express provisions to the contrary notwithstanding. The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity. {Jack- sou V. Blodgct, 5 Cowen. 305; Jaclson v. WilJard, 4 Johnson, 43.) It must be admitted that there is consideral)le discrepancy in the authorities upon the question under consideration. In Bailij v. Smith et al., U Ohio State, 39G— a case marked by great ability and fulness of research — the Supreme Court of Ohio came to a conclu- sion different from that at which we have arrived. The judgment was put chiefly upon the ground that notes negotiable are made so by statute, while there is no such statutory provision as to mort- gages, and that hence the assignee takes the latter, as he would any other chose in action, subject to all the equities which subsisted against it while in the hands of the original holder. To this view of the subject there are several answers. The transfer of the note carries with it the security, without any formal assignment or delivery, or even mention of the latter. If not assignable at law, it is clearly so in equity. When the amount due on the note is ascertained in the foreclosure proceeding, equity recognizes it as conclusive, and decrees accordingly. Whether the title of the assignee is legal or equitable is immaterial. The result follows irrespective of that question. The process is only a mode of enforcing a lien. All the authorities agree that the debt is the principal thing and the mortgage an accessory. Equity puts the principal and ac- cessory upon a footing of equality, and gives to the assignee of the evidence of the debt the same rights in regard to both. There is no departure from any principle of law or equity in reaching this conclusion. There is no analogy between this case and one where a chose in action standing alone is sought to be enforced. The fallacy which lies in overlooking this distinction has misled many able minds, and is the source of all the confusion that exists. The mortgage can have no separate existence. When the note is ])aid the mortgage expires. It cannot survive for a moment the debt which the note represents. This dependent and incidental relation is the controlling consideration, and takes the case out of the rule applied to choscs in action, where no such relation of dependence exists. Accessorium non rlucit, sequitur principnle. In Pierce v. Fainice, 47 Maine, 513, the court say: " A mortgage KKf. 11. 1 I'.M(;i: C. (11 Al'MAN. <>^ '•> \i> pro Innlu a jjtircliasc, aiul a hDiia fulv iii()rt;rafr«'0 is ((luallv cntilli-il to protecliun as a hoiiCi fide ^^rantt-c. So tlu' assij^ncc of a mortga^'i- is on the same footin<5 with the bond fide niortcaclialilc title he receives the protection of the law a:^ a<^ainst luikiioun aiitl latent defects." Maillicu's V. Wtilhrifii. \ Veay no more than what is really due uj)on the bond; if an action of covenant was brought l)y the covenantee, the account must he settled in that action. In this court tlu- condition of the assignee cannot be better than it would be at law in any mode he could take to recover what was due upon the assignment." The principle is distinctly recog- nized that the measure of liability upon th(> instrument secured is the measure of the liability chargeable upon the security. The con- dition of the assignee cannot be better in law than it is in equity. So neither can it h(^ wor^e. T'jion this ground W(> place our judg- ment. Wc think the doctrine wc have laid down is sustained by reason, princijilc, and ihc greater weight of authority. Decree reversed. ?.\Tr;E V. ni ATM AN'. SrT'RrMi: roiKT nr \i;\v 1 1 \ M I'SIl I WK. 1878. (r.s .V. //. xu.) Wkit ok I'ATUY. on a mortgaire inach' fo sivure the defendant's note, endorsed and deliv(>r(Ml with the mortgage, by tlie payee, to the G80 ASSIGNMENT OF MORTGAGE. [cilAP. ly. Ijlaintiff, before maturity, as collateral security. The plaintiff re- ceived the note and mortgage in good faith in the ordinary course of business, and with no notice of any equities between the mort- o-ao-ee and the defendant. The question whether the defence of want of consideration, and that the note and mortgage were ob- tained from the mortgagor by fraudulent representations, can be made, is reserved. Allen, J. Negotiable paper, received for value, before ma- turity, in the ordinary course of business, without notice of in- firmity, is, in the hands of a purchaser, freed from defences by the maker. The same is true when the paper is received and held as collateral security. {Tucker v. Savings Banh, ante, 83.) A mort- iraofe is incident to the debt secured by it, and a transfer of the note or other evidence of debt carries the mortgage with it. {Wheeler V. Emerson, 45 X. H. 527.) Any defences, open to the maker in a suit 071 the note, may be made use of in an action on the mort- gage. {Northy v. Northu, 45 jST. IE. 141.) The mortgage follows the debt as a shadow does its object, and cannot exist without it. Whoever holds the evidence of debt holds the mortgage security, and payment of the debt extinguishes the mortgage. The debt is the principal thing, and imparts its character to the mortgage, and the legal rights and remedies upon the debt become fixed upon its incident, the mortgage. Defences which cannot be made against the note, because it has travelled away from them, cannot be made against the mortgage which has kept company with the note. The freedom from infirmity, which the innocent purchaser and holder of the note enjoys, cannot be destroyed or made less by taking with the note a mortgage made and intended as security. The plaintiff received the note and mortgage in good faith, before the debt had matured, and with no notice of defect or defence. The defence sought to be set up cannot be made. (Oarpenter v. Lonaa^i. IH Wall. 271. ; Taylor v. Page, 6 Allen, 86 ; Sprague v. Graham. 29 Mp. 160; Pierce v. Faunce, 47 Me. 507; Gould v. Marsh, 1 Hun (N. Y.) 566; Jones on Mort. 834, 835, 840.)^ Case discharged. Bingham, J., did not sit. ^Fisher v. Otis, 3 Chand. (Mich.) 83 (1850), Dnfton v. Tvcn, 5 Mich. 515 (1858), Oroft V. Bunstcr, 9 Wis. 503 (1859), Gould v. Marsh, 1 Hun. (N. Y.), 560 (1874), Duncan v. Louisville, 13 Bush (Ky.) 378 (1877), Basselt v. Daniels, 136 Mass. 547 (1884). accord. But see Franklin v. Tvofjood, 18 Towa, 515 (1865). "•] TursTKKs or rsroN- roi.i,i:(ir. i. w 111.1:1. kk. G81 TKISTKKS OF IMON L'OLLECiK v. W 1I1':KLEK. Commission of Appeals of New Yobk, 1874. (Gl N. y. 88.)^ Appeal from so much of the judgiiicnt of the General Tenn of I lie Supreme Court, in the fourth judicial department, as aflirms in part a judgment di^smissin«r the jdaintifT's eomj)laiiit, entered on the report of the refenn'. (Kcjjorted helow 5 Lan.s. KJO ; .')♦) Barh. .585.) This action was hrought to foreclose a mortgage executed by I'hilo StevciLs to Benjamin Xott, to secure the payment of $2,800. It l)ears date July ]81h, 1833, and was recorded August 8th, 1833. It covered, when given, four pieces of land, viz.: three in the then \ illage of Oswego and a large tract in the town Scriba. The mortgage was assigned by Xott to the plaintiff by an assignment bearing date the 1st day of July, 1834, which was recorded on tlie •?r)th day of December, 1852. The complaint, after stating the above facts, further states that a portion of the mortgaged premises, being two of the parcels of land in Oswego, had been released from the lien of the mortgage, and as to them tlu- i)]aintin* made no claim, but alleged that the residue remained subject tliereto. Several of the defendants answered and set up that they were owniTs of different portions of the lands lying in Scriba, which they claimed were not subject to the lien of the plaintilT's mortgage, having been discliarg<'(l by the transactions referred to in the oj)in- ions. The issues were referred to a referee, who dismissed the plain- lifT's comj)laint. The CJcmeral Term on a])peal revers(>d the judgment, so far as it related to mo.^t of the mortgaged premises, but afVirmed it as to the residue. The further facts are set forth at length in the opin- ions. DwKUiT. C. TIk; facts of Ibis case show tli;it on October 1st, 1828, one ^fellen conveyed a large trad of land, incluiling the j)rem- i.ses in question, to Chauncey B. .\spiinvall. The consideration for the land was jiaid by .\spinwall, I'hilo Stevens and Benjamin Xott, in equal portions, and each wer(> equally interested in the property. Aspinwall, by deed bearing (Lite January 2(1, 1830, conveved an undivided two-third-; part of the prop(M'tv to Stevens, for the con- sideration of $2,000 While .\spinwall held the property he executed contracts of -ale of portions of the land to a number of 'Tlie ippoit of tlii-* case is nnicti ii))1iroviiit(Ml. tlio opinion of T.otl. rii.(\. :nihlnirn on IJeal i'roperty, 1T(J, par. 17, and cases cited.) When Aspinwall conveyed to Stevens he transferred an estate to him ehar<;ed with a valid existing tru.st, of which Stevens had full knowledge. Stevens, aeeording to ele- jnentary rules, became himself a trustee for Nott to tlu; extent of the interest conveyed to him. ( 1 Spence's K(\. dur. 'yl^; Willis on Trustees, Gi; 2 Washb. 178, par. 'Jl.) During the whole period from Oetoljer 1, 18"J8, to the time of the execution of the mortgage, the relation of trustee and ccKiui ijue tni^t existed between Aspinwall and Nott, or Stevens and Xott. These trustees were aceountable to Xott in a court of cipiity. They had the management of the estate, had the legal power to sell, and iheir acts were acquiesced in by tlu' rfsfiii (jiic fnit:l and ratified by the accountings held from time to time. Tiider these circum- stances the purchasers under the contracts had an eipiity superior to that of Xott. At the moment when he conveyed to Stevens, they could have enforced the agreements against him, on payment of the residue of the purchase-money, and against Stevens, his successor in interest. Xott and Stevens held the legal title, as trustees for the purchasers under the contracts. The sale by Xott to Stevens and the execution of the mortgag** to the former worked no change in this state of things. At the moment of sale he was a trustee for the ))urchasers und<>r the con- tract. By a familiar ride in the law of trusts he could not buy or sell to the prejudice of the crsfuis (/iir trusts. ]]\< sab- to Stevens, and taking back a mortgage for the j)urchase-money, left him pre- cisely when^ ho was before the tran>aetion was entered into — still charged with the execution of the trust in favor of the jturchasers under the contracts. It was, therefore, quite immaterial, as far as Xott was concerned, to sliow that he had constructive notice of the contracts by tlie possession of the purchasers. His duty toward them did not depend upon notice, but upon the inherent equities of the case. Suj)pose that after he had sold to Stevens he had immediately repurchased from him; would he not have been subject to the same equities as lie was liable to l)efore tlie sale? The authorities are distinct that he would. .\ mortgage coubl give him no murchasr. It i> thus clear that if Xott bad remained owner of the 684 ASSIGNMENT OF MORTGAGE. [CHA^ IV. mortgage of Jul}- IS, 1833, and had sought to foreclose it, he would have been bound by the same equities as before his sale of that date, and would have been required to allow the claims of the purchasers under the contract. Does the plaintiff occupy the position of Xott, or can it urge that it is a purchaser in good faith, and for value, and thus shut out the equities between the contractees and Nott, or is it governed by the rule that the assignee of a mortgage takes subject to the equities between the original parties? According to the reasoning thus far, this is a case of an inherent equity as between a person having nn interest in the equity of redemption and the mortgage. The mortgage, in form, covers the property claimed by the contractees ; if they do not fulfill the contract, it certainly embraces it in full. What they say to the mortgagee is this : " Owing to certain equities between us and you, it is inequitable to enforce the mortgage against property which, as a matter of law, is actually covered l)y it, except you respect our rights." Is, then, the plaintilf in any better position than Nott, the mort- gagee? It is well settled that an assignee of a mortgage must take it subject to the equities attending the original transaction. If the mortgagee cannot himself enforce it, the assignee has no greater rights. The true test is to inquire what can the mortgagee do by Avay of enforcement of it against the property mortgaged ; what he can do the assignee can do, and no more. In Clute v. Bohison, 2 J. R. 612, the rule, as stated by Kent, Ch. J., is, that a mortgage is liable to the same equity in the hands of the assignee that existed against it in the hands of the obligee. (2 Vern. 692, 765; 1 Yesey, 122.) The rule is not simply that the assignee takes subject to the equities between the original parties, though that is sound law. (7«- (jrahnm v. Dishorough, 47 N. Y. 421.) It goes further than this, and declares that the purchaser of a chose in action must always abide by the case of the person from whom he buys. (Per Lord Thurlow, in Davies v. Anste7i, 1 Yesey, Jr., 247.) The reason of the rule is, that the holder of a chose in action cannot alienate anything but the beneficial interest he possesses. It is a question of power or capacity to transfer to another, and that capacity is to be exactly measured by his own rights. (Beehe v. Banl- of New Yorl\ 1 J. E. 552, per Spencer, J., and 549, per Tompkins, J.) Kent, Ch. J., in a dissenting opinion in the same case, would have confined the rule to the equities between the original parties to the contract. {Id. 573.) The opinions of Spencer and Tompkins, JJ., were, however, recognized as the correct ex])nsition of the law in Bn^h v. LnfJrrop, 22 X. Y. 535. A cnnsidera])]e numl)er of author- ities are cited by the plaintiff as tending to show that the assignee ''*■• "•] TlilSTKKS OF r.VIOV ( (H.I.KC.K r. \V 1 1 1.F.I.KIl. 0S.> >f a ilio.^o in action is only suhjoct to tlio equities W'twecn the con- tractor (assi;iiior) and the dchtor, and not to the so eallcd latent <'(|uities of third persons. Such cases as James v. Morey, 2 f'owen, ".'lis, opinion of Suthcrhind, .1.; Hlimiiirr v. Ilvmhrsou, S Midi. 10',': Matt V. Clfirk-r. !» liarr, lot, and others of the same ehiss, were reviewed a< to tlieir principle or specifically in Hush v. Lalhroii, Tl X. "^^ ")3."), and repudiated. 'I'he doctrine of Lord Thurlow, in Kn^daiid. and of Spencer and Tompkins. .F.F.. already con.>idere(l, was tlius adopted rather than that of Kent. Cli. J. The hiw of some of the other States unchmhtetlly coincide^ with tlie vit'ws of Kent, hut, since the decision in Ihish \. LdtJirop. must be regardetl as without authority lierc. The correct theory is well stated in 'I Story on Ivpiiiy .luri — prudence, section 1040: " l-'very assij^Miment of a chose in action is considered in equity as in its nature amountinjr to a declaration of trust and to an agreement to permit the a-signee to make u-^e of the name of the assignor in order to riH-over the del)t or to n'duce the property intti possession." Tliis theory would lead to the con- < lusion that the action hy the assignee must be precisely commen- surate with, that of the assignor, as it must be in his name and on the supposition that, for the purjxjsi's of the action, he is still owner. The case of DiUdi/r v. CoDinirrci'aJ Bauk of Whitrlmll, '*] X. Y. 3-15, is not opposed to this view, as the (piestion in that ca>i' was not one of the enforcement of a mortgage, hut conei'rned the title of the two claimants to the ownership of the mortgage itself The point was. whether one who held a mortgage in trust, with an apparently unrestricted power of disposition, could transfer it fre(» from the claims of the cestui que tru.st to a j)urehaser in good faith. It M'as held that Vie could. This case has no tendency to establish any right on th'. part of the assignee in enforcing the mortgage beyond that ]^'>sscssed by his assignor. The plairfifT cites, to support his view, authorities to the efTi-ci /luit an a-s\i:nee is a purchaser, and to the efTect that "a mortgage IS in i',r\n a conveyance of the land and an assignment of it is on'ft'ier conveyance of the sanu' land." Thesi* ea.ses. which are vers- numerous in the law book<, refer only to thi' position of u mortgagee or assignee in a court of law, and were decided in Eng- land and in States of the T^nion where more technical views of the rights of a mortgage(> in a court of law prevail than in this State. They are of no force in a cojirt of eipiity. in which the ea.-je at bar is assumed to be pending, for in such a tribunal a mortgage is b\ir a eho.«5e in action and security for a debt. Reference is also made to a class of eases appearing in the law rejmrts of a number of the States, hoi. ling, in substanc*'. that when a mortgage i< given to 686 ASSIGNMENT Or MORTGAGE. [CIIAP. IV. peeuro a negotiable note, which is itself transferred before maturity for value, it is taken by the assignee free from all equities. It is argued that these authorities tend to show that the mortgage par- takes of the nature of the debt, in such a sense that only the direct equities between the debtor and the creditor can be set up as against the assignee. These cases have not yet become established law in this State. {Carpenter v. Loiu/an, IG Wall. [U. S.] 271 ; Keni- cott V. Supervisors, id. 452 ; Tajjlnr v. Page, G Allen, '^Q ; Croft v. Bunster, 9 Wis. 510.) If sound, tliey must be made to rest on rules of law attending the transfer of negotiable paper, and cannot be held by indirection to overthrow a rule concerning the ordinary bond and mortgage which luis become fixed in our jurisprudence. The result is that the plaintiff' in the present case takes subject to the rights of the purchasers under the contracts, by reason of the equities between them and Nott and without reference to any actual or even constructive notice of such equities as between such pur- chasers and the mortgagee The judgment of the court below sliould l)e affirmed. All concur. A motion having been made for reargument, the following opin- ion was given, on denying the motion. DwiGiTT^ C. The plaintiff in this cause moves for a reargument on three grounds : First. That this court erred in holding that the plaintiff took the same position in respect to tlie mortgage which was the subject of foreclosure in the present action as its assignor, Xott, the mortgagee. Second. That the court should have held that, where the contracts owned by the respondents were assigned subsequent to the record of the mortgage, the plaintiff has a lien for the pur- chase-money unpaid at the time of such assignment. Third. That the court committed another error in holding that after Nott had made the assignment and continued the apparent owner, the assign- ment being unrecorded, and the respondents having no notice of such assignment, his release from the lien of the mortgage of cer- tain portions of the premises which were primarily liable to pay the debt, was binding on the plaintiff and so discharged the re- spondents. Before considering the first proposition, it will be well to recall the exact relations of the parties. Nott held a mortgage upon cer- tain lands to which the mortgagor held the legal title, but which in part had been sold by a valid contract to some of the defendants. The validity of the contract is undisputed, as is also the fact that Nott, the mortgagee, had full notice of the equities of those de- fendants, and was bound in equity to recognize them. sKc. II. I Tiiis'Ji;i:s OF IMON coi.i.Kci: r. \viii;i:i,i;i{. GH7 Siiiriin;; with this jiroposition, the counsel for the plaintiff main- tain.s that the i)hiinliir, if considored as a purchaser of a chose in action without notice, i> not ixiund to reco>,Miize the etpiities to which Nott would have heeii sidjject ; and again, that it is a pur- vhaser of tiie Ic^mI title to the land, and that it can invoke the rule that till' honest purchaser of land for a valuahle consi(h,'ration can shut out any i'(piities wliicli iiii;,dit have existed hetweeii the iiiort- ga<^or, as well tlio>e wlioiii lie represented, and the niort«^a<,'ee. In uriring the lir>t hraiieli of this proposition, he calls our atten- tion to the sup])oseil fact that the case of flush v. Lutliroj), '^'i X. Y. ')oo, and cited as auth(>ritv in one of the opinions disposin^jj of this rause, has hi-en overruled, and with it. that tlu' doctrine on which we relied has fallen. Tlii-. Imwcver. is an incorrect a.ssuinption, for that ca.se has not heeii oveiiiileil a< a whole, hut only as to one proposition maintained in it. See Mmir,' v. MctropoJil'in HI,-., ")•"» X. Y. 41. It is there stated that several pro]utsitions in Jiiish V. Ldihrop were deciih'd "'Wilh perfect accuracy." The special point in respect to which there is a conniet hetween the two cases is, whether an as«;i«inor of a eho.se in action can set up any ecpiities atTeeting the title Itetween himself and his assi<;nci', in an action hrought hy a second assi;> imj)ai«l, and thai tlicic was no olT-sct, (h'fciicc or coiiiitcr-elaini to the inortpit,M'. Tin" inorti,'n<,'(' was dated and executed anterior ti> the claim of one (irillin, wlio had acquired, subsequently, a mechan- ic's lien upon the land, hut hel'ore Mrs. Rurchard hecanu' assij^nee. Of his ri<,dits at that time she was i^rnorant. The question was. who had, under these circumstances, the hetter ri<,dit to the surplus moneys, considered as land. The court held that, notwithstindin;: the niortgatre was, on its face, executed |irior to the mechanic's lien, it mii^ht he shcnvn hy riritlin that his lien was in existence when ^Irs. Rurchard advanced her money, and that his ri<,'ht could not bo affected hy the mortpisje. The court there broadly applied th«' rule, that if flrifTin's claim was an equitaV)le one and latent, it could still be set up bv him ajrainst the assii v. Aiisirn. 