,ast f^-r^jjw^pw'^ M. S. BOW EN. THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW P 11'^ Washington St., Bostun, May ], 1S:)0. VALUABLE LAW BOOKS, PUBLISHED BY LITTLE, BROWX AND COMPANY, 0^=" Orders for any of our publications will be promptly attended to, and bound volumes sent by mail to any post-office in the United States on receipt of the price. We invite the attention of the profession to our extensive and continually increasing stock of Law Books, both Foreign and Domestic, embracing every branch and depart- ment of Jurisprudence, including many rare and valuable French works. Catalogues may be had upon application. KENT'S COTOIENTAIIIES. NEW EDITION. Commentaries on American Law. By Hon. James Kent. Ninth, and entirely revised Edition. By Hon. William Kext. 4 vols. 8vo. S16.00. 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" The opinions of the Court are, in all cases, given as they have heen printed by the nuthorized reporters, alter correcting such errors of the press or of citation, as a careful examination of the text has disclosed. I have endeavored to give, in the head-notes, the substance of each decision. They are designed to show the points decided by the Court, not the dicta or reasonings of the Judges. To each case is appended a note re- ferring to all subsequent decisions in which the case in the text has been mentioned. It will thus be easy to ascertain whether a decision