1 A'es. 247. was pronounced to be the principle governing the i'a.se. ".\ purcha.ser of a chose in action must always abide by the case of the person from whom he buys." (Srhnfrr v. Reillif'. 50 X. Y. fi7, 08.) This was the pre- cise ground on which the case at bar was rested. The plaintiff is mistaken in the sup])osition that the present ca.-e is one merely of notice of equitable rights on the part of third parties to Xott. the mortgagee, and. accordingly, that it is not bound by the notice under the ordinary doctrines applied to th" purchaser in good faith, ami for a valuable consideration, ac!rhnfrr v. Rrt'lli/, supra. (See also, AiuJrvir.x v. Tnrrrif. 1 McCarter fX. J.] 3."..'i.) The cases .>f Jackson v. Van Vnlkrnhiirgh . 8 Cow. 200; Jdrkson v. Ilcnni. li> 600 ASSIGNMENT OF MORTGAGE. [CHAP. IV. J. E. 185; Varich v. Briggs, 6 Paige, 323; Fort v. Burcli, 5 Den. 187, and others cited by the appellant, have no application to the case at bar. Those and others of the same nature are either cases of title obtained by fraud, or involve the effect of notice under the recording acts, or are instances of mortgages accompany- ing negotiable notes, and declared to partake of the character of the note. They are noticed and distingiiished in Scliafer v. Reilly, supra, and it is unnecessary to spend time upon them. It should be added that, under the rules of equity jurisprudence, it is essential that one who claims to exclude an earlier equity must show that he is not only a purchaser, but has acquired the legal es- tate. What evidence was there, in the case at bar, that the plaintiff had acquired the legal estate? The complaint merely alleges an as- signment of the debt and mortgage in writing. The referee only finds an assignment in writing. There is not a word anywhere con- cerning the acquisition of the mortgage by a deed or other instru- ment under seal. If the mortgagee had the " legal" estate, he did not transfer it by such an instrument as the law requires to transfer a freehold estate in land. The plaintiff was, undoubtedly, the equita- l)le owner, by force of the assignment of the bond and the mort- gage accompanying it, but that was not enough. The legal title must pass. {Peabody v. Fcnton, 3 Barb. Ch. 451.) The authori- ties, to the effect that a deed or other mode of conveyance is neces- sary to pass the legal estate, strongly preponderate. {Den v. Dlmon, 5 Halst. [N. J.] 156; ^Vardrn v. Adams, 15 Mass. 233; Jaclcson v. Myers, 11 Wend. 533, 539 ; Morrison v. Mendenhall, 18 Minn. 232; Cottrell v. Adams, 2 Bissell, 351; Olds v. Cummings, 31 111. 188; Partridge v. Partridge, 38 Penn. St. 78; Graham v. Newman, 21 Ala. 497: Lyford v. Ross, 33 Me. 197; Smith v. Kel- ley, 27 id. 237; Givan v. Tout, 7 Blackf. 210; 2 Washburn on Real Property [3d ed.], page 113, paragraphs 12 and 16, and cases cited.) Such cases as Green v. Hart, 1 J. R. 590; Jackson v. Blod- get, 5 Cow. 202, and Jaclson v. Willard, 4 J. R. 43, do not affect this question, as the matter of passing the legal title to the mortgage Avas not in controversy. Johnson v. Hart, 3 J. Cas. 322, only decides that by the transfer of the debt an equitable title to the mortgage passes. It is, however, not our intention to hold that the legal estate, under the present law of this State, ever does or can pass from the mortgagee to the assignee. On the other hand, it is now set- tled law that the mortgage is but a lien upon the land. The mort- gagor, both in law and equity, is regarded as the owner of the fee, and the mortgage is a mere chose in action, a security of a personal natur(\ An assignment of a mortgage, in this view, cannot pass ^t'*- "1 DAvrs V. in;cnsTi:[v. •;'.•! thf titlr. {.fference over an earlier holder of an equitahlo title, arc not to ho aj)i)lio(l to a state of the law so en- tirely difTerent from that which prevailed when the law of inort- ^'ages first oriizinated. In other words, the power of a vendee of land to convey to a second purchaser, so as to shut out the ecpiities hetween himself and the original vendor, is not to i)e referred to for the purpose of ascertaining the eapaeity of a mortgagee when he makes an assignment of the mortgage to shut out the c(iuitics hetween himself and the mortgagor, and those whom the mortgagor rt^presents. If that rule were ever a part of the law of mortgages, the deve]oj)ment of that l)raneh of jurisprudence in this State de- mands that it should he discarded The motion for reargument is denietl. All concur. DAVrS V. RKCIISTFJX. Court of Ai'I'F.vi.s ok Xi:\v Voi;k. 1S77. (r,9 .V. }'. I to.) This was an appeal from a judgment of the General Term of the Court of Common Pleas for the city and county of New York, modifying the judut failed to do so. had the mortgage recorded, and assigned the l>ond and mortgaije for a valuable consideration to the defend- ant, Bivhsti'in. riainlilT's hu-band was not nuidc a partv to this 602 ASSIGNMENT OF MORTGAGE. [CHAP. IV, action. It did not appear that he had any interest in. the real estate covered hy the mortgage. A judgment was entered in favor of the plaintiff, declaring the bond and mortgage in suit void, and direct- ing that defendant Bechstein surrender and deliver up the same. The General Term modified this judgment so as to declare the bond and mortgage void only as against plaintiff, and that the register of the city and county of Xew York be required to enter upon the record of the mortgage that it was adjudged void as against plaintiff, striking out the provision in the judgment direct- ing the mortgage to be surrendered up and cancelled. Church, Ch. J. Neither the decision in McNeil v. The Tenth National Bank, 46 N. Y. 325, nor in Moore v. Metropolitan Naf. Bank, 55 N. Y. 41, affect the question involved in this case. Those cases hold that the owner of a chose in action is estopped from as- serting his title against a bond fide purchaser for value, ^dlo pur- chased upon the faith of an apparent absolute ownership by assign- ment, conferred by the owner upon the assignee and seller, but neither of them intimated an intention to interfere with the well settled principle, that a purchaser of a chose in action takes it sub- ject to the equities between the original parties, and that the as- signor can give no better title than he himself has. On the con- trary, G rover, J., in the last case declared, in answer to the sug- gestion that these principles might be impaired by the decision, that " no one pretends but that the purchaser will take the former (non-negotiable choses in action) subject to all defences valid as to the original parties, nor that the mere possession is any more evi- dence of title in the possessor than is that of a horse." It is only where the owner, by his own affirmative act, has conferred the ap- parent title and absolute ownership upon another, upon the faith of which the chose in action has been purchased for value, that he is precluded from asserting his real title, and this conclusion was ar- rived at by the application of the doctrine of estoppel. At the time Riley transferred the bond and mortgage to the defendant Bechstein, as between him and the plaintiff, the mort- gagor, he had no title or interest Avhich he could transfer. The mortgage was executed and delivered to him as an accommodation, to be used as collateral security for the payment of a note of $2,000, Avhich he contemplated getting discounted at the New Y'ork Na- tional Exchange Bank, and under an agreement not to have it re- corded. He failed to procure the discount, and the plaintiff re- peatedly requested the return of the bond and mortgage, and Eiley promised to return the same from rime to time. It is very clear that the l)ond and mortgage in hi^ hands were of no value, and that he could not have enforced tbcin. and the defendant, when Iv^ j^Ki'. II.] DAVIS r. v.K(\]srv.\s. C>'.)^ puii-lins«(l. occupicil no l»oltor position. Hiloy ooiild not sell any lu'tlcr titU' tlinn he had, which was none, and the dcft'iuUint (•f)ulinion that it is sunicieut to sustain the findings of the Jiulge, and therefore the findings are conclusive. The hushand was not made a party, and a mis-trial is claimed for this reason. He had no interest, as it appears, in tho real estate, and the def«'ct should have heen taken hy answer or demurrer. Oth- erwise it is deemed waived. (Code, § 14S.) The General Term modified the judgment, so as to preserve all the rights of the defendant against the hu-^hand. and he cannot in any event he injured. The judgment must he afrirmed. All concur; Kai'.m.lo, J., not voting. Jiiihiiiicnl dffinned} \e\v .Tkhsky (\v.s. Stat.. 18!H;. Mortovofs ^ ^l (p. 2108). [It is enacted] That all mortgages on land in this State, and all covenants and stipulations therein contained, shall l)e assignal)le at law hy writing, whether sealed or not. and such assignments shall pass and convey the estate of such assignor in the mortgaged prem- ises, and the assignee may sue thereon in his own name; hut in such suit there shall he allowed all just ofF-sets and other defenses against the assignor that would have heen allowed in any action Itrought hy him and existing hefore notice of such assignment. . . . § 32. That tlie clerks of the several counties of this State lie and thev are licrehv authorized to record in suitable hooks to h«' ])rovid(^d for that pur])ose anv assignment of auv mortgage upon \V,stfcrly ne^rotiatcil ami assioiiod l)V tho mortuapop for his own purposes, "by the very form of tho morti^MLTO itsolf" (•roato<'l apiinst tho niortv'ap>r and those I laimin^' iintler him. To the same eir«>ft ««•«• Comiuonirtullh v. CtmntiU oj I'lltshuKjh, .U Pa. St. t'.Ui. .".-JO ( 1S.">1M. and compare /)rtii.i v. Utirr, it S. and R. (Pa.) 137 (1822) and McMasltrs v. Wilhrlm, 85 Pa. St. 218 (1877). G94 ASSIGNMENT OF MORTGAGE. [CHAP. :v. lands within their respective counties. . . .; and such record- ing sliall be notice, from the time such assignment is left for that purpose, to all persons concerned that said mortgage is so as- signed. ... § 34. That when any assignment hereafter made is not re- corded, as in this act provided, any payments made to the as- signor in good faith, and without actual notice of such assignments and any release of said mortgaged premises or any part thereof, to a person not having actual notice of such assignment, shall be as valid as if said mortgage had not been assigned. New York Real Prop. Law, § 271 (1 R. S. 763, § 41).— The recording of an assignment of a mortgage is not in itself a notice of such assignment to a mortgagor, his heirs or personal representa- tives, so as to invalidate a payment made by either of them to the mortgagee. CHAl'TKH V. DISCHAKCiK OF .MORTGAGE. Section 1. Tknuku and I'avmkn-t. (a) In (icnrrql. Lit. §§ 334, 335, 337, 338, 339, and Co. Lit. 209, reprinted at pages 9-11, supra. Lit. § 340. Also, upon such ease of feoffment in morgage, a ques- tion liath been demanded in wliat place the feoffor is bound to tender the money to the feoffee at the day appointed, &c. And some have said, upon the land so holden in morgage, becau.-se the condition is dcjH'nding upon tiie land. And they have said that if the feoil'cr he ujjon the land there ready to pay the money to the feoffee at the day set, and the feoffee bee not then there, then the feoffor is quit and excused of the payment of the money, for that no default is in him. But it seemeth to .>;ome that the law is con- trary, and that default is in him ; for he is hound to seeke the feoffee if he bee then in any other place within the realm of England. As if a man be bound in an obligation of 20 pound ujmn condition on- dor.sed uj^on tln' sam«> ol)ligation, that if lie j)ay to him to whom the obligation is made at such a day 10 pound, then the obligation of 20 pound shall lo.se his force, and bee holden for nothing; in this ca.se it behooveth him that made the obligation to .seek him lo whom the obligation is made if he be in England, and at the day set to tender unto him the said 10 pound, otherwise he shall for- feit the summe of '20 pound comprised within the obligation, &c. And so it seemeth in the other case, &c. And albeit that some have said that the c(mdition is depending upon the land, vet this prov.'S not that the making of the condition to bee performed, ought to bee made ujmn the land, &c., no more then if the condition were tliaf the feoffor at such a day shall do some speciall corporall .service t«> the feoffee, not naming the place where such corporall .service shall be done. In liis case the feoffor ought to do such corporall service at the day limited to the feoffee, in what place soever of England that the f«^itfee bee, if he will have advantage of the condition, i^e. So it seenu'th in the other ca.se. And it .|tt' limited, ilir fi'ofTcc is not l)(>und to rrccivc tbu payment in any otber plaee liiit in tilt' same plaei- >o limited. Miit yet if be doe receive tbe pav- nieiit in anotber |)laee. ibis is '^(hh\ enon^di and a.-> stron;,' for tbi- JeotVor ;i< if tbe reeeipt bad l>eene in tbe same plaee so limited, iSre. vj 0} t. Also, in tbe i-ase of feolTment in morj^a^e, if tbe feolTor payetb to tbe ft'oU'ee ;i borse, or a enp of silver, or a ring of gobi, tber tiiin^r in fnl satisfaetion of tbe money, and tbe • itber reeeivetb it, tbis is ^^ood enou<:b, and as strong as if bee bad received tbe sumnie of inom-y, tbongb tbe borse or tbe otber tbing were not of tbe twentietb j)art of tbe value of tbe sum of ni(»ney, bocauao tliat tbe otber batb accepted it in ful satisfaction. BuRGAiXE V. Spurlixg, Cro. Car. 284 (King's Bcncli, 1G33). JJjeciment. All tbe Court agreed tbat wbereas in tbe principal ca-se ibe condition was for tbe payment of 1 ()(!()/. upon tbe first of July, and tbe j)ayment was made before tbi' first of July, viz., upon dcc- liii', sixlo J iinii, and an acceptance tbereof. it i.> a good performani-u of tiie condition. TiTi.i:v V. Davis. -2 Kq. Cas. Abr. (iOl (Cbanccry, UM)). A. mortgages two estates, viz., Blaekaere and Wbiteacre, to B., and afterwards mortgages Blaekaere to ('.and after tliat Wbiteacre to D. Tbe question was, wlietber tbe Court can decree a redemption of H.'ri mortgage, wbo was tbe original mortgagee, by proportionable r knowl(>dge that it was set up by the de- fendant as a subsisting incumbrance, she offered to redeem and re- quested the defendant to stati' an account. The defendant, in his answer, alleges that the plaintiff joined in the execution of the mortgage and thereby releaseil jier right of dower, and he denies that she is entitled to dowjT. He denies that the as.«ets in the hands of the administrators should have been ap- plied to the payment of the mortgage debt, or that he was bound to sec to the aj)plication of the a.«!.>ss from the same, but denies that he engaged to release or extinguish the mort- gage, and also denies that the administrators, in taking the l)on1 lias pli'iinrv jiiri>(li(tioii to makr -inIi a ilccnr; Jd, thai the as.si;:M- iiicnt of the niorl^'a-^c t<> tin- (lifciidaiit, when lio was possessed of tli'- equity of n-demptiun, did not o|M'rate as a mer^'er and ex tin;jui ali- ment of the inoit^'a|,'e ; '.U\, that the phiiiitilF is not entitled to havi^ the mortgage discharged out of the personal estate of the intestate; 4th, that the jilaintifT, not hein.i: a jiarty to the Itond of indemnity given to the administrators, cannot take advanta^'e of it; -"ith, that the entry and possession of the defendant are not -ullieieiit in law to foreclose the mortgage; and proceeds as follows: — Considering, then, that the jjlaintitT's right to redeem i> iioi t\- tinguished hy the defendant's entry and possession under the mort- gage, we are to decide u])on what terms ami to what extent sln> is now entitled to redeem. As the defendant has purchased the equity, as well as the mort- gage, it would seem equitahle to allow the plaint itT to redeem a third part of the mortgaged premises, hy paying her equitahle portion of the mortgage deht. according to the valu" of iier right of dower as compared with the residui' of the estate. But this can- not he done without infringing the defendant's rights as assignee of the mortgage'. He stands in tlie place of the mortgagee, and has an undouhted righ.t to insist (Ui his whole deht. .Vor can he ho compelled to he redeemed hy ])arcels, for hy thus di\ iding the «*state the income or value of the whole may he reduced. The rule there- fore is, when several are interested in an cfpiity of redenq)tion and one only is M'illing to re(leem, he must pay the whole mortgage deht; and the others interested in the eepiity. who refuse to redeem, are not conipellahle to contrii)ute; for it would he unreasonahle to compel a jiarty to redeem, when perhaps it might he for his benefit to suffer the mortgage to he foreclosed. The mortgagee, however, is not to he entanglecl with any question which may arist; between the owners of the e(|uitv '•• n-lation t<» cont rihution. luit has the right to insist on an entire redemption. If. therefore. >ev- eral estates are mortgaged hy one mortgage, and the mortgagor afterwards conveys the estates separately to dilferent j)ersons. although each owner of the se|)arate estates may redeem, yet it can only he allowi-d by payment of the whole mortgage debt. .Vnd the party so redeeming will be entitletate mortgaged until he shall be reindiursi-d what he has In-en thus <-om- pelled to j)av bevond his due proportion. He is considered a-< assignee of the juortgage, and stands, after such redemption, in the place of the mortgagee in relation to the other owners of the «H|uitv. So if there be tenant for life antl remainderman of an equity, either may redeem, but not without paying the whole mortgage. In like manner a dowress or jointress of lan mortgaged may redeem, she 703 DISCHARGE OF MORTGAGE. [CIIAP. V. paving the mortgage debt, and may hold over, if the heir refuses to contribute, until she and lier executor shall be repaid with inter- est. {Palmer v. Danby, Free. Ch. 137; Saville v. Saville, 2 Atk. 463; Banl's v. Sutton, 2 P. Wms. 716; Elwys v. Thompson, 9 Mod. ,396; 15 Viner, 447; Ex parte Carter, Ambl. 733; Powell on Mortg. 392, 708, 709, in notis.) If the defendant had redeemed the mortgage, the plaintiff would liave been let in by contributing her portion of the mortgage debt, according to the value of her life estate in one-third part of the mortgaged premises, in conformity with the rule adopted in the case of Suminc v. Ferine, 5 Johns. Ch. Rep. 482. But as the defendant, being assignee of the mortgage, insists on the payment of the whole mortgage debt, the plaintiff cannot redeem on any other terms. After redemption, she will hold as assignee of the mortgage, but will be bound to keep down one-third of the interest during her life, and may hold over for the residue of the mortgage debt. The de- fendant must be held to account for the rents and profits from the time of his entry under the mortgage; for although this entry can- not operate by way of foreclosure, for want of notice to the plain- tiff, yet it is sufficient to charge him with the reception of the rents and profits. The case must be referred to one of the masters in chancery to take an account accordingly, and redemption will be decreed upon payment of the debt which remains due on the m.ortgage after de- ducting the rents and profits. GEOVEE V. FLYE. Supreme Judicial Court of Massachusetts, 1863. (5 Allen, 543.) Writ of En-try. The demandants claimed title under the levy of an execution by selling the equity of redemption of the premises. At the trial in the Superior Court, before Lord, J., it appeared that at the time the levy was made the premises appeared on record to be subject to a mortgage to the Blackstone Loan and Fund Asso- ciation, to secure certain sums of money, a portion of which was not then due; that full payment of said sums had l)een made and a discharge of the mortgage and release of the premises by the said association e.^cccuted before the levy, but the discharge and release «Ef. l] CltOVIMl r. FI.YK. 703 wrrr not recorded until aftrrwanls ; and that neither the judgment iTcditor nor the olliccr hatl actual or const riictivc notice of such 4lis(har^n' until the record thereof. The jud^'e ruh'd that it was immaterial, for the i)ur|)(>si>s of this action, whether the mortgage u|K)n the premises had heen discharged, unless the creditor or otTi- < rr had actual or constnictivo notice thereof before the seizure of the land on the execution, and that a sali' of the e(|uity without such notices was regular and pniper. The jury returned a verdict for the demandants, and the tenant iilleged exceptions. BiOELOW, C. J. It is admitted that the sums due on the mort- gage to the Tioan Fund Association were jiaid before the sale of the right in e(piity to redeem was made l)y the olliccr; and that these ])ayments were made at or before the times when the several instal- nu'nts became due according to the stipulation set forth in the con- 4lition of the mortgage and the bond which accompanied it and roniK'd part of the transaction. By such payment, on familiar jirincii)ks, the condition was saved and the mortgagor, the tenant, was in of his old estate. No conveyance or discharge of the mort- gage was necessary to revest the estate in the niortsrasror. or to de- feat the title of the mortgagee. {Merrill v. Chat^p, 3 Allen, 330, and cases cited. JosJi/n v. Wi/man, ante, G2.) The argument, there- fore, of the demandants, founded on the lu'cessity of recording a release or discharge of a mortgage in order to defeat a title acquired by a judgmcnit creditor by a sale on executitui of a right in equity made after such release or discharge but without actiuil notice thereof, falls to the ground. The act of payment in the country ante rel apud diem saves the forfeiture of an estate held by a con- veyance defeasible on a condition subsequent. No record of such an act is necessary to make the estate a fee simple estate in the grantor or mortgagor, as against all persons claiminjr bv a subse- quently acquired title. The release of the Tjoan Fund .\ssociation to the mortgagor was a useless and sujierfluous act, which added nothing to the strength of the title which be had ac(|uirer the sale of the right in equity to redeem the estate is invalid. Tht> jiremises being unincumbered and hebl by the iudgment debtor as an estat<' in fee at the time of the senice of the execution, could be legally levied on only by an aiipraisement, and set off in the mode pn'- scribed bv law. (Fnrster v. }fr]len. 10 "Nfass. 121. Freeman v. M'Gdic. 1>) Pick. 82. Perrii v. Ifni/n-nrd. 12 Cush. 344.) Exceptions stuftointd. T04 DISCHARGE OF MORTGAGE. [ClIAr. (b) After Default Emanuel College v. Ewens, 1 Ch. Rep. 18 (Chancery, 1625). ^ That the Earl of Himtington, seised in fee of the Manor of North-Cabury, with advowson appendant, and for paynieat of debts by way of mortgage, 25 Eliz., made a lease for 500 years of the said manor, with appurtenances, not mentioning the advowson by express name, with a clause of redemption, and for advance- ment of learning and religion, of his free disposition in 38 Eliz. by deed granted the said advowson to Sir Francis Hastings, and others, and their heirs, to the use of the said Earl for life, remainder to the Master, Fellows, &c., of the said college, and their successors forever; and shortly after in the same year paid his said debts. And this court conceived the said lease, being but a security, and that 2noney paid, the said lease being void, as well against the said college as against any other; and though the money not paid at the day, but afterwards, the said lease ought to be void in equity as well as on a legal pajment, it had been void in law against them. Manning v. Burges, 1 Ch. Cas. 29 (The Eolls, 1663). A mortgage was forfeited; the mortgagor afterwards meeting the mortgagee, said, "I have moneys; now I will come and redeem the mortgage." The mortgagee said to him he would hold th(> mortgaged premises as long as he could; and then when he could hold them no longer, let the devil take them if he would. And afterwards the mortgagor went to the mortgagee's house with money more than sutFicient to redeem the mortgage, and tendered it there ; but it did not appear that the mortgagee was within, or that the tender was made to him ; and it was decreed a redemption, and the defendant to have no interest from the time of the tender, because of his wilfulness. A like case between PccJcliam and Legay about a year since. LuTTON v. Rood, 2 Ch. Cas. 206 (Chancery, 1675).— A deed in the nature of a mortgage and covenant to reconvey on pay- ment : the money was tendered at the day and place, and re- 'A portion only of the case as reported is liere given. ^^^'- 'J wii/rsiiiKK V. sMriii. 70."i fused: Decreed, the money without interest from the time of tlie tender, and to reecmvey, thoii«rh that the j)Iaintiir ouglit to make oath that the money was ke])t and no profit made of it.' WILTSIIIKK v. SMI'l'Il. High Court of Chancery, 1744, (3 Alh: 89.) A bill was brou<,dit to redeem a mortgage on the 8th of May, 1742, in whieh the piaintilf insists upon a redemption on paying the principal money only, for that the interest ought to end the 20th of February, 1741, because the plaintilT had given six months' notice to pay otf tiie mortgage, and on that day tendered the princi- pal and interest and a deed of assignment, but the defendant abso- lutely refused to take the money. The defendant .swears that he offered to take tiie money, pro- vided he might liave time to consider of it and to advise upon the deed of assignment, as tliere are covenants in it on his part, upon which, as he is not of the profession of the law himself, it is reason- able he should ask tlie oj)inion of some attorney, whether they were such as he juight safely execute. Lord Ciianckllor [ Hardwickkj : There is not one.ca.se in twenty ujwn the fact of an al)S()lute refusal after a tendei that is ever made out, lor they are generally attendi'd with circumstances that explain the refusal, and are nothing more than cau.-^es cooked \i]) by country attornies to make themselves business. The plain- tiff did not, as he ought to have done, send a draft of the assignment to the defendant any time before the moni-y was tendered. The j)laintilf insists that the defendant absolutely refu.sed to take his money or execute the deed of assignment. If this had l)cen the fact, it woidil have been uneonscional)le and unreasonaltje in the defendant. But the person who was to take an a.'ssignment of the mortgage swears that the defendant desired further time or to that efT»'et The (pieslion is. Who was in the wrong? The plaintilT certain! v was. For where there are covenants on the j)art of the mortgagee. it is verv reasonable that lie shouM have some time to look them 'Oylrs V. //«//. *2 P. Wins. :{7S (17'2rt), Stoic v. h'u.ss,U, :U1 111. 18 (ISiUK and the uuUnuitirs gfiuTullj, accord. 706 DISCHARGE OF MORTGAGE. [CHAP. V. over; and the plaintiff's attorney ought to have left the deed for a week with the defendant, that he might have an opportunity to advise upon it, and the plaintiff's attorney should have appointed n time to pay the money after the defendant had hcen allowed a sufficient time to advise ; or, as I said before, he should have sent a to})y or the ingrossment of the assignment. But the subsequent transaction and what passed before the filing of the bill explains it. Did ever a mortgagor, as is the case here, after he was put under this difliculty, lie by a year and quarter Avithout bringing a bill to redeem? What could be the reason? Why, the plaintiff, the mortgagor's attorne}^ told him, You have made a tender of your mortgage money, and the defendant's refusal has forfeited his interest ; for that you may keep the money, and by a bill compel the defendant to take the principal, without interest, from the time of the tender. Lord Hardwicke ordered that it be referred to a master to take an accoLint of what was due to the defendant for principal, interest and costs on the mortgage, and on the plaintiff's paying to the de- fendant what the Master shall certify to be due within six months after he has made his report, it was decreed the defendant should assign the mortgaged premises, as the Master should direct ; but in default of the plaintiff's paying as above directed, it was ordered the plaintiff's bill do stand dismissed. MAYNAEI) V. HITXT. Supreme Judicial Court of Massachusetts, 1837. (5 Pick. 2-40.) Writ of Entry. The defendant declared upon his seisin in fee and in mortgage and a disseisin by the tenant. The tenant pleaded: First, itnl disseisin. Secondly, that Nathaniel Maynard, the mortgagor, assigned the premises to the tenant, with warranty against all incumbrances, and that the tenant, after condition broken, but before action was brought, tendered $400 for the discharge of the mortgage. The demandant took issue on the tender. Thirdly, that in consideration that the tenant would forbear to make the tender, the demandant promised that the tenant should hold the land discharged of the mortgage, and that he (the de- *'»^f- '■] MAYNAIM) r. HUNT. 707 iii;iiul;mt) Would rcsoit to \;it liMiiii'l Maynard I'lir payment of tln" iioti', wliirli was sci'uri'd hy the iiiort^M<,'»'. J^.siic was taken on this j>lea. Fourthly, a jilca liko the second, t'.\c»'i)t that it alleged a tender «( $4")0. Issue was taken on the tender. The cause was tried before Putnam, .1., and a verdict was found tor the tenant upon all the issues. The demandant thereui)on moved in arrest of judgment, because the three last is.sues were immaterial, and the first issue was found only for fonn's sake and as a consequence of the finding on the •other issut's. lie further moved that if any of these three issues should be ad- judged ininuiterial the Court would grant a new trial, because no evidence bad been introduced sufficient or i)roper to maintain -•■itiier of them on the i)art of the tenant, and because all the evi- ilence in the case, the three last pleas and the admission of the tenant's counsel show that the finding of the first issue for the tenant was a conse(;uenee of finding the other issues in his favor, and that, if that issue had stood alone, it would have been found for tbe demandant. At the trial .1. W. Hunt, the l)rother of the tenant, testified that, at the tenant's request, be called on the demandant and inquired bow mucli was due upon the note. Tiie demandant replied $400. The witness asked bim if be intended to call upon tbe tenant for liie land, if Xatlianiel Maynard (wbo was tbe defendant's son) >li()uld be unable to pay tlu' note. He answered in the affirmative. The witness said he would pay him $100; that be came for tbe jiurpose of settlii.g with bim; that be bad the money with bim in iiank bills, and that be would get the specie if it would make any (lilVerence. Tbe (b'lnaiKbint said it would not. He also said that if lu' took tbe money the tenant would immediately sue Nathaniel. The witness told bim that he could e.\pcct nothing else. The de- mandant then said that be would not take tbe money; be would rather it should lie as it was on interest; he was secure; but be assured the witness that his brother should not be hurt. Tbe question wlietber this evidence was sutficient to warrant thi» finding of tbe jury was reserved for the determination of the j.vbol(> court. r.vKKKU. ('. .1. It is very clear that all the ion the sale referred to. The i)laintifT, upon iiKpiiry, afterwards ascertained that Hanson, after the attachment, and before the seizure of his right «tf redemption upon the executions, had fully paid the mortgage debt. But the mortgage had not l)een di.-charged. cither by an «ntry upon tlu- record or in any other nuinner. The plaintiir claims that such payment was itself a discharge of the mortgage, .so that Hanson's title was no longer a right of re- dcinjitiun. which could be snhl bv the sherilT, but a fee. upon which the execution should have been crtcntlcl. And he has brought this suit to recover back the purchase money, on account of the failure vf title. The defendant docs not concede that tlu- plaintifT would be en- titled to rvcover. if there was a failure of title, as he has alleged, :is he gave a meiv release, with no covenants of title. But he eon- liuds that the mortgage was not discharged by payment merely; 710 DISCHARGE OF MORTGAGE. [CIIAP. V, and that, if the mortgage debt had been paid, it was a benefit, and not an injury, to tlie plaintiff. In the case of Martin v. Moivlln, 2 Burrow, 978, Lord Mansfield is reported to have said, " a mortgage is a charge upon the land, and whatever would give the money will carry the land along with it, to every purpose. The estate in the land is the same thing as the money due upon it. It will be liable to debts. It will go to execu- tors. . . The assignment of the debt, or the forgiving it, will draw the land after it, as a consequence, though the debt were for- given only by parol," &c. The case under consideration was a suit at law; and the confounding of principles of law with those which prevail in equity, only, is probably due to the reporter, whose lan- guage it is. For he admits, in publishing his notes of cases, that he did not always take down the restrictions with which a proposition was qualified, " to guard against its being understood universally, or in too large a sense."' (1 Burr. 9.) It is worthy of notice that in that case, as generally in English mortgages, the condition was that, upon performance, the mort- gagee should reconvey the premises, and not, as in this country, that the deed should be void. It would seem, therefore, to be cer- tain that payment on the law day would not have revested the title in the mortgager without such reconveyance. Harrison v. Owrti. I Atk. 526 ; 2 Cruise (London ed.) 110. Upon mortgages to be void upon performance, such as are usually given in the LTnited States, it is everywhere conceded that payment before condition will divest the mortgagee of his title, without reconveyance, or other discharge. (1 Washburne on Eeal Prop. 543; Whitcomh v. Simpson, 39 Maine. 21 ; Holman v. Bailey, 3 Met. 55.) In this country there has been a constant tendency to apply the views attributed to Lord Mansfield indiscriminately, at equity and in law. Sustained by such jurists as Chancellor Kent, Judge Story, and Mr. Greenleaf, it is not strange that the weight of au- thority should turn in that direction. But in Maine, Massachu- setts, Connecticut, and in several other States, the old doctrines of the common law still prevail. Though in equity the mortgage is an incident, and the debt the principal thing, at law the mort- gage is a conveyance of the title, to be defeated upon a condition subsequent. Unless thus defeated, the legal title is in the mort- gagee. He may assign the debt without the mortgage, in which case he holds the mortgage in trust for such assignee. Or he mav assign the mortgage without the debt, or the mortgage to one and the debt to another, the owner of the mortgasre alwavs hold in? in trust for the owner of the debt. So that the assignment of the debt operates as the equitable, but not as the legal assignment of the SKC- I-] STr-WACT r. .IIOSRY. Til niortpi^o. And pnyincnt oT the dcht, aftt-r ooiidition broken, does not dive.st the in<)rt^a«j:('i' ol" liis Ici^al title; l)ut the niort^^as^er must resort to e(|uity for a n-leasc. or a rcconveyanoe. Tlu'se j)rincij)les, thouiih extensively denied in (his country, are sustained by so many decisions in the States before referred to that it is unnecessary lo cite them ( 1 Washburn, ^)'):\: 1 Milliard on Mort. 47(!.) Mr. (Jreeideaf collects the authorities in the first volume of bis edition of Cruise, and in support of the opposite doctrine su^r^ests that the acceptance' of i)ayment, after condition broken, is a waiver of the condition, and has tlu' same effect as a performance of it. (1 Greenl. Cruise, 595.) r)Ut this is more specious than sound. A waiver of the condition may operate to confer the same ri/^hts as a performance of it. This is the case in regard to bonds for the conveyance of real estate. But it does not follow that such a waiver can operate, by our laws, to convey or release a legal title to real estate. It cannot do so, in the case of a mortgage, any more than of a bond. So that this theory, like all others in support of the doctrine, rests ui)on a denial tliat the mortgagee has the legal title, until after foreclosure. But another answer to it is, that such an acceptance of payment is not a waiver. A waiver is a voluntary relinquislnnent of some right. But the mortgagee relincpiislies nothing in such a case. The mortgager pays it as a matter of right ; and it is not at the option of the mortgagee whether it shall be paid or not, until th'^ right of redemption expires. A receipt of payment after that would be a waiver of the forfeiture ; but ])efore forfeiture the mortgager, by payment, acquires a riglit to a release, or a reccniveyance, not on the ground of waiver, but of contract, and of law. But though it is well settled in this State that upon payment after condition broken, the legal estate renuiins in the mortgagee until it is released, so that the mortgager cannot maintain a writ of entry against him; it is equally well settled that, in such case, the mortgagee, not being in i)ossession, cannot maintain such an action against the mortgager. {UniUorl- v. Bulfhirh. 31 Maine. 247; Williams v. Thiirloir. 31 "Maine, 392.) The reason as^igne.l for this is that, by our statutes, in all actions upon mortgage's, there must be a conditional judgment; and. if the del)t has been paid, so that there cannot b(> such judirment. the demandant cannot n'cover at all. {WaJr v. Ifmninl. 11 Pick. 2S9 : Wrhh r. Flnn tlvre js no pro- vision of statute to ])revent, as in an action of forcible entry anil detainer, it has been held that a suit for possession may lx> main- tained bv the mortgagcv, after payment, (ffoirnri! v. Howard. 3 Met. 548, 557.) 712 DISCHARGE OF MORTGAGE. [CIIAP. V. The mortgagee, after such payment, hokls but a naked trust, AvithoLit any interest. As in other like cases of holding in trust, he can derive no benefit from it, and can convey no title except as subject to it. And the estate cannot be taken for his debts, though it can be taken for the debts of the cestui que trust. As the mort- gagee's title in such case is of no value, there can be no motive for transferring it to a third party; and therefore it is seldom done in this country. That it may be done would seem to admit of no doubt. (Dudley v. Cadivell, 19 Conn. 218.) Such a deed, says Wilde, J., in TFacZe v. Hoicard, before cited, conveys " the legal estate, or a satisfied mortgage; such an estate as is frequently pur- chased in England to be tacked to a subsequent mortgage." Numer- ous cases of this kind may be found cited in the English editions of Cruise, vol. 3, c. 5, which Mr. Greenleaf has omitted, because the doctrine of tacking mortgages does not prevail in the United States. There is no difficulty in applying these principles to the case at bar. When the executions against Hanson were issued he had paid the mortgage debt, but the mortgage itself had not been discharged. If the payment had been before the condition had been broken, that M'ould have revested the estate without any discharge; and there would have been nothing to seize on tbe execution. (Grover v. Flye, 5 Allen, 543.) But payment after breach of the condition had no such effect. His interest in the premises was clearly liable to be seized on the executions; and the only question is, how should the levies have been made — by a sale, or by an extent? If, at the time of seizure upon the executions, there had been not only a payment of the mortgage debt, but a release of the mortgage, recorded in the registry of deeds, then there could have been no sale of an equity of redemption, though the mortgage was in force at the time of the attachment upon the writs. (Foster v. Mcllen, 10 Mass. 421.) In Pillshury v. Smyth, 25 Maine, 427, the report of the case does not show whether the discharge of the mortgage had been recorded. And we need not determine whether, if there is a release, but not on record, the officer may not proceed as if none had been made. For in this case no release had been made, either upon the record or otherwise. By the E. S., c. 90, § 14, " when the amount due on a mortgage has been paid to the mortgagee, or person claiming under him, by the mortgager, or the person claiming under him, within three years " from proceedings for a foreclosure, " he may have a bill in equity for the redemption of the mortgaged premises, and compel the mortgagee, or person claiming under him, to release to him all his right and title therein." And, by c. 76, § 29, "rights of re- deeming real estate mortgaged may be taken on execution and sold." •*<*-^"- 'J KDitruiciir c. t ADV. 7l:» It Wiis }n>\ >ii(li a ii«,^lit of rcdiH-iiiiii;,' a paitl mort^oi^c wliicli llaii- .>()ii owned wlicii it was scizt'd on the cxt'cutioiis. The same title passed In' the sale that would have pass<'d by an extent. Tlu- defend- ;int therefore conveyed a good title to the j)laintifT; and the latter, liavin^ sufTered no loss, is not entitled to recover. Whetlier, if there had been no right of redemption in existence w hen the phiintifT purchaseil of the defendant, he could recover hack the considi-ration paid, on the ground of a mutual mistake of fact, is ji question which becomes immaterial. See the case of Earle v. Dr Will, with tlu> able dissenting opinion of ^fcrrick, J., d Allen, Exrrplioiis siislnined. Verdict set aside. Waltox, Dickerson, B.vkhows and D.vxfohth, J.T., concurred. Applktox, C. J., and Clttixg^ J., concurred in sustaining the exceptions for another cause.^ KOirrKKillT V. C'.\I)Y. CouHT <>i' .Vri'KAi.s OF Xkw VoitK. 18G0. CM X. r. :u:\.) Appeal from tlie Supri'me Court. Action !•> fcir('cln<(> m mort- gage The defendant Cadv was a subsequent grantee of tlic equity <'f redemptit)!!. lie averred in his answer, and proved on the trial, that, after the money secured by the mortgage had become due and the stipulated day for payment had passed, he tendered to the plain- lifT the amount due for principal and interest. The plaintitT re- fused to receive it unless Cady would also pay certain taxes upon the mortgaged premises, which the plaintilT had discharged. It was held that Cady was, for reasons unneees.sary to ho stated, under no obligation to pay the ta.xes, and the case stood upon the naked tender. Cady did not in his answer allege a n'adiness still to pay the mortgage debt, or that it was j)aid into court, in^r did he otTer to l)ring it into court; and it did not appear, from the find ing of facts or otherwise, that he in any way kept the tender good. The plaintitT bad the u.-ual judgment of foreclosure, and f<^r a sal-' '>f the mortgaged premises. Cpon appeal by the defendant Cad\. ' Tlic opinion <>f .Vpulcton, < '. •>. in whirli ("nttin'r. T.. (oniMii rod, i"« • iniittfd. 714 DISCHARGE OF MORTGAGE. [CIIAI". V. this judgment was affirmed at General Term in the First District; ■whereupon he appealed to this Court. .... CoMSTOCK, Ch. J.'. After the suit was commenced to foreclose the mortgage, Cady, Avho had hecome the owner of the land, ten- dered the amount due, with the costs, which being refused, he set up the tender in his answer, in bar of the further maintenance of the action. The only question in the case is, whether a tender, made after a mortgage is due, by the owner of the lands mortgaged, discharges the lien. Forty years ago this question was fully determined by the Su- preme Court of this State, in the case of Jackson v. Crafts, AS John. 110. Mr. Justice Woodworth, in delivering the opinion of the court, observed: "From the nature of the interest the mort- gagee has, there is no necessity of a reconveyance by him to the mort- gagor after the mortgage has been paid. When that is done, the mortgagee has no title remaining in him to convey, and conse- quently, by our laws, on payment of the money he is not deemed a trustee, holding the legal estate for the benefit of the mortgagor. The only question, then, is, whether tender and refusal are equiv- alent to payment." Having thus truly stated the relation between mortgagor and mortgagee, according to the law as it was then and has been ever since well settled in this State, he cited some of the early English authorities, holding that a tender of the money duo discharged the land from the lien. Nearly twenty years after this decision was made, the same ques- tion again arose concurrently, or nearly so, both in the Court of Chancery and the Supreme Court. The case in each of those courts originated in the same transaction, which was this: In 1823, om^ Edwards mortgaged land in Buffalo to the Farmers' Fire Insurance and Loan Company in New York. The company foreclosed that mortgage in Chancery in 1833, and at the sale under the foreclosure Tibbctts, their president, purchased a portion of the lands for the benefit of the company, so that the company was deemed the real purchaser. In 1835 they entered into a written contract with W. T. and Isaac Merritt, whereby they agreed to sell to them the land so purchased, and the Merritts paid a part of the price agreed on. By a clause in the charter of the company, it was declared that when the corporation became the purchaser of any land mortgaged to them the mortgagor should have the right of redemption of such lands on payment of principal, interest, and costs, so long as the same should remain in the hands of the corporation unsold. After the company made the said contract of sale to the Merritts, Ed- wards, the mortgagor, claiming that the lands in question still re- 'The order of the opinions has been changed. ^^'■•<'- '•] K of ilic cniiipaiiy iiii>(i|(|, ii'iiilinil lo iIh'mi liic iiiiioiint of tlic iii(»rt;,M;,'c dclil with iiitcrt'st ami cn.-ls, ami <|friiaii(lr(l a rclcasi' or n-coiivcvaiicc of tin' premises. Tlie tentiou was, whether they could make title to the saitl lands in HufTalo. IVfore filin«j that hill, the heirs of Tihbetts had conveyed to the Merritts in pursuance of the contract of tlu' company; hut that eon- \ryance was given after the ai)ove-mentioned tender. {Merrill v. Lambert, 7 Paige, 344.) The question of titl(> in hoth of the.sc con- tioversies depended on two considerations: First, did the lands re- main in the hands of the company unsold, notwithstanding th«! contract to sell them to tlie Merritts? Second, if so, then did the tender by the mortgagor discharge the lien of the mortgage? — it l)e- ing, of course, conceded that, under the said clause in the charter, the right to j)ay off or redeem the nuirtgage existed notwithstanding the foreclosure and purchase by the company. The Chancellor was of opinion that the contract witli the .Merritts was in elTect a sale to them, wliich cut olT all the rights of the mortgagor; in other worils, that, hy reason of that sale having been made, the saving clause in the charter had no etfect. lie was also of o|)inion that if the right to redeem was still left in the mortgagor, a mere tender unaccei)ted did not discharge the lien. In giving iiis views upon tlie last mentioned (pu-slion, the Chan- cellor criticised the opini(»n of Judge Woodwortb in Jackson v. Crafls (stijira), for the reason that the English authorities which he referred to related to a tender on the '.» b, !< :]:)<; 20 Viner, lit. Tender, .\., >$ 4.) On this criticism I shall make on* or two observations, liy the ancient common law, a mortgage was a grant of land defeasible on the condition subseiiuent of payimr the money at the exact tiuu" specified. ( 1 Toweil on Mortgages. I ) On failure to j)erform tliat condition the grant was absolute, and neither tender nor jiayment mad«' afterwards could have the »'IT( ct to revest the title. The specified time of payment was called the law day, because after default the legal rights of the mortgagor were gone. The estate became vested in the mortgagee absoluteI\, because the original grant was freed from the condition. "For these reasons," the Chancellor bi?nself renujrke«l. ** it is, that the mortgagor, or his assigns, or subsccpient incumbrancers upon the 716 DISCHARGE OF MORTGAGE. [CHAP. V. mortgaged premises, are driven to a bill to redeem, where the mort- gagee refuses to receive what is equitably due to him. But this could not be necessar}'," he added, ''if a mere tender of the amount due after the mortgage has become forfeited would have the legal t'ffect of discharging the mortgaged premises from the lien of the mortgage." It is a self-evident proposition, which the Chancellor need not have undertaken to prove, that when the law was that even jiayment after the law day would not discharge the mortgage, a mere tender could not have such an effect. He was probably quite correct in saying that the English authorities cited by Judge Woodworth referred to tender at the day, because those authori- ties were of a date when even payment after the day did not divest the estate or interest of the mortgagee. But Judge Woodworth and the eminent men who sat with him on the bench of the Supreme Court considered, what the learned Chancellor seems to have failed to notice, the fundamental change which the law of mortgage had undergone long before the decision in Jachson v. Crafts was pro- nounced. In this State, a mortgage had always been regarded as a mere security or pledge for the debt ; and the rule had always been that payment at any time discharged the lien, so that no reconvey- ance of the estate was necessary. It seems to me, therefore, that the authorities cited by the Supreme Court, on the effect of tender, were extremely pertinent to the question, because they showed very conclusively that a tender at the law day had the same effect on the mortgage as a payment on that day. Underlying this particular jDroposition, of course, was the more general doctrine that when a certain effect must be given to a payment, a tender Avill have a like effect. This was what the Supreme Court undoubtedly meant, and the authorities cited simply showed the application of the principle to the law of mortgage. The principle itself, or its application, Avas not questioned by the Chancellor; but he did not consider, so far as appears, that the rule had become entirely settled, giving to ji payment after the day and on the day precisely the same conse- quences. I think, therefore, with great respect for a jurist so learned and accurate, that he differed from the Supreme Court, and criticised its opinion, without due reflection upon the real ground of the decision. I turn now to the controversy which arose concurrently in the Supreme Court, and directly presented the question for the sec- ond time in that court. {Edwards v. The Farmers' Fire Insurance- and Loan Companij. supra.) At the trial the Circuit Judge had ruled in favor of Edwards, the mortgagor, upon both the points above stated. That is to say, he held that, notwithstanding the con- tract of sale to the Merritts, the lands in question still remained in «'^^'- !•] KournMiiir /. ( amy. 717 the hands of (he conij)any iinsohl, and that the tender after the law day extinguished the lien of the niort<^a;;e, the foreclosure itself iiaving no contrary effect, aeeordin«; to the express provision of the charter. The plaint ilT had a verdict accord iiij:ly. A new trial v.a-: moved for in the Supreme Court and denied, — the ojiinion of th<' court being delivered Ity Mr. .hist ice C'owen, who examined both these questions, and csjuvially tlie one now |)re-;ente(l to us, at great U'ngtli and with great al)ility. hi the cnurse of the discussion he also sjjoke of the provision in the charter as nn extension of the law day; but to that consideration I think only small imi)ortance should be attached, for the charter only exti-nded the " right of re- dcm])tion," in other \sords, the right to pay otT the mortgage, leav- ing tiie effect of an unaccepted tender to depend, a< it did before the foreclosure, upon gencnil principles of law. If the concurrence of Cliief Justice Nel.-oii had hi'cn placed on this s|)ecial and narrow ground, undoubtedly he would liaxc so stated, ih-. Justice Bron- ^on dissented from the conclusion; but wlietlicr on the ground thai the executory sale to the Merritts had cut off all the rights of the mortgagor, or on th(jground that a mere tender does not remove the lien of a mortgage, does not ajtpear. After a decision so authoritative as that of .fnil-snti v. ('rnft.<, and the lapse of nearly twenty years, there bi'ing in the intermediate time at least two distinct recognitions of the doctrine in the Su- [iremc Court (5 Wend. 617; 11 Id. 538), this question might well have been regarded as at rest. It sj)rang, however, into a new ex- istence under the opinion of the riianeellor; and althougli the Su- jtrcme Court, with a new bench of judges, realVirmed its ])ositiou after a most elaborate and searching examination, the subject was jterhaps a suitable one for final adjudication in the tribunal of la-t resort. The action of ejectment was aci'ordingly carried to the Court for the Correction of Errors, which atrirmed the judgment of the Su- preme Court. {Farmers' Fire Insitniinc niul Lonn Com pain/ v. Ed- iianls. 2(» Wend. .>!!.) The cause was most fully arguecl l»y some of the ablest gentlemen at the bar, and the decision of tlu' court was pronounced beyond all jmssibility of cavil on the very point now in controversy. The Chancellor, who was a menilMT of the court, and could and did take part in the decision, was for re- viTsal on two grounds, whii-h he stated: 1. That the written con tract to sell the premises to the Merritts was a sale within the mean- ing of the saving clause in the charter of the company. After tliat contract was made, and a part of the purchase money paid, he thought the lands no longer nnnained in the hands of tlio company unsold, .-o as to authorize the mortgagor to n'deem. 2. On the ground that a tender of the mortgage money after default in pay- 718 DISCIIAKGE OP MORTGAGE. [cHAP. v. mcnt at tlio dav could not in any case have the effect to extinguish the lien. With the Chancellor concurred seven of the Senators. Senator Verplanck delivered an opinion in favor of affirmance, dis- cussing on the other side the same question, and no others. He made no attempt to sustain the decision on the ground that the law- day of the mortgage was extended by the charter in any sense dif- ferent from a mere continuation of the right to redeem or pay off the debt after the original default and after the foreclosure and sale. Xo member of the court, on either side of the general ques- tion, so much as mentioned that ground of decision; and most mani- festly the right to redeem given by the charter, notwithstanding a foreclosure and purchase by the company, could not have, and was not designed to have, the effect of enhirging the contract in respect to the specified time of paying the (lol)t. With Mr. Verplanck con- curred the President of the Senate and a majority of the Senators. We are bound to say that the judgment was pronounced on the two propositions discussed in the respective opinions, and it necessarily affirmed both of those propositions. There is no other conceivable explanation to the judgment, unless we sav that a judicial fore- closure and sale created a now law day of indefinite continuance, after the one appointed in the contract had long since passed; and this we cannot say, because such a position was in itself wholly un- tenable, and was not even alluded to by any member of the court. No one who will read the case with a little attention can fail to be satisfied that it was a decision most deliberately pronounced upon the very question now to be determined.^ Such being, as I think, the clear result of the authorities, a re- newed discussion of the question may seem to be unnecessary. I cannot help saying, however, that a decision by this court in oppo- sition to the rule laid down in the cases referred to would introduce into the law of mortgage an inconsistency too plain to escape obser- vation. In the early history of that law" the courts of equity, departing from the letter of the contract, but adhering to the intention of the parties, adopted the just and liberal doctrine that a mortgage was but a pledge or security, always redeemable until fore- closure. The courts of law followed in the same direction. As Lord Eedesdale observed (Mitf. 428): "The distinction be- tween law and equity is never in any country a permanent distinc- tion. Law and equity are in continual progression, and the former is constantly gaining upon the latter. A great part of what is now strict law was formerly considered as equity, and the equitable de- cisions of this age will unavoidably be ranked under the strict law ' ITerp follows an examination of ilie ease of Arnot v. Post, 6 Hill, 63, wliich is omitted. SEC. I.] KoirntrnnT v. » vdv. : 1 'J <>'■ tile next." Siifli, jirciTiiiiifiitly, luis l)ccii tlic coursL' of juris- jiriidciicc on this suhjfct. TIh" doctriiu's ori;,Miijitin^' in the court.-* <)\' ('(iiiity n'sjM'ctiii;; the ri<;hts of inort|,oi;;or and niort^a^ce havr Ik'ou incor|)orat('d into the cndc of the coniinon hiw, so that then? is now no diircrcnic hctwct-n the two systems. This has Ix-en trm? in suhstanec for nearly a ccnttiry past. In Marlin v. Moulin. 'I Burr. !>7S, decided hy the I-]n;zlish Kinj,''s liciich in 1T(»0, it was lu'ld that whatevtr wdnl- in a will would carry the money due u[)oii a mort,i:a_<:e would carry the interest in the land. Liuvl Man-field said: '* A niort<:a_<:e i.- a ehari^e upon the land, aiid whatever would jrive ttie nu)ney would i-arry the estate in the land aloni; with it. The estat(» in the land is the same thin;; as the money due upon it. It will he lialtle to dehts; it will )n^ to the exeeutor; it will pass hy i\ will not made and exeeuti'd with the solemnitii-s reipiired hy the* statute of frauds. The assignment of the deht, or for^riving it, will draw the land after it as a eonse(|Uenee ; nay, it would do it though the deht were forgiven only hy parol." So, in The Kiufj V. St. Michacla. Doug. 632, it was said hy the same judge tiiat " a n;ortgagor in possession gains a settlement, heeause the mortgagee, notwithstanding tjie fornu has l)ut a ehattel, and the mortgagi- i.>? only a security." To the same efTect is The King v. Kdington. I East. 288, and sue)-, is the uniform tenor of the Hnglish authori- ties. (See () Conn. 1.")!).) In this Slate, the rules of law and ('(piity in regard to mortgag-es have never dilfered in any degree; it heing the doctrine of hoth sy.s- t(ms that a mortgage is hut a jiersonai interest mendy. This prop- osition, in its fidl length and hreadth, was y refusing to accejjt, dws not forfeit his right to the very thing ten- dered, but he docs lose all collateral benefits or securities. (;i Johns. Cas. 213: 12 J. II. 27 \ : (\ \V«>nd. 22; O Cow. 72S ; Cotjgs v. JU'rnard, 2 \iOVi\ l{ay. \\. \Hi\.) Thus, after the tender of a money debt, followed by jiayment into court, interest and costs cannot be recovered. The instantaneous effect is to discharge any collateral lien, as a j)ledge of goods or the right of distress. It is not denied that the same principle applies to a mortgage, if th<» tender be made at the very time when the money is due. If the creossible to hold otherwi.se, although the tender hv nnule aft«'rwanls, unless we also .in;; his |)rior debt, {('uit v. I/oiislon, .1 .Folm. Ci\. 213.) In llunlrr V. A/' Contr. (• Cow. 7*.*.S, the Suprcnic Court lu-M that a t( iidcr of n-iit takes away th«' ri;,'ht to distrain till a suh.scqucnt dr- iiiand and rcfii.-al ; Imt it docs not take away the ri;,^^ to sue for the rmt as for a dfht. It only saves the interest and e(/!(, speaking of the fourth class of hailnients, says: '* If the m<»n«'y for which the jroods are pawned he tendered to the pawnee before they are lost, then the pawnee shall he answerable for them. I)eeause the pawnee, by detaininrortg.. A, and ca.ses there cited.) Holding, as we do. then-fore, in this State that the land mortgaged is hut a security for the debt due to the mortgagee, in other words, a jdedge to him to . in the other. But I think wc are not left at liberty to settle this ca.^e on princi- j»le, but are to regard it as authoritatively dispose*! of hy the courts of this State. A very careful cxamimition of the decisions has brought mv min.d to the conviction, contrary to my first im|)ression. that we should regard the (piestion now jiresented as not o|H'n to further discussion. I shall recur t(» the cases in which this (pu*stion has arisen; and I think an examination of them will lead to the same conclusions to which I have arrived.' . . . It is not jHTceived how the mortgagee is to he emharra.ss«Nl. or his sivurity impaired, by tiie adoption of this rule, as seems to U- sup- posed by the Chancellor in luhrnnfs v. Fnrmrrs' Loan Company. ' Tlio exnniinntion of tl\«« niitlioritioi* i>« oniitt«^l. 724 DISCHARGE OF MORTGAGE. [CIIAP. V. 26 Wend. 552. If the mortgagor does not tender the full amount due, the lien of the mortgage is not extinguished. The mortgagee runs no risk in accepting the tender. If it is the full amount due, his mortgage lien is extinguished and his debt is paid. This is all he has a right to demand or expect, and all he can in any con- tingency obtain. His acceptance of the money tendered, if in- adequate and less than the amount actually due, only extinguishes the lien pro tanto, and the mortgage remains intact for the residue. A much greater hardship might be imposed, and serious injury be produced, by holding that the mortgagor cannot extinguish the lien of the mortgage by a tender of the full amount due. It has never occurred to any judge to argue that a pawnee was in great peril, and in danger of losing the benefit of his pawn, by the enforcement of the well settled rule that a tender of the amount of the loan and interest, and refusal, extinguished the lien on the pawn. Littleton well says, that it shall be accounted a man's own folly that he re- fused the money when a lawful tender of it was made to him. The only effect upon the rights of the mortgagee is, that the land or thing pledged is released from the lien, but the debt remaineth. The only remaining question to be considered is, whether the ten- der in this ease was well made, it not being followed with the allegation of tout temps prist, and the money not having been brought into court. It will be seen, by reference to the authorities, that these are not required when the tender has only the effect of extinguishing the lien, and does not operate to discharge the debt or sum owing. In the latter case the averment of tout temps prist followed up by bringing the money into court, is essential to a good plea of tender. (Hume v. Peploe, 8 East, 168; Giles v. Hartis, 1 Lord Ray. 254.) But if a man make a bond for the payment of a loan of money, and afterwards make a defeasance for the payment of a lesser sum at a day, if the obligor tender the lesser sum at tho day, and the obligee refuse it, he shall never have any remedy by law to recover it, because it is no parcel of the sum contained in t\v^ obligation. And in this case, in pleading of the tender and refusal, the party shall not be driven to plead that he is yet ready to pny the same, or to render it in court. (Co. Lit., note to § 335.) The same principle was held by the Supreme Court of this State in Hunter v. Le Conte, 6 Cow. 728, and easos there cited. No question in reference to the taxes arises in this cause, upon the facts found by the referee. Tlie referee found in favor ,of tlie appellants upon the question relating to them; and to liis findiii.u' in that respect the plaintiff took no exception. It is not, therefore, to k' reviewed in this court. *'^f' ^3 KORTIIIOIIT V. r ADY. 726 Till* jii(l<,Miu'nt aj)j)oal»Kl from should he rrvrr.-id iirid a new trial urilori'il, with eosts to al)i(l(' the event. Skluen. Clkkkk. WuKiiiT, Bacon, and Dkvio, .Is., conciirn'd; iho hitter putting' his coiiciirn'Mce on th<' ;,M(Mind that the (juestion was so far deleniiiiied hy authority in this State, that it wouhl now bo indiscreet to reexamine it in the lij,dit of reason and the analogies of the hiw. Wkli.ks. ,J. (Dissenting.) The only (|uestion involved in the case is, whether the tender ma(h' hy the defeiuhint Cady, under the < ire\nnstanees, was elTectual to extricate the premises in (juestion from the lien created by the mortgage of Blunt to Miller. Thi.s tender was made after the day provided in the bond and mortgage for the payment of the money, which is called the law day. If the sum tendered was sufllcient in amount, and was made to the proper })erson, the question is reducee a good answer to the plea. In the case of a mortgage which is collateral to the delit, it is agrivd that a tender nuiy be made by the person owning the equitv of redemption, whicli will extinguish the lien of the mortgage for- ever, without alTeeting the debt. The primary object of a fon^ ilosun^ suit is to enforce the lien, and if that is met by a suflicient tender, the cause of action is srone and cannot U^ restonvl by a sub- t^equent demand and ref\i;der whdher (he tender in the present ease, being made after the 726 DISCHARGE OF MORTGAGE. [CHAP. V. law day, if good in otlier respects, had the ctTcct to discharge the lien of the mortgage/ ... My own opinion is, after a careful examination of the cases, that the weight of authority is in favor of the rule as it existed at the common law. If that rule has not been abrogated or modified, all will admit that it is the plain duty of the courts to follow and en- force it. Clearly there is no stare decisis in our way. It is of iniT portance that the rule be definitely settled, and its boundaries do- fined. Before we hold a rule dift'erent from what we find it settled by the common law, we should require evidence that the rule has been changed by competent authority, either expressly or by nec- essary implication. This evidence, the advocates of the change of the rule claim, i* found in the changed character of a mortgage upon land, in conse- quence of various legislative enactments. We are told that when- the rule of the common law in question was adopted, a mortgage conveyed a conditional estate in the premises, which entitled the mortgagee to possession, and upon which he could maintain eject- ment; and that a mortgage does not now pass any estate in the land,, but is merely the creation of a specific lien as security for the pay- ment of a debt or the performance of a duty; and that the statute has taken away the right of the mortgagee to maintain ejectment. All this is true ; and doubtless other shades of difference may be found between the legal effect of a mortgage at common law and as it now exists. But they will be found to relate to the remedy,, or to consist in collateral or incidental circumstances. Mortgages are substantially what they always were. The fact that they are not now regarded as transferring the freehold, but are merely spe- cific liens, is altogether theoretical and ideal, so far as respects the (juestion under consideration. The great object of these instru- ments is the same now as it always was — that of security for the payment of money or the performance of a duty. A mortgagee in possession is now, as always heretofore, accountable for rents and j)rofits, and he may still defend his possession with the mort- gage the same as ever. I know of no difference between the right of the mortgagor, or the person owning the equity of redemption, to redeem the premises from the lien of the mortgage, as that right now exists, and as it existed in the time of Coke or Littleton. That right is governed now by substantially the same rules as then. The rule contended for by the plaintiff is reasonable, convenient and just. In the first place, the parties to the mortgage have, by agreement, fixed upon the time of payment, and if the mortgagor ' The learned judge then re examines the New York authorities. This portion of the opinion is omitted. SEC. I.] KoKritKiii r r. tAi»v. 7"'" fulfills his ajjrct'ini'nt by paying,' <>m tlif diiy appointed, or ti'mlfriii;,' ])aym('nt on that clay, the lien is dischar^'cd. Tlif parties are tlu'ii to be ready, the niortj^agor to j)ay, and the mortga^^ee to receive. If the former perforins his duty, or tenders performance, and the latter refuses, his lien is ;;one forever; he iuis no excuse for iiis folly, and is entitled to no consideration for the loss of his lien. On the law day each j)arty is presumed to know exactly what his duty is, and the amount tlu' mortgagor is bound to pay and the mortgagee entitled to receive. If the mortgagor allows the law day to pass without payment or tender, he then is a defaulter. If he can discharge the lien by a tender of payment the ne.xt day, there is no reason why he may not do the same by a tender after the lapse of one year or of ten years. Suppose the mortgagee goes into possession under the mortgage, by consent of the mortgagor, immediately upon default of payment, and the latter takes no steps towards payment for years after; what amount shall he tender when he gets ready for payment ? what abatement from the [M-incipal and interest shall be made for mesne jirofits? Shall the defaulting mortgagor be permitted to select his own time, and then make a tender of such an amount as he shall deem proper, and the mortgagee be l)0und to accept it in full, at the peril of losing his lien forever? Suj)j)ose again the case of a defaulting mortgagor, who claims t'** have made j)artial i)ayments, or to be entitled to a set-off, about which he and the mortgagee in good faith differ: according to the rule claimed by the defendant, he must acci'j)! in full the amount tendered at the ))eril of losing his lien, provided, upon a litigation, it shall be adjudged that the tender was sutlicient in amount. It seems to me that the old rule is tlu' (mly just and wholesome on«' that can be recognized. It isi|uiteas favorable to the mortgagor as he can in reason ask. If he makes a s\il1it p the tender good, and, when he is sued, let him set it up us a defence, bring the money into court aJid offer payment as in t>ther cast^^, and the court will in such a case decn'c tlu' mortgage satis- fied and discharged, and adjudge costs again>l the plaintiff. Or if for any reason the mortgagor, or the ju'rson whose duty or interest it may be to have the lien discharged, does not wish to wait the mortgagee's time for foreclosing, let him nnike his tender and keep it good, and then bring his action to redeem, alleging the tender and offering to |)ay ; and if, upon the trial, it is found that his tentler was sufficient and the plaintiff was ready to pay, tlu' court wouM give him all the relief which c«iuity and justicv required. In all "^28 DISCHARGE OF MORTGAGE. [CIIAP. v. these eases the mortgagee would have the right to have the dis- puted questions adjudicated without losing his lien for the amount in equity and justice due to him. The rule contended for hy the defendant would, in many cases, oi)erate as a bounty to negligent and defaulting debtors, and mort- gagees would, under its workings, be induced to purchase their ])eaee at an unjust sacrifice. For the foregoing reasons, I am of the opinion that the rule of Littleton, as expounded by Coke, and as, all now admit, was the rule of the common law in relation to the effect of a tender after the law day, is still the law of this State; and as the tender in this case has not been kept good, and the defendant's answer contains no offer of payment, and the facts found by the court before whom the cause was tried do not show that the tender has in any sense been kept good, or that the defendant was ready to pay, &c., I think that he can have no benefit by reason of it; and that the judgment should be affirmed, with costs. Judgment reversed.^ SHIELDS v. LOZEAR. Court of Errors and Appeals of New Jersey, 1869. (34 iV. J. L. 496.) Li ejectment. Error to the Supreme Court. This was an action of ejectment tried before the Chief Justice at the Warren Circuit (a trial by jury having been waived by the parties), to recover the possession of a tract of land situate in said count}'. The action was commenced on the 13th of June, 1869, and the plaintiff's right of possession was alleged to have accrued on the 1st day of April, LS69. The plaintiff in error (who was the plaintiff below) produced and offered in evidence a deed of con- veyance of the premises, made to him by the defendant and wife, bearing date on the 9th of April, 1867. 'Curu titers v. Humphrey, 12 Midi. 270 (1864), Potts v. Phiisted, 30 Mich. 140 (1874), Storey v. Krewson, 5.5 Ind. 397 (1S76), aecord. So ■\vlioie mort<^a{,'eo evades tender: Ferguson v. Popp, 42 Mich. 115 (1879), McClcUan v. Coffin, 93 Ind. 456 (1883). And see Brcitenhach v. Turner, 18 Wis. 140 (1864), and Ma>ikrl v. Belseamper, 84 Wis. 218 (1893), ftevibic, accord. T5ut the authorities generally are contra: Currier v. Gale, 9 Allen (Mass.) 522 (1865) ; Perrc v. Castro, 14 Cal. 519 (1860) ; Crain V. Mcdoon, 86 111. 431 (IS77) ; Mattluivs v. Lindsay, 20 Fla. 962 (1884). «K<^- 'J smiM.KS c I.OZKAIt. 72*J 'I'lir ilffcinlimt (lull (inVicd ill r\ idnicf a mnrt;,M;,'c iilkIc and cxc- \\\n of $J,00(> on court did find, as a fact, that a legal tcn the cora- menciMnent of this attion; hut the court refused to adjudge that said tender v'xtinguished and terminated the rigiit of the said do- T30 DISCHARGE OF MORTGAGE. [CIIAP. V. fendant to hold possession of the said Lmd, by virtue of said mort- gage, and did adjudge that said tender having been made after the day named in the said bond for the payment thereof, did not ex- tinguish or terminate the right of the said defendant to hold pos- session of the said land, and that the said defendant was and is en- titled to hold possession of said land, by virtue of said mortgage^ notwithstanding the making of said tender, to which refusal and judgment of the court the plaintiff, by his counsel, excepted, and he prayed that his exception might be sealed, and it is sealed accord- ingly. M. Beasley, C. J. [l. S.J The opinion of the court was delivered by Depue^ J. The bills of exception sealed at the trial raise two questions: First. Whether the defendant, being the tenant of premises under the plaintiff, could, at the expiration of his lease, make title under his mortgage without iirst yielding and surren- dering the possession to the plaintiff. And, second, whether a tender by the mortgagor of the money secured by a mortgage, Avhich is not accepted by the mortgagee, made after the day of payment named in the condition, terminates the estate of the mort- gagee in the mortgaged premises, and extinguishes the lien of the mortgage on the land,^ .... The extinguishment of the lien of the mortgage by the unac- cepted tender of the mortgage money after the day named in the condition, was contended for by the plaintiff's counsel with much earnestness. A mortgage, at common law, is a conveyance absolute in its form, granting an estate defeasible by the performance of a con- dition subsequent. The estate thus created was strictly an estate on condition, and in a court of law was treated as subject to be de- feated only by the performance of the condition in the manner and ,) at the time stipulated for in the defeasance. If made on condition that the conveyance should be void on payment of a definite sum of money on a given day, and the condition was performed accord- ing to its terms, the estate reverted back to the mortgagor without any re-conveyance, by the simple operation of the condition. A tender at the time and place and in the manner prescribed in the instrument itself was equivalent to performance, and operated to determine the estate of the mortgagee, and revest it in the mort- gagor. (Lit. § 335; Co. Lit. 207, a.; 4 Kent, 193; Coote ort Mortgages, 6; Merritt v. Lambert, 7 Paige, 344.) But when the condition was discharged by failure to comply with its terms, .the estate of the mortgagee became absolute in law, and the title of the mortgagor was completely divested and gone, and a re- * The opinion on tlie first jjoint is omitted. «-C- I] SHIKI.DS c l.o/.KAU. 731 conveyaiK'O was nccrssarv to rrst(»r(' liini 1«> his ori;:iii;il estate. (Lit. .^ HM'-i ; 2 HIack. ('Ktii. l.")S ; Cootc on M()rt<^a;;cs, 'J.) So inflexibly was tliis harsh r\ilc of the hiw atlhcrrd to, that it was remarked hy a h-arncd writer that if the (h'htor had no greater merry sliown to him than a court of hiw will allow, the smallest want of punctuality in his payment would eaus4' him forever to lose the estate he had jiledged. (Williams on Real Prop. 33:5.) The rigor of this rule was somewhat abated by the statute of 7 George II., ch. 20 (1 Evans' Statutes 243, re-enacted in this State December 3d, IT!)-!, Nix. Dig., Uh ed., <;()8), which per- mitted a mortgagor, when an action was brought on the bond or ejectment on the mortgage, j)ending the suit, to pay to the mort- gagee the mortgage money, interest, and all costs exj)ended in any suit at law or in ecpiity; or in case of a refusal to accept the same, to bring such money into court wlu-ri' such action was pending, which moneys so paid or brought into court were declared to be a satisfaction and discharge of such mortgage; and the court was required, by rule of court, to com|)el the mortgagee to assign, sur- render, or re-convey the mortgaged |)remi.s('s unto the mortgagor, or to such otiier person as he should for that purpose nominate and appoint. In cases strictly within the terms of this statute, the P^nglish courts of law have exercised an e(|uitabk' jurisdiction to enforce a redemj)tion on payment of the mortgage debt after default in payment, according to the condition, by compelling a re- conveyance. Except in ca.ses within this statute, the doctrine of the English courts is in accordance with the ancient common law, that at law a failure to j>ay at the day prescribed forfeits the estate' of the mortgagor under the condition, leaving him only an equity of redemption, which chancery will lay hold of and give effect to, by compelling a re-conveyance on e(|uitable ti'rn\s. In the United States, the prevailing doctrine in courts of law as well as in courts of cipiity, is to consider the mortgage as merely ancillary to the debt, and to h<»ld that the estate of the mortgage is annihilated by the extinguishment of the di-bt se«tired by it, after the day of payment named in the condition. (2 (Ireenl. Cruise, J)l, note 1 ; 1 Kent, l!)3.) In fact, the latter conclusion will neces- sarily follow whenever the mortgage is regarded not as a common law conveyanie on condition, but as a .security for tiic debt, the legal estate being considered as subsisting only for tliat purpo.."»l ; prr Justice Southard, in Mitniifoivmi v. fininr. 1 South. 27!>, who.sc di.ssenting opinion in the Supreme Court was adopted in the Court of Ernirs '^o2 DISCHARGE OF MORTGAGE, [CIIAP. V. m reversing tlio judgment of the Supreme Court. 3 South. 865.) Consequently, payment after the day will convert the mortgagee into a trustee of the legal estate for the henefit of the mortgagor. In Harrison v. Eldridge, 2 Halst. 407, Chief Justice Kinsey, speak- ing of payment after the law-day, says : " When the debt is dis- charged according to law the mortgagee has the legal seisin in trust for the mortgagor, and the court will never permit the trustee or those claiming under him to set up this legal estate in him or them, to defeat the possession of the cestui que trust. This principle is settled in Armstrong v. Peirce, 3 Burr. 1898. The same doctrine being applicable to all trustees, the court would not per- mit a recovery upon a merely formal title, when the cestui que trust could have compelled a re-conveyance immediately, and thus liave acquired the legal title." The seventh section of" the act of June 7th, 1799 (Rev. Laws, 4G3 ; Xix. Dig., 4th ed., Gil, sec 11) which authorizes satisfaction to be entered on the registry of the mortgage, in discharge of the mortgage, gives a legislative sanc- tion to this eifect of payment in the case of a mortgage which has been recorded. But a tender, though it is equivalent to performance where the question is whether the party is in default, is not a satisfaction or extinguishment of a debt. Tender of the mortgage de])t on the day named as performance of the condition, and by force of the terms of the condition, determines the estate of the mortgagee, and the condition being complied with, the land reverts to the mort- gagor by the simple operation of the condition. The courts of the State of New York have given the same effect to a tender, without payment, after the day prescribed for payment. This doctrine was first asserted in Jaclson v. Crafts, 18 J. R. 110, on a misapprehen- sion of a passage from Littleton. (Lit. §§ 335, 338.) It was denied by the Chancellor in Merritt v. Lambert, 7 Paige, 344, and re-affirmed in the Supreme Court in Edwards v. The Farmers' Fire Insurance and Loan Company, 21 Wend. 467 ; and in the Court of Errors, in the same case on error, 26 Wend. 541 ; and by the Supreme Court in Artiot v. Post, 6 Hill, 65; and again denied ])y the Court of Errors in reversing the last-mentioned case. (Post V. Ariiot, 2 Denio, 344.) Finally, in Kortright v. Cadij, 21 X. Y. 343, the question was set at rest in the courts of that State by re- aflfirming the rule laid down in Jachson v. Crafts, and it seems now to be the settled law in that State that a tender of the money due upon a mortgage at any time before foreclosure discharges the lien without payment, though made after the law-day. I do not find that the rule, as finally established in the courts of New York, has Ixvn adopted by tlie courts of any other State. In Massachusetts SKC. l] siiiri.ns r. r.ozrM;. 7.",;; the decisions Iiavi- In^cn to the conlrarv. ( Mni/ii'inl v. /funt, Tt I'ick. 240; Currier v. Galr. *) Allen, r>Ti.) In an earlv ease in New TIanipsliire (Sweit v. Horn, 1 New llanip. 332), the court lieM, under a statute declarin<,' that all real estate ple(|j,'id hy rnort;,M^'e might ho redeemed hy payinj; all costs, &c., pro\id<(l such pay- ment or performann' or tend.T thereof Im- made within one year after the entry of the mort<,'a I)ut«lier, IJM.) The >tatute only applie-; to payments actually made, and a tender after the dav cannot he jdeaded. (2 Saund. 48, h, note i.) And if the tender is made on the day, it can only Ik* nuuh' ayailahle hy plea, accompanied hy pay- ment into court. (Co. Lit. 2o;, a.) Where, as in this case, the mortgage is accompaiii<' c. i.o/.i.vi:. 735 raised for tlic hcncfit of llir iii(»rt^'a;,'i)r until the purpose for which the mortgage was made is answered. It was stated on the argument that the nioiiey i>oiiding statute of T (ieorge IF., eh. 'iO, and have held the circumstances of the litigation mentioned in the preamhie and in the statute to he jurisdictional facts, which the court is not at liberty to disregard. {Doe v. Clifton, 4 Ad. & Hi. 809; Good-title V. No-title, 11 Moore, 41)1; Sutton v. UnwUnijs. 3 Exch. 407.) The statute shouKl be strictly construed, and is not aj)j)licable to anv case in whicli the mortgagor is himself the actor. It was designed to aj)ply only in certain cases mentioned in its preamble and in the introductory words of the statute, and was not intended to sup- ])lant bills for redemption. The subject is one that falls peculiarly within the jurisdiction of courts of ('(piity. The remedy there is complete by bill for a redemption, and relief may be speedily obtained by the exercise of the undoubted powi'r of the court, by the writ of assistance to carry into effect its decree, by putting the mortgagor in j)ossession, where the mortgagee has obtained posses- .'ion under the mortgage. {Yates v. Ifiinihlij, 'i Atk. ;}(i;5 ; Green v. Green, 2 Simons, 3^)!), 4<)() ; Bacon's Ordinantrs in Chancery, 9 ; Val- entine V. Teller, Hopk. C. 1?. 422 ; Devancene v. Devancene, 1 Edw. ('. K. 2T2; Kerslidir v. riiompsou, I Johns. C. R. ri09 ; Svhenrk v. Vonover, 2 Beas. 221; Fnrkler v. Wurth, Ih., 39."); Thomas v. l)e Hnum, 1 McC'arter, 37; 2 Dan. Chan. Prac. 12H0.) It is n(jt, therefore, es.sential to the administration of justice that courts of law should, in the al)sence of th(> ii!iperative n'quire- menls of a statute, entertain a jurisdiction thai pertains X^^ courts of equity, in the exercise of which cipiitiis may arise that a <-ourt of law may lie incompetent to deal with. There is no error in the rulings of the eoiit l>elow. ami the judgment should be aflirnu'd. T36 DISCHARGE OF MORTGAGE. [C'lIAl'. V, TUTHILL V. MORRIS. Court of Appeals of New York, 1880. (81 N. Y. 94.) Appeal from judgment of the General Term of the Supreme Court, in the Second Judicial Department, affirming a judgment in favor of plaintiff entered upon a decision of the court on trial without a jury. This action was brought to restrain the defendant from selling certain premises in statutory proceedings to foreclose two mort- gages thereon and to have the same adjudged to be extinguished and to require defendant to cancel the same of record, on tiie ground that the amount of the mortgages was duly tendered and refused. The mortgages were executed by plaintiff. The mortgagees commenced proceedings to foreclose the same by advertisement under the statute. Pending the proceedings they assigned the mortgages to defendant. Defendant requested one Steers, an at- torney, to attend the sale for him. The circumstances and the nature of the employment, together with the occurrences out of which the alleged cause of action accrued, are set forth in the opinion. Rapallo, J. The uncontroverted evidence shows that Mr. Steers, to whom the tender relied upon by the plaintiff was made, was not the attorney in the foreclosure proceedings nor connected with such attorney, nor the agent of Mr. Morris, except for the specific purpose for which he was employed; that his first and only connection with Mr. Morris or the foreclosure was that he Avas requested, on behalf of Mr. Morris, to go to the place of sale and engage an auctioneer, and to attend the sale and see that it was properly conducted. It may also be inferred from the testimony that he was instructed that the sale should be for cash. It is con- ceded by the respondent's points that Mr. Steers had no express authority to receive a tender and that none was thought of. Mr. Steers did not know nor was he informed of the amount due for principal, interest, or costs, beyond such information as was af- forded by the notice of sale, nor does it appear that he had any means of ascertaining the amount of the costs. He was not empow- ered to receive the purchase money, for this would be payable only on the execution of the deed by the mortgagee. When he arrived at the place appointed for the sale he was presented with a sum- mons, complaint and order of injunction in an action by the plain- si^c. I.] TiTirii.r. r. ^^oI{I!Is. T;J7 tifT a<^ainst ^fr. ^lorris, hut declined to nvi'ive or admit service thoivof on behalf of Mr. Morris, on the ^'round that he was not his attorney. Tiie injiinetion order was then reii him. It ordered that the sale lie upon the terms, anion;,' others, that not more than 10 per cent, of the amount hid he paid down. He stated, as testified to hy the |)laintiir's attorney, that he was in- structed to sell for cash, and said that if he could not do that he should adjourn the sale, and accordingly instructed the auctioneer to adjourn the sale for thirty (hiys. After he had announced hi^ intention to adjourn tin- sale, hut lu-fore he liars that he tendered the money in behalf of the plaintiff for the whole amount due. That lie did not state how much money there was, hut tendered it, an auctioneer, under the instruction of Mr. Steers, announced the adjournment of the sale for thirty days. ^Ir. Steers testified that in declining to receive tlu^ m<»ney he stated that he was not authorized and that the sale was adjourned. We perceive nothing in the course pursued hy Mr. Steers indi- cating any purpo.«e to oppress or take any uikIuc advantage of the ])laintifT. By the adjournment of the sale the i)laintitT was re- lieved of all immediate pressure, and ample time was an'orrly conducted, is hy such employment authorized to receive the principal of the mortgage; hut, irrespcM'tive of that point, when he announces that he i< ignor- ant of tlu> amount due for jirincipal, inten^st and costs. an<1 if is evident that he has not the means of information at hand a< to the exact amount, it would he in the highest degree unreasonable to 738 DISCHARGE OF MORTGAGE. [CIIAP. V. liokl that a person thus situated is bound to take the responsibility of accepting or refusing a tender, and that his refusal discharges the lien of the mortgage. Insisting upon the immediate accept- ance of a tender under such circumstances, and when the sale is iibout to be adjourned, indicates rather a design on the part of the mortgagor to take an unfair advantage of the mortgagee than to relieve himself from oppression. Furthermore, there is no evidence in the case showing that the sum tendered was the full amount of principal, interest and costs. The sum tendered is said to have been $6,300. The amount of principal and. interest, according to the notice of sale, was $6,150 and upwards. What was the amount of the costs in no manner appears in the case. To this point it is answered that Mr. Steers did not object that the amount tendered was insufficient, and that the plaintiff was ready to pay whatever amount was due. But 'Mr. Steers did state that he was ignorant of the amount, and he did not occupy such a relation to the case that it could be presumed that he knew or that it was his duty to know the precise amount. ;N"either does it appear that any specific amount was tendered. The plaintiff's witness, Mr. Tuthill, exhibited a quantity of bills, but he admits that he did not name the amount, though he asked Mr. Steers to count them, and, taking the whole evidence, it is not clear that Mr. Tuthill offered to pay the whole amount he had in his hand, if it exceeded the amount due. When asked what he wanted to pay, he replied, " the notes, interest and costs." He had previously said that he wanted to pay the whole amount if Mr. Steers would let him know how much it was, and Steers had told him he did not know. The fair construction of this testimony is that he desired to pay the amount due only, and before pay- ing desired to be informed of the amount, but that the person to whom he applied had not the means of giving the information. We are of opinion that the plaintiff failed to make out a tender to the defendant and a refusal which discharged the lien of the morto-age. In view of the serious consequences resulting from the refusal of such a tender, the proof should be very clear that it was fairly made and deliberately and intentionally refused by the mortgagee, or some one duly authorized by him, and that suffi- cient opportunity was afforded to ascertain the amount due. At all events, it should appear that a sum was absolutely and uncon- ditionally tendered sufficient to cover the whole amount due. The l)urden of that proof is on the party alleging the tender. But even if a sufficient tender had ])een made out, this action could not, in our judgment, be maintained. Although the au- thorities cited sustain the proposition that when a tender has been «>•■*■• '1 TrTiin.i. r. Moitiiis. 735 duly iiuidi' of the full amount dur it will di?rlinrp;c tho lion and ho a ^Doii dcl'i'iisc aj^aiiist its ciifdrcciiiciit, witlioiit llic tender boin^ kept jfood, yet we arc idcarly of ojiinion that it should he kept ^ood in order to entitle the iiiort,<;a;,'or to the allirniative relief whioh he seeks in this action and which the jud<;nient awards him, viz., the extinguishment of the mortgage. A party coming into equity for alhrmative relief must himself do ecpiity. and this wouhl rcfpiire that he pay the dei)t secured i)y the mort;(a<;e, an-.nur V. Tuvh, Vl" N- V. 217 (ISitl). ,V. /.so,, v. l.n,Ur, V.Vl N. Y. 288 (18!)2). CoxrliH V. Marhlr, M Mult. ir)H (IS77). arron/. Ihit sit l/<>i/« not satislied l)y the body of the debtor having been taken in execution, -o a- to extinguisli the lien of \\\v creditor on the hmd. Mr. 'rreslocf and Mr. M'lrlin. in sup|>8; Tookc v, HaHIci/. '> Uro. ('. ('. Vio.) y\r. Wilhriihniii . (outrn. The Master of the Kolls fSin John Lk.mii] snid he did not remember to have heard it ever suggested that a mortgagiH', by pro- ceeding to execution against the body of the debtor, reiea.st'd his interest in the hmd: and he ovi-rnded the exct>ption. 743 DISCHARGE OF MORTGAGE. [CHAP. V, BRINCKEEHOFF v. LANSING. Court of Chancery of New York, 1819. (4 Johns. Ch. 65.) Bill filed February 4tli, 1812, by Jobn Brinckerboff, Natban Morey, and Aaron Wilcox against Lcvinus Lansing, Otis Bates, and James Adams to restrain defendants from selling certain premises in Lansingburgh under a fi. fa. levied tbereon by defendant Lan- sing, or under a power of sale contained in a mortgage, exe- cuted September 3, 1803, by defendant Bates to said Lansing, to secure the latter against loss on a note endorsed by him for Bates. The plaintiffs claim title to the property in question, and allege that on April 3d, 1806, a judgment by confession was entered up against defendant Bates in favor of defendant Lansing to indem- nify him as such endorser, and that the note or notes, to secure which the mortgage was given, were afterwards discharged. The other material facts are given in the opinion.^ The Chancellor [Kent] : The claims of the three plaintiffs- are entirely separate from each other, and rest on distinct grounds. 1. The plaintiff Wilcox claims as a purchaser under the defend- ant Bates, and seeks to be relieved from the operation of a judgment of 1806, against Bates, in favor of the defendant Lansing. The counsel for the defendant Lansing admitted at the hearing that the judgment complained of was satisfied ; consequently, the plain- tiff Wilcox is entitled to the relief sought by the bill, and to have the defendant Lansing perpetually enjoined from any proceeding upon that judgment. The plaintiff Brinckerboff also seeks the same relief, and is entitled to the same remedy in respect to that judgment. 3. The plaintiff Morey claims title to a lot in Lansingburgh, under a purchase upon execution against John Morey, who held under a lease of the defendant Bates, given in 1804, and he seeks to be relieved against the operation of a mortgage coverinsj the same lot, and given by Bates to the defendant Lansing in 1808.^ 3. This case, then, turns wholly upon the question whether the mortgage of 1803, from Bates to Lansing was, at the time of filing ^This short statement of facts is condensed from the pleadings set fortli in the report. ^The opinion relating to the claim of this plaintiff, viz.: that defendant Lansing is estopped by his dealings with this plaintiff from setting ii]i tlie mortgage as to him, is omitted. Tlie learned Chancellor reaches the con- clusion that there is no estoppel. *^*'^- "-J HUlNCKDItllorr I'. LANSING. 743 the l)ill, to bo dct'incd a valid subsist in;^ inort^^Mfjo for any part of the di'bl originally sciurcd by it. In lhi.s question the plainlilFs Brinckoriioir ajul Morey are wjually interested, for they both hold, by purcliasi- under iiati-s, parts of ihe land eovereii l)y Lansing's mortgage. Jt does not appear to nie tiiat the claim under this mortgagi? ought to be alfected by other transactions totally distinct from it; any fraudulent pretensions of Lansing, under either of his judg- ments, are not to destroy his rights under tlie mortgage; it must gtand and be investigated upon its own merits. There is no doubt of its having been a fair, valid mortgage in the beginning, and given to indemnify Lansing, as endorser of a note drawn by Bates for 1,.500 dollars. The only proper inquiry now is, Has Lansing I)(>en injured, and is he entitled to any indem- nity for the injury he received by means of that note? The proviso in the mortgage was, that Bates v^'as to pay to Lansing 1,500 dollars with interest, "according to the condition of a certain bond, or writing obligatory, bearing even date therewith, executed by Bates to Lansing as a collateral security." The bond here re- ferred to wa.s, according to the condition of it, " to pay 1,500 dol- lars, with lawful interest, on or before the 7th of March, 1803, or keep the defendant L. hannless. and pay up the nt>te endorsed by the defendant L. for the defendant B., in the Farmers' Bank, when the same should be called for.'' The note referred to, in the condition of the bond, was of tlu' same date with the bond and mortgage, and was for L'>00 dollars, payable in fifty-six days, and discounted at the Farmers' Bank, in favor of Bates. It appears by the testimony t)f L. L Tillman that the note was renewed at the end of the fifty-six days by a new note made and endorsed in like manner, and so it continued to be tv- newed toties j-i (. i.w^iNc;. 71*) li woiiKl l)f dangerous and unjust, ns l)Otwoon tho partirs, not to allttw the wliolr note so ri-ncwi'd to coinr under the protection of the luorti^age. 'I'liere wa.s nothing here like the novation of the civil hiw. There was no new debt created dilTering in quality or char- acter, or relation or security. It was according to mercantile and hank usage (in reference to which the bond and mortgage wen- given) a renewal or continiuition of the same debt, under the same circumstances, and subject only to those tluctuations in amount which arc customary in such bank operations.* I shall, therefore, decree: 1. A perpetiuil injunction in favor of the plaintilTs B. and W. against any execution or other proceed- ing, on the judgment confessed by Bates to Lansing, and docketed on the 3d of A])ril, ISOfi, and that entry of satisfaction of record of that judgment be made by the defendant Lansing. 2. That unless the plaintiffs B. and ^I., or one of them, bring into court and deposit with the register, for the use of the (h-fend- aut L., within thirty days, the sum of 720 dollars, together with lawful interest thereon from the 8th day of October, IHll, unto tlie day of bringing in the same, the injunction heretofore issued, in respect to any proceeding under the bond and mortgage in the pleadings mentioned, Ih^ thereafter dissolved, so far as to allow the defendant L. to demand and collect under it, or by virtue of it. the sum of 720 dollars, with interest from the 8th day of October, ]811, until the money shall be paid and the costs and charges of all necessary proceedings thereon. 3. That the bill, as to the defendant B., be dismis.sed, and that unless the plaintiffs B. and M. shall within thirty days elect to pro- ceed against the defendant .\., to enforce his proportion (if any) of contribution to the said debt and interest so declared due to tlu> defendant Ti., and give notice of such election to the solicitor for the def»>ndant Adams, that then the bill as to him shall stand dis- missed.' Derrrr acrnnh'ngli/. 'Tlic rc>?t of (lio opinion, rolntinp in ollior nsp<'<-ts of tho controversy ix'twtpn llio partios. i>» omitted. ■Chotinii V. Thompso}!, 3 Oh. St. 424 (1S.')4): McHuin- v. Van P,lt. .V. .\1;». .144 (ISTTi). accord. Hut see ,farnapa» v. Oainxi. h\ ]\] .W* (isTi'.i 746 DISCHARGE OF :\IOETGAGE. [CIIAI-. V. BUTLER V. MILLER. Court of Appeals of Xew Yokk, 1848. (1 N. Y. 496.) This was an action of trover brought in the Supreme Court by Butler and Yosburgh against Miller for a number of horses, cattle and hogs, and a quantity of, farming utensils, and other property. The cause was first tried before Cushman, late Cir- cuit Judge, at the Columbia Circuit, in September, 1843, when a verdict was had for the plaintiffs, which was set aside by the Supreme Court and a new trial ordered. (See 1 Denio, 407.) A second trial was had before Parker, Circuit Judge, in March, 184G, and on that trial the case was as follows : — The plaintiffs gave in evidence a chattel mortgage upon the property in question, executed to them by one Abraham B. Van- derpoel, dated April 19, 1842, which had been duly filed in the proper town clerk's office. The instrument recited that Yandcr- poel was indebted to the plaintiffs in the sum of $498.72, being the amount of three promissory notes made by Yanderpoel, and held by the plaintiffs, and the mortgage was to become void if Yanderpoel should pay the debt by the first day of October then next. Evidence was given tending to show a just consideration for the notes. At the time the mortgage was given the property was on the farm of the mortgagor, and was used by one Mosher. who worked the farm on shares, under an agreement by which Yanderpoel was to furnish teams, stock and utensils. After the mortgage was given the property remained on the farm, and wa< used as before. On the 15th day of July, 1842, the defendant, as sheriff of the county of Columbia, sold the property in question by virtue of an execution against Yanderpoel, in favor of the Lafay- ette Bank, which was delivered to the sheriff' on the oth of May.. 1842. The evidence tended to show that the plaintiffs asserted their claim under the mortgage at the sale, and forbid the sale. It also appeared that on the 7th of May, 1842, the plaintiffs took from Yanderpoel a bond and warrant of attorney for the amount of the notes secured by the mortgage, upon which judg- ment was entered in the Supreme Court on the same day, and execution thereon was. by Yanrlerpoel's consent, issued immerli- atelv to one of tho deputif^s of the sheriff aforesaid. It was also provod. after obiection rlulv made and excention bv the defendant's counsel, that it Avas ao-roed between the plaintiffs and Yanderpoel that the judgment should be taken as collateral to the mortgage. s^f"- "J niTi.n; /•. mi 1.1.1:1;, 747 'I'lit' plaint ifT."*' cxcfutioii, smou after it was issued, was levied upon the property in (piestion, and the property was advertised for sale hoth uiuh-r that execution and the t)ne altove mentioned in favor of the Liifayt'tte Hank. It also ajjjieari'd that afhr llie .-lieriir's sale ai>o\r nieiil ioiud the plaintitTs made a m<»tii)n in the Supnine Cmiri for an order requiring; the defendant, as >uili >hcriir. t<> ajiply the proceed- of the sale on tlie judgment and execution in their favor. This mo- tion was hased ujion an allegation that the execution of the Lafay- ette ]iank, when (irst deliMTcd to tlu' sin rilT, was directed to the sheriff of the county of Hudson (there heing in fact no such county), and that the error was corrected and the execution re- deliviTcd to the sherilT after the exeeution of the plaintitTs was issued. The motion was denie(l with costs. The defendant's counsel rccpiestcd the ( 'inn it .hidge to decide and charge tlie jury: 1. That the mortgage under wliich the phiin- tiffs claimed was fraudulent and void ns against the judgment and execution of the Lafayette Bank. '2. That the judgment taken hy the plaintitTs on "the Tth of May, 1SI'^\ for the same notes secured by the mortgage, merged the notes and extinguished the lien of the mortgage. ."5. That the issuing of execution upon that judg- ment, the levy ujion the mortgage(l property, and the motion to the 8uj)reme Court to have the proi-ecds of the sheritf- -ah- applieil iijwn that execution, were severally acts inconsistent with any claim under the mortgage, and destroyed all right to assert any such claim. The Circuit .ludge ruled that the fpi«'stion of fraud was om* of fact for the jury to decide. That the judgment was not a mergiT or extinguishnu'nt of the mortgage, if it was taken as colhiteral merely; if not so taken, then that it was a merger. I'lton the l\i\ proposition he refused to charge as re.1. Tlie Circuit Judge was rcipiested to charge the jury that the suhseipient judgment nn the notes operated a< a merger of (he notes and conscfjuently avoiderily shown \ha\ the 1^48 DISCIIAIJGE OF MORTGAGE. [CHAP. V. judgment was taken as collateral to the mortgage, in which case it was not a merger. The charge npon this point Avas in strict accordance with the rule laid down by the Supreme Court (1 Denio, 407) when this cause was before it on a former trial, and must be regarded as cor- rect unless that court was then in error as to the true rule upon the subject.^ It may, perhaps, well be doubted whether the judgment was a security of a higher nature than the personal mortgage; and, even if it were, whether it would operate to extinguish the mortgage and divest the mortgagees of the title they had acquired under it. Tt will scarcely be contended that in case the notes in question had been secured by a mortgage upon real estate, a judgment upon them would have extinguished such mortgage. And yet a mortgage upon real estate is a mere security and incumbrance upon the land and gives the mortgagee no title or estate therein whatever. Where- as a personal mortgage is more than a mere security. It is a sale of the thing mortgaged, and operates as a transfer of the whole legal title to the mortgagee, subject only to be defeated by the full performance of the condition. And if it be conceded that a judg- ment u[)on the original indebtedness would not extinguish a col- lateral security for its payment upon real estate, I do not see how it could divest a title to personal property acquired by purchase. A vested legal title, whether in real or personal property, is the highest of all securities — certainly higher than the mere lien of a judgment upon land, or the right of a plaintiff to personal prop- erty acquired l)y levy under an execution. Although it is clear that the notes were merged in the judgment by operation of law, it does not, as I think, certainly follow that all the collateral securities would be extinguished. The debt is not yet satisfied. The notes may have been cancelled, but the debt was not, and until that is done it seems to me that all mere collat- eral securities, whether upon real or personal jjroperty, should bo allowed to stand, especially titles to property acquired under instru- ^" If tlien the judgment was intended as a collateral security to the notes and niort^a^e before executed, it would he clear that the notes and mortgage were not merged in or extinguished by the judgment, but remained a valid conveyance under which the plaintifTs could make title to the property mortgaged and sustain their action. [B\it] the jiulgnient, which is a higl'.ei- security than the notes and mortgage, or either of them, was between the same parties. It was, so far as the plaintiffs, the mort- gagees, are concerned, for the same debt, and this appears on the face of the securities. Does not the law presume that the judgment was taken in satisfaction of the original debt? I am of opinion that it does." — Per Jewett, J., in opinion in the Supreme Court (pp. 412, 413). SEC. II.] BUTLKi; r. .Mii.i.ri!. 710 nients whore tlio parties stand in the relation nf vendor and pur- (•ha.ser without fraud. The rule that seeurity of a hi{,'her nature ex- tinguishes inferior seeurities will be found, 1 apprehend, only lo apply t*^ the state or eondition of the deht itself, and means uo more than this — that when an account is setth'd hy a note, a note changed to a hond, or a judgment taken uj)on either, the del)t as to its original or inferior eondition is extinguished or swallowed up in the higher seeurity; and that all the memorandums or seeurities hy whieh sueh inferior condition was evidenced lose their vitality. It has never been applied, and 1 think never should Ix', to the ex- linguishment of distinct collateral securities, whether superior or inferior in degree. These are to he cancelled l)y satisfaction of the debt or voluntary surrender alone. This most obvious and rational distinction seems to have Ix'en overlooked i>y the S\ipreme Court in the opinion to which I have referred. It is unnecessary, however, to decide the question here discussed, as it wa< put to the jury substantially to find whether it was agreed or intended by the jjarties in entering uj) the judgment to cancel the mortgage: and I admit that if sueh had been the agreement and intention, there was sutlicient consideration to support it, and that the mortgage must have yielded to the superior force of the agreement, wliether express or imidied. The jury have determiiu'd by their vi-rdict that the parties to the mortgage did not intend to cancel it, and that notwithstanding the judgment it remained a valid subsisting .security. Thus far, then, it seems to be established by the verdict that, at least up to the time of the execution being placed in tlie hands of the sheriff by the plaintilTs, the mortgage was a valid instrument in their hands, and vested in them the legal title to all the property it purported to convey. sul)ject to be defeated only by payment and satisfaction, or voluntary waiver or surrender. It remains to be seen whether the plaint itTs have in an\ way divested themselves nf their title to llu' property thus acquired, or been guilty of any acts wliich would authorize the court to estop them from assert inir tluMr rights under the mortgage. [The learn(>d Judge examines this (|ueii r. ro(»i'i;i;. T'iL \Mst Optoltor, 1>!11. .111(1 rclits on tin- >lu'i-ilT's di-od to him. II»? jivcrs that he paid for >aid property with nionev ac«|uirc'd by him siiiir his di>fhjir_iri' in Itaiiknipit \ , and claim- tillc to it against all ihi' worhl. The court l»clo\v -u-taiiicd the jiravcr of the hill, and V>nn\\ aj)- jicalcd to this court. .Mr. -Tiisticc IJ.v.Ni)^ delivered the o[tinioii of the court. This hill was Hle(l hy the appellee in the SupiTi(»r Court of Chancery, to foreclose a deed in trust e.vecutod hy the appellant on the ITtli March. 1S40, conveying certain real estate in tlio town of Port (lil)son to trustei-s to secure the payment of two prom- issory notes made hy ihe aj)pellant, and afterwards transferred to the apjK'llee. The facts necessary to he taken into view in con- sidering the (jUL'stions presented for di'termination are as follows: — The notes secured by the trust deed NU-re due in January and Fchruary, ISll ; and in Xoveniher, }Sl'i, a judgment at law was rendered upon them against l^usli, which judgment and the deed in trust were afterwards transferred to the ajipellee, and remain un- jtaid. The deeil, in conveying the jiroperty, contains the words " grant, bargain, and ^ell," but contains no other covenant of war- ranty in express terms. Tlie appellant was discharged as a bankrupt in Fchruary, IS 13; and in October, 1844, he jiurchased the property embraced in the deed in trust at sherilT's sale, under an execution on a judgment rendered in June, is:?8. against the aiipeliant. and whii-h was un- salisfied, for the sum of .$1.0.'?;). by mmiis ac<|uiri'd by him after his di.scharge as a bankrupt ; and in virtue of that purchase, he now claims to hold the projierty by title paramount to the lien of the deed in trust. On the contrary, the appellee claims that the prop- <'rty is subject to the payment of the debt secured by the deetl in trust, notwithstanding the discharge of the appellant as a bankrupt, and that the apivlhint's jmreha.se, under the prior in- cumbrance, cannot be .set U|) hy him to defeat the security of the ^leeil in trust. The first (piestion to be settled is, whether the di.scharge of the appellant from the debt, by his certificate as a bankrupt, ex- tinguished the d"ed in trust. . It is insisted on his behalf that the deed was but a mere incident to the debt, and that whatever discharged the debt mve.ssarily di^ st roved the deed, because the security could not e.xist where the debt, which was its foundation and support, was di!«charged. Thir< is undoubtedly well sustained l)y modern decisions, as a general rule, but it is not without exceptions. It is held to apply ill all cases where the debt has been actually paid, or where it was T53 DISCHARGE OF MORTGAGE, [CHAP. V. not supported by a valid legal consideration, or where the debtor ex cequo et bono is discharged from its payment. But it is held not to apply to a case where an action upon the debt has been barred by the statute of limitations, and that the creditor may proceed to foreclose his mortgage, notwithstanding the bar of the debt by the statute. {Miller v. Helm, 2 S. & M. GOT; Miller v. Trustecfi of Jefferson College, 5 Ih. 650 ; Banh Metropolis v. Guttschlich, li Peters, 19; Thayer v. Mann, 19 Pick. 535.) In addition to this, the objection is fully met by the second sec- tion of the bankrupt act of Congress of 18-11, which provides that " nothing in the act shall be construed to annul, destroy, or impair any lawful rights of married women or minors, or any liens, mort- gages, or other securities on property, real or personal," &-c. From this it is manifest that, while the privilege was granted to the debtor to be personally discharged from the debt, any security which the creditor might have, consisting of a lien on property, was left in as full force as though the debtor had never been discharged from the debt, for the security of which the lien was made. The second question, then, presented is, Whether Bush is estopped by the deed from setting up his title acquired under the judgment, which was a lien existing at the date of the deed, in opposition to the title conveyed by the deed? This is a question of great impor- tance in its direct and collateral bearings, and it has been carefully considered by the court. [The Court then discusses at length the question of the effect of the appellant's discharge in bankruptcy upon the estoppel arising from the covenants in his deed of trust, and concludes as follows :] It follows from this view of the subject that the appellant was not discharged from his covenants in the deed, and consequently that he is estopped from setting up his subsequently acquired title against the claim of the appellee. As a legal proposition this con- clusion is well sustained by expositions given to the bankrupt laws by very high authorities. In an equitable point of view, the po- sition of the appellant would not be more favored. After having pledged the property as a security for the payment of the debt, he would scarcely be heard, in point of mere equity, to set up a claim to the same property, founded on the existence of a prior lien which he had covenanted against, and thereby deprive his creditor of the security he had given, and appropriate the property to himself. The decree of the chancellor is affirmed.^ Whamierlain v. Meeder, 16 N. H. 381 (1844). stt'. n.] PKATT r. ilidclNS. 7'»;i I'lIATT \. liniClNS. Si'i'UKMic Coriii or Nkw Vouk. 1.s."V.). (V.) Ihirb. ■.';:.) This was an action to i'orcelose a juorigagc iii»on premises in Greene county, datid iH'bniarv 5, 1835, executed and delivered liy the defendant, William T. lluruary, 18;}(!, anortion of the amount secured by the mortgage was still due and unpaid; but hobling, also, that the right to recover was barn-d by the statute of limitations, he gave judgment for the defendants, with costs; from which judgment the plaintilT. having duly ex- cepted to the rulings of the judge, appealed to the (leneral Term. The remaining facts, so far as they are material, sullieiently apj>ear in the opinions which foll«iw. Ho(}i;hoom. J. The facts of this case lie within a narrow com- ])ass. Tht^ plaintilT. I)y a under seal, e\ecut<'d in 18;5.'), for a del)t falling due in 183(i, which mortgage was accompanied by a prou>i<^ory (unsealed) nott^ to secure the satne debt. The mortgage contain~ no covenant to pay, but the condition is that the instrument shall 754 DISCHARGE OF MORTGAGE, [chap. v. be void if the above sum, with interest, is paid on the 1st of Feb- ruarj', 1836, " in the manner particularly specified in the condi- tion of his (the mortgagor's) certain bond or obligation bckring even date herewith." The mortgage was duly acknowledged and recorded. The answers interposed several defenses; and among others, the defense of payment; and that the plaintiff's cause of action was barred by the statute of limitations, in consequence of its not accruing within six years before suit brought. The justice before whom the cause was tried, without a jury, came to the conclusion, upon the evidence, that there was ar unpaid balance due on the note, and that he should have given judgment for the plaintiff but for the fact that more than six years had elapsed since the said note became due, and the cause of action thereon accrued ]-)rior to the commencement of this suit ; and for that reason he gave judgment for the defendants. The case therefore presents the question whether a debt secured by a sealed mortgage and an un- sealed note can be enforced by a foreclosure of the mortgage, after the expiration of six but before the expiration of twenty years from the time when the debt became due. As has been said, there is no covenant in the mortgage to pay the debt ; but at the same time the debt, its amount and the time of payment, are specified in the mortgage ; and it is provided that in case " default shall be made in the payment of all or any part of the said principal sum of two hundred and fifty dollars, or the interest thereof, at the time or times when the same ought to be paid as aforesaid, that then, and in such case," the mortgagee may sell and dispose of the premises, &c. The true question, therefore, would seem to be, has the mortgage been paid ? or, rather, in this case, is the lapse of six years since the maturity of the note, without any subsequent recognition or acknowledgment of the debt, conclusive evidence of payment? The justice trying the cause has come to the conclu- sion, upon the evidence, that a part of the debt is actually unpaid. Is there a legal bar to giving effect to that conclusion by rendering judgment for the plaintiff, in consequence of the lapse of time before mentioned? If this is substantially an action upon the note, then it is barred, for it is an action upon simple contract and must be l)rought within six years. (Code, § 90.) And the plaintiff in such case fails, not because the debt is in fact shown to be paid, but because the law forbids the action. The remedy is taken away. But this is not in terms or effect an action upon the note. The mortgage would be goofl without the note. If there had been no note, but only the evidence of the debt recognized in the mortgage, is there any doubt that the mortgage could have been enforced after the debt became due, and for twenty years afterguards ? The only ques- ^^'- "•! TRATT C. TTrfiOTN'S. 765 lion would bo. was thoro a dt-hl ninaiiiin^' iiiiHaid — a poriirity upon real estate — and was the lien enforced during the period that tlie hiw irives it h'<,'al existence? The additional n'cof'jnition of the , the note (if negotialjle) would have some facilitii's for an easy transfer, and might be negotiated independent of the mortgage. If so trans- ferred, it would in law carry the mortgage" with it. and so would the mortgage carry the note with it. The payment of either would be the paynuMit of the other, cicejit so far as a hona fide holder of the note for value is eoneerne from the jury. We are not pn-cisely ap- prised by the ease at bar what circumstances here exist ; but we are told in the case itself that the j)laintilT gave (>videiu'e "tending to sh«)W that then* was due ujion the mortgage about the siun of $70; that no part of the .«?nid sum, or tlie interest thereon, had l)een ]taid." .\nd the judge al^o savs, " I am entirely satisfied from the evidence that there is nn unpaid balance due on tlie note, and should liave decided in the jdaintifT's favor, exet^pt for the legal bar above stated." The latr' chancellor (Walworth) donbts, ;ind even dimies, the authority of the last cited case, in Ileycr v. Pnnjn, 7 Paifre, 756 DISCHARGE OF MORTGAGE. [CIIAI'. v. •165, and goes so far as to say that it " cannot be law." The eases in Massachusetts and Connecticut, and one in Kentucky, hold that notwithstanding that '' the note may be barred by the statute of limitations, yet if it has not been paid, the mortgagee has his remedy on the mortgage." (Thayer v. Mann, 19 Pick. 535; Bush V. Cooper, 26 Miss. [4 Cush.] 599; Eastman v. Foster, 8 Mete. 535; Baldwin v. Norton, 2 Conn. 163; 11 B. Monroe [Kentucky]. 307. See also 2 Cox's Chancery Cases, 125; Spears v. Ilarftij. 3 Esp. E. 81, 2; Hilliard on Mortgages, 21, 22.) The case of' the Banl- of the Metropolis v. Guttschlich, 11 Peters, 19, declares a kindred and nearly analogous principle. The case of Walter mire V. \Vestover, 11 N. Y. R. 16, has also, particularly in the reasoning of Mr. Justice Selden, some bearing upon the present case. In that case the lien of a justice's judgment, which according \o the statute would be barred after six years for the purpose of bringing an action thereon, was, when a transcript was filed in the county clerk's office, recognized as of equal validity and duration Avith that of a judgment originally entered in the common pleas, and ex- tended to ten years as against subsequent creditors. It is true much stress was laid upon the language of the statute giving such a judgment the same force and effect as a judgment of the common pleas, but much stress was also laid upon the fact that there was nothing to prevent the enforcement of such a lien, except the lan- guage of the law of limitations ; and it was considered that that language might be appropriately limited to cases directly within its terms; that there was reason for saying that the debt still re mained, notwithstanding the statute had cut off the remedy when resorted to in the shape of an action. A distinction was drawn between the institution of a suit upon the justice's judgment and the enforcement of it as a lien upon real estate; and I think hero a distinction may be drawn between an action upon the note for the purpose of enforcing a personal liability and an action upon the mortgage for the purpose of enforcing the lien upon the real estate. This question, in this State, may be said to be nearly re< nova, and I feel authorized to follow the weight of judicial author- ity elsewhere, resting, as I think it does, upon principle, especially as the case in 7th Wendell is not directly hostile to the rule hen^ suggested. The judgment should be reversed and a new trial granted, with costs to abide the event, Gould, J. At the December term, 1858, this case was sub- mitted upon briefs, without oral argument. And on that submis- sion I wrote this brief opinion : " The mortgage is defeasible on condition that $250 ])e paid. The' statute of limitations effects not the right to the money, but the ^»^' • "•] pirvTT r. inf;f;i\R. 757 vtiiuily tliorefor. It siiys to the cR'ditor, not ' vou are paid,' but ■ vmi raniiot cjill uj)on ii court of law to mforoc payment.' And the d«'f('iisi' ill iliis case is, not that tin- niort<;a;,'or has complied witli the (oiulition, \)u\ that, if In* were sued at law on the note, the ^lalut^' of limitations (oiild he interposed as a le<,'al har to a re- rcciscly and very satisfactorily covered bv the case of Thayer v. >rann, 19 Pick. 535. There should be a new trial." As this opinion was thought to overrule the case of Jackson V. Sack-i'll, T Wend. HI, my associates deemed it best to have a full argumi'nt before coming to such a result; and on such argument it now comes up. My views remain unchanged, and though it is rather ditlicult to say what the cas(> of Jackson v. Sackctf did decide, still, if to order a ntw trial in this case that ca.se must be reversed. I should order the ni'W trial. That case founds its reasoning on the basis that the .-tatute t)f limitations is a defen.so, because the law. from lapse of time, presumes i>ayment. I do not so understand the statute of limitations. I understand mere lapse of time to be a full defense, because the statute says so: Jta lex srripfa: and tlu-re is need of no such ]>resumption to help out an absolute rule. Rut that case departs from its premise of presumj)tion of payment lu'ing merely the basis of a positive statute bar. when it says (at j). 100), " but the presum|>tion arising from lapse of time is but evidence to tht^ .jury, from which they may infer that the debt has been sat- isfied. " This, though (nu- on a fpu'stion of fact (as to actual pay- ment), cannot be said of a legal ])resumption arising from an ad- mitted fact. The lapse of tinu^ was either a liar or no bar. If, by the statute", a bar, it ]ieeded no help from jtrcsnmption. If not, by the statute, a bar, no presum|)tion could help it. Rut since my first opinion was written there has l)eeii published a decision (given indeed in IS.")?, but not then printed) by which the Court of .\ppeals clearly takes the view that 1 did. {Walter- mire v. Weslorer. 1 Kern. 10.) .\t page '.?0, ** such statut«N act upon the remedy merely, and not upon the debt." .\nd at page,^ ?1. 2. "If statutes of limitation do not discharge the debt, but act fxclusively upon the renu'dy, upon what princijile of interpretation 18 it to be held that this statute, which is in tcnns confined to the 758 DISCHAUGE OF MORTGAGE. [CIlAr. V> remed}' by action, operates to annihilate a remedy by execution? The statute does not operate by producing any presumption of pay- ment, but is a mere statutory bar, founded in principles of public policy." In the ease before us, the statute of limitations (where it speaks of the lapse of six years as a bar) is in terms confined to an action at law on the note, and cannot operate to annihilate a remedy on the mortgage, by wliich a court of equity cuts off the equity of re- demption. Tlie decision in 4th Kernan is abundant authority for ordering a new trial in this case. The judgment of the circuit court should be reversed and a new trial ordered, costs to abide the event. ^ Wkigjit, J., concurred. New trial granted. BOEST V. COEEY. Court of Appeals of New York, 1857. (15 iV. Y. 505.) On the tenth of August, 1837, the plaintiff and the defendant^ Samuel Newkirk, as executors of the last will and testament of James Halliday, deceased, conveyed to the defendant, David P. Corey, a piece oi land in Montgomery county for $1,G00, subject,, however, to a mortgage thereon for about $635, and this action was commenced August 5th, 1847, in the Supreme Court, on the equity side, to obtain a sale of the premises, by virtue of the equitable lien for the purchase price. The complaint in the action set forth the conveyance of the premises by the executors, alleged that no part of the purchase price had been paid by the grantee except the amount of the mortgage, and asked for a decree that the premises be sold and the purchase price and interest he paid from the pro- ceeds of the sale. The complaint further alleged that the executor,, ^^ewkirk, had refused to join with the plaintiff in the commence- ment and prosecution of the action, and was therefore made a de- fendant. The defendant, Xewkirk, suffered the bill to be taken as con- fessed. The defendant Corey, by his answer, alleged that prior to the delivery of the deed to him" be paid the purchase price of the land in full, except the amount of mortgage thereon, and had subse- ^BelJcvfip V. aicason, 11 Conn. 160 (1830) ; Hulhert v. Clarh, 128 X. Y 295 (1891). sKc. II. J noitsT r. couKY. T.")!) qucntly jiaid the niortiia^'c ; and that lie had not, at any time wiiiiin six yi'ars lu'xi ])ri()r to tht- coiiiiiitMui'mcnt of the action, hrcn in- debted to the executors or either of them, for or on account of the purchase price of the ])rcinises, or promised to j)ay the same; and that no cause of action had accrued for the same within the six years. To this answer a "^oncral replication was put in. The action was tried before referees, and tliey found that more than six years had ehipsed since tlie sale of the premises in (pieslion, prior to the commencement of the action, and decided that the plaintifl" he nonsuited, on the ;;round that the cau.se of action, to enforce which the suit was hroujjht, was l)arre(l hy the statuti' of limitations. \o bond or mortgage, or other written instrument, was taken to secure the payment of the purcha.«je price of the land, and it does not a])i)ear tliat any credit was given then^for. Judgment having been enti'red on the rej)ort, the plaintiff aj)- pealed therefrom; the Supreme Court, at general term, in the third district, allirmed the judgment, and the plaintiff aj>pealed to this court. Bo\vi:n', J. The purchase ])riee of the land in ([uestion was due and payable on the convi'yance of the land to the defendant Corey, and as this action was not commenced until more than six years after the conveyance, and as no i)romise to ])ay was shown to have been made within six years, the statute of limitations would have been a coini)lete l)ar to an action at law to recover the i)urcha.se price. (2 K. S. •>«).■), ^ 18.) This action, however, was one of equitable cognizance. At the time of the commencement of the action, the relief sought to be obtained in the mann<'r applied for, that is, by a sale of the prem- ises under the efjuitable lien thereon for the purchase price, could have been awarded by a court of equity only. An action at law, if commenced at any time within six years after the conveyance, could have been maintained against the de- fendant Corey, in whiih a judgment against him personally wouM have been rendered. The object of such an action, and the ndief sought for therein, would have been the recovery of the unpaid pur- chase price of the land. The .ame, whichever court is reported to. It is true that, to s\i-tain tli«> suit in eipiity, the plaintilT mu-t ■J GO DISCIIAIJGE OF :N[OI!TGACiE. [CUAP. V. bring to his aid the equitable lien given by law, while the action at law can be sustained without reference to such lien. But the lien is merely an incident to, and ]nust stand or fall with the debt. The l r. ( ulJKV. 7(il prt'vi«)usly to the a(lt»[>iile co-nizaiico, but i:i obedience lo ihe statute. {Hoscrclt v. Mi.ik-, (i Juhu. Ch. R. 2(;(i ; Kdiic V. Hluodijijod, T /'/. !•<); Murray v. Coaler, 20 John. oTO; Saw- yvr V. Dc Meyvr, 2 l'ai,i,'e, oT-l ; Ihnnhcr v. Trinilij ('Ininh, ', iil. 195; 24 Wend. oS? ; Story's Eq., § r.V.l) I think this ease comes within the j)rinci])le established by the above authorities, and that, independently of the statutory provision limiting the time of commencing actions in courts of ecjuity, it i-ihould be hehl tliat the si.\ yeai's' limitation to actions at law con-ti- tiites a defence to this action. The provision of the Revised Stat- utes limiting the time of commencing actions in courts of equity was ado])ted as declaratory of the law a.'^ it then existed, and not as introducing a new rule. ( 3 R. S. 70,"), revisers' notes.) It would be an anomaly if th.e ])laintiff could recover his debt by an action to enforce the lien given to secure the debt, when no action could be sustained to recover the debt directly without ref- erence to the lien. There is no reason why the limitation should l)e applicable in the one case and not in the other. It has, however, been held that where a mortgage was given to Fccure the payment of a simple contract debt, the statute limiting the time for commencing actions for the recovery of such debts was no bar to an action to foreclost^ the mortgage, (lialch v. Onion, 4 Cush. 00*); Thni/er v. }fa,ui. ]9 Riek. ."inr) : Elkin v. Kilinir,Is. 8 Geo. 325; Heijcr v. Prui/ii. 7 Paige, 4(15.) But there is a material distinction between a mortgage and the ^(piitable lien for the purchase price of land given by law. and also between an action to foreclose a mortgage and one to enforce such a lien. The action to fonvlose a mortgage is brought upon an in- strument under seal, which acknowledges tb^ existence of the debt to secure which the mortgage is given ; and by reason of the seal the debt is not pres\imed to have been paid until the expiration of twenty years after it becomes due and payable. The six years' lim- itation has no application to a mortgage. In fact, all instru?nents under seal are expressly excepted therefrom. Xo action nt law can be predicated upon the mortgage, to collect the debt .e< are situated, within two days after its execution. On the eighth of .\ugust, 1S"»'>, the note matured, and on the eighth of \ugust. IS.'iO, the period of limitation within wliieh, by the statute*, an action coidd be com- menced upon it, (^xpired. Subsequently to this, and on tlu' eleventh of !^^ay, ISnO. the defeiicLints indorsed quent tf> the execution of the mortgage, ^forris. oii(> of tlie defendants, disposed of his interest in \ho prem- 'Tlio opinion only i-« lioro fjivtMi. 704: DISCHARGE OF MORTGAGE, [CHAP. V. isr.<, for the petition of intervention, and the findings of the Court mention Goodman, the other defendant, and two other persons as being the successors of the defendants. We infer from this, and shall so assume in the consideration of the case, that these parties held the interest of the mortgagors in the premises, and it matters not for the purposes of the appeal in what mode the interest was ac- (^uired. Having sucli interest, they executed on the nineteenth of January, 1860, two mortgages upon the premises, one to the in- tervenors to secure their promissory note of the same date for $4,894, payable on or before the fiftli of June. 1800, with interest, and the other to one Poison to secure their promissory note to him for $2,185, payable three months after date with interest. This last note and mortgage were assigned to the intervenors, and in July, 1860, both of the mortgages were foreclosed, and the usual decrees in such cases entered. In December. 1860. the present suit to foreclose the first mortgage was commenced, and the owners of the second and third mortgages filed their petition of intervention, alleging that the remed}^ of the jilaintiff upon tlie note and mort- gage to him was barred by the statute, and that the lien of the mort- gage was extinct previously to the nineteenth of Januar}', 1860, and if the note had been revived that such revival did not affect the ex- tinct lien of the mortgage, or not in such manner as to give it any priority over the liens of the mortgages owned by them. The Court held that the liens of the intervenors must be first satisfied out of the proceeds of llic mortgaged property, and the lien of the plaintiff be postponed until such satisfaction, and ordered judgment to that effect. The Statute of T.iimitations of this State differs essentially from the statute of James I., and from the statutes of limitation in force in most of the other States. Those statutes apply in their terms only to particular legal remedies, and hence Courts of Equity are said not to be bound by them except in cases of concurrent juris- diction. In other cases Courts of Equity are said to act merely by analogy to the statutes, and not in obedience to them. Those stat- utes as a general thing also apply, so far as actions upon written contracts not of record are concerned, only to actions upon simple contracts — that is. contracts not under seal, fixing the limitation at six years, and leaving actions upon specialties to be met by the presumption established by the rule of the common law, that after a lapse of twenty years the claim has been satisfied. Tn those stat- utes, where specialties are mentioned, as in the statutes of Ohio and of Georgia, the limitation is generally fixed either at fifteen or twenty years. The ease is entirely different in this State. Here the statute applies equally to actions at law and to suits in equity. It •'"••^■- "•] r.niji) /•. Miiia.is. ; . . ij; (liri'cti'd to tlif >nl)ji'{t iiiiiltcr jind n then any distinction in the limitation j)rcscribim|)I»' contracts in writing and spcciahies. Tims the statute rcrniins an action "upon any contract, ohligalion. or lial)ility foimdcd u|)on an in- strument of writinrf," cxcejtt a Jnd;:mcnt or decree of a Court of a State or Territory, or of the I'nitcd States, to he commcneed within four years after the cause of action has aecnieil. Jt matters not whether damages be sought for a breach of the c(»ntr}icl, and thus an action at hiw be brought, or a specific performance be prayed, and thus a suit in I'quity be commenced: tlie proceeding must in citlier case be taken within the limitation designated. (See Pearls v. Covillaud, (I C'al. (ilT.) The statute, after prescribing certain periods witiiin which actions upon judgments, upon simj)l(> con- tracts, for relief on the ground of fraud, and for other causes, shall be brought, declares in general terms that ''an action for relief," not thus provided for, must be commenced within four years after the cause of action shall have accrued — covering all cases where equitahle or other relief may be sought. A mortgage in this State also dilTers materially from a mort- gage at common law, or a mortgage in our sister States. .\t common law a mortgage of real property was n'garded as a con- veyance of a conditional estati', which i)ecame al)solute upon con- dition broken. It gave to the mortgagee, except as «thcrwi.se stip- ulated by provisions inserted in the instrument, a jiresent right of possession. Ujion it the mortgagee could enter j>eaceal)Iy. or bring ejectment, or a writ of entry: and in those States where the com- mon law view has been modified by considerations arising from the real object of the instrument antl the nature of the tran Shaw, in delivering the opinion of the Su- preme Court of Massachusetts, after stating the object of a mort- gage, said : *' Hence it is that, as between mortgagor and niortiagtv. the mortgage is to be regari- (lilliculty to liis iviiu'dy npon (lie otlicr." These derisions are no .iiithority in the ease under consideration, for the reasons already LMNcn, that the statute makes no distinction in the period of limita- tion Ijctween a sinii»le contract in writing' and a contract under seal, and a mortgage deed here does not confer any right of possession upon the mortgagee. It is undoul)tedly true, as stated hy the ('ourt in the case from (Jeorgia, that the creditor st ijiuhitcd hy eon- tract for two remedies against his (h-htor to enforci' the eoHection of liis demand — the one hy action upon the note, and the other by ])Otition and foreeh)sure upon the mortgage. Similar remedies he can pur-ue in this State. He can jiroceed upon the note, and take an orcfinary money judgment for the amount due; or he can sue in ('(piity upon the mortgagf', and take a decree for its foreclosure and th(> sale of the ])ri'mises. The diirerenee is, that here the limitation preserihed to the e(piitahle suit is the same as that prescribed to the action at law. The mortgage is as much within the general ilesignation (»f a "contract, obligation, or liability, foundi-d \\\u)i\ .in instrument of writing," as is the note it.self. We do not question the correctness of the general doctrine pre- vailing in the courts of several of the States, that a mortgage re- mains in force until the debt for tlie security of which it is given is paid. We only hold that tin* doctrine has no apjjlication under the Statute of Limitations of this State. A mortgage is n specialty, and is not within the terms of the English statute, or of the stat- utes of most of the States. .\n action founded upon such specialty can only be met by |»roof of payment. The |)aynu'nt may be estab- lished by direct evidence of the fact, and it may be presumed frt)m tlie lap.se of twenty years, when such presumption is not counter- vailed by evidence from the mortgagee. "Thus," says th«' Su- |trcme Court of Maine in -/(n/ v. Adiims, 2'! Maine, 'XV.\, "a mort- gage security has not Ix-en deemed to be within any branch of the Statute of Limitation^. He who woidd avoid such securitv must show payment : otherwise, tlu> mortgagee will not be precluded from entering upon and holding possession of the mortgage«l prem- ises. The m(»rtgagor has not been allowed to d«>feat su»'h right bv -bowing merely that the pergonal security, to which the mortgage -c;e of time has been 'eejued to be sulVicient for the ptir|io«e. in the nbsonco of nnv eoun- icrvailing eonsidenitions. This is admitted as a presumption of law, which may be removed bv «'inMiniecurifv within it^ term- IfiT'* 768 DISCHARGE OF MORTCIAGE. [CIIAI'. v. paj^ment may be pleaded, and so may the statute itself without reference to the fact of payment. Our conclusion, therefore, upon the first question presented is, that where an action upon a promissory note, secured by a mortgage of the same date upon real property, is barred by the statute, the mortgagee has no remedy upon the mortgage ; that though distinct remedies may be pursued by him, the limitation prescribed is the same to both. The second question is one of easy solution. The mortgagor, after disposing of the mortgaged premises by deed of sale, loses all control over them. His personal liability thereby becomes sep- arated from the ownership of the land, and he can by no subse- quent act create or revive charges upon the premises. He is as to the premises thenceforth a mere stranger. And if, instead of sell- ing the premises, he execute a second mortgage upon them, he is equally without power to destroy or impair the efficacy of the lien thus created. But it is said that the plea of the statute is a per- sonal privilege of the party, and cannot be set up by a stranger. This, as a general rule, is undoubtedly correct with respect to per- sonal obligations, which concern only the party himself, or with respect to property which the party possesses the power to charge or dispose of. But with respect to property placed by him beyond his control, or subjected by him to liens, he has no such personal privilege. He cannot at his pleasure affect the interests of other par- ties. His grantees or mortgagees, with respect to the property, stand in his shoes, and can set up any defense that he might him- self have set up to the action, either to defeat a recovery of the property or its sale. In the case at bar the defendant Morris had sold his interest in the mortgaged premises ; and his grantees, with the other defendant, executed the second and third mortgages after the statute had run upon the note secured by the first mortgage. The subsequent revival of that note continued the personal liability of the defendants. Whether it also revived the mortgage executed by them it is unnecessary to express any opinion, as the defendants do not appeal from the decree. The revival could not affect, and did not affect, the previously acquired liens of the second and third mortgages upon the property; and the intervenors holding those mortgages could interpose the statute to the enforcement of the first mortgage, so far at least as to secure a priority in their liens over that mortgage. The ruling of the Court below, therefore, in post- poning the lien of the first mortgage, assuming that the lion was re- vived, to the liens of the subsequent mortgages, was clearly correct. Judgment affirmed} 'But that the niortf?agor is not entitled to affirmative relief, see Z)f Cazara v. Oreiia, 80 Cal. 132 (1S80). '*'^^'- "•! 1 1. \ Kit IS /•. MILLS. 709 jiAi;i;is \. MILLS. SuPRKMK Conn ni- Illinois, LS(;*3. (2S ///. n.) The I'juts of this case arc stated in tlic opinion of the court bv ^Ir. .Tu. of these He- ports, at ])ater, Jud^'c, at tile October term, LSdl, of the Marshall Circuit Court. Walkek, J. This bill was exhiliited to foreclo.se a mortgage, given to secure a note alleged to have been lost. The mortgage l)ears date the 12th of May, 18;>7, and recites a note for .seven hun- dred dollars. The note is alleged to have been given on the !)th of .\pril, 183(1, ])y Edwin Mills to appellant, due on the !)th day of September, 1838. The mortgage was not recorded until the 8th day of Xovember, 18.")."), and appears never to have been acknowl- edged. It also apj)ears that Edwin ^lills, on the 13th day of Jan- uary, 183i>, executed a uiortgage on the same land to secure tw<) thousand dollars to Harlow Mills, for indebtedness due to him. This latter mortgage was acknowledged and recorded. Edwin Mills, on the 17th day of Eebruary, 1842. conveyetl the mortgag;'d premi.ses to Ilarlow Mills for the expri'ssed consideration of two thousand dollars. This deed was reeordi'd on the Ith of August. 1812, in the jn-oper ollice. The bill charges that this deed and mortgage, from Edwin to Har- low Mills, are without consideration, and are fraudulent and voiill, as a bar to a fon^losure. On the hearing, the court below dis missed the bill and rendered a decree against com|)lainant for eo«:ts, to rever.>e which he prosecutes this appeal. The principal (piestion j)resented by this record is this: the stat- ute of limitations having barred a recovery by suit on the note, does it form a bar to a foreclosure of the nuirtgago by bill in e(|uity? Had this been an action on the note, over sixteen years having elapsed after the maturity of the note, the recovery would have been barreil. If s»nh :in action had lieen instituted, and a recoverv defeated, the judgment could have lieen interpo.s<» l)ar of the statute allowed to defeat a recovery against Harlow ^lills or those holding uiuIit him, the judgment might also have been relied u})on to prevent a decree of foreclosure. Oi', had a Nr/zv facltis Ix'en sued, and had the statute of limitations heeu successfully inlerj)Osed to defeat a reeoverv, the judgment might have been ])leaded to avoid a foreclosure l)y bill. When the party has elected one of several remedies, ami it results in a judg- iiiciit against llie niortgagee, that judgmenl becomes as complete a l)ar to a proceeding in a different form for a foreclosure as pay- ment, release, or other discharge. The question, howevi-r, still recurs, whether, after several reme- dies have ))een barred. l)ut not establisluMl in a legal proceeding, the liar \nn\ be relied u])iin in other and dilferent remedies? As a general rule, coui'ts of eipiity follow tli(> law in allowing the de- fense of the statute of limitations. A l>ar of the statute, at law, forms a bar in equity. (Story's E(i. PI., § •"'*"'. >5 '^-Jl-) I" equity, as at law. an acknowledgnumt that a debt is due, and a promise to ])av it. will take it out of the o})eration of the statute. If the mortgagor is ])ermitle(l to remain in possession twenty years after a breacli of the condition, the right to file a bill to foreclose will be generally considered as barred and extinguished. Though in cases of this description, as the law is not positive, but is based upon pre- sumption of ]>aynient. it is open to be rebutted by circumstance.?. (•2 Storv's Eq., § 102S. 1).) This court has repeatedly held, in conformity to the general doctrine announced by the adjudged cases, that the debt is the principal thing and the mortgage is the incident. That the latter follows the consideration of the former. That an assignment of the note operates ipso faclo to transfer the mortgage. That a payment, release or other discharge of a note satisfies and releases the mortgage. Tf we are to ])e controlled by analogy, no reason can be perceived why a bar to a recovery on the note should not produce the same effect on the mortgage. In Oreat Britain it is usual to insert in the mortgage itself a cov- enant for the payment of the money. When such a covenant is found in the mortgage, it being under seal, and the debt to secure Avhich it was given is not. a bar to a recovery of the debt, if of a shorter period than a bar to a sealed instrument, could not affect the ronedy on the covenant in the mortgage. If the statutory period necessary to bar an unsealed instrument be of shorter dura- tion than a sealed instrument, a mortgage containing such a cov- enant given to secure the pavment of a debt evidenced by an un- sealed note would be governed by the longer period required to l)ar a reeoverv on sealed instruments. The mortgag(> in this case con- tains no sncn covenant. This biMiig so, renders the* decisions of I lie British courts on mortgages containing such covcMiants, and given to secure sini})U' contracts, ina])|)licahle to tliis case. The statute having Ijari'ed a recovery on the note, because according to the theor}' upon which the statule is hased, the presumption is that tlie debt has heen paid. There is no cNidiiice in this record showing any pi'oiiiise to take it out of the operation of ihe statute. These statutes are, emphatically, statutes oT rej>ose. Without their aid litigation would never he harred, and titles and possession of property Mould never he -piieted. By the efTlux of time, the loss of evidence, the death of witnesses, and the failure of memory, wen; it not for the bar of these statutes, great injustice would n-sult. These considerations have indui-ed all civilized nations to ado|)t such laws, differing in detail and in the period lu'cessarv to operate as a bar^ but all based upon the same pi'iiu-iples and tlations, but analogous in all ])articulars to no one of them. Whilst a tenant, until he surrenders the possession to the landlord, cannot rely u])on the statute, 3'et the mortgagor, by acquiring an out- standing title and occupying the premises under it for the period, and upon the conditions imposed by the statute, may invoke its aid to prevent a foreclo.sure. Xor i< he. like a tenant, required to ac- count for rents and profits, bound to repair, nor is he impeachable for waste. Otlier courts have held, and such is clearly the weight of authority, that when the statutory period necessary to bar a recov- ery at law has elapsed, it will bar a foreclosure. (Christophers v. Sparl-e. 2 Jacob and W. 234; Jacl'son v. Wood. 12 J. Jl. 242; Giles V. Barremore, 5 J. R. 545; }Yatermnn v. llasl-ins, ihicl. 283; Jarl-- ^'on V. Mjiers, 3 J. E. 383; Bal-er v. Evans, 2 Car. S. R. 614: ITiigh V. E(tiranls,9\yhoa\. A97 ; Moore v. Coble, 1 J. Ch. Vx. 38.5.) ^Ve are, 772 UISClIAJiGE OF MOUTGAUH. [cilAi-. V. therefore, for those reasons, of the opinion that when the note be- came barred by the statute the right to foreclose also became barred, unless the mortgage had contained a covenant for the payment of the money, when it might be that it would require twenty years to produce that efE'ect, as an ejectment would not be barred, under the general limitation law, before that period, unless it be under the seven year limitation acts. No error is perceived in dismissing complainant's bill, and the decree of the court below must be affirmed.^ Decree affirmed. ^Pollock V. Maison, 41 111. 516 (1866); Neioman v. DeLorimer, 10 la. 244 (1865); Schmucker v. Sibert, 18 Kans. 104 (1877); Lilly v. Dunn, 96 Iiul. 220 (1884) ; Ark. Dig. Stat. L. (1894), § 5094; Miss. Ann. Code (1892), § 2733; Mo. Rev. Stats. (1899), § 4276, accord. Compare VoH Campc v. Vlti/ aj Vhkago, 140 111. 361 (1892). P /CMlMMnilK %;/n-inv^-ie)^ ^jiiAiNnmv ^^OFCALIFO/?^ ^ ^^AavaHiii'^ OFLALiF0% ^^AavH8n-i^ '^^ 5RAii i(;/ ^-r7130NV-S01^ '^''^"^ ^ '''^' ^' ^''^ OFCALIFO% •2; .V \\^EUN1VER% v^lOS-ANGElfj; "'Dl^ONV-SOl^ "^Aa^AlNR^WV AOSANGEL£j: ^HmMiW/: -<^lilBRARY6// %Ojnv3-jo^ IFO% an-^- AA 000 761 693 3 ^ Or .-'Tk ■■ " i>^ ^1 ri :iyiiiiiil!iiiill!Sii!!!i!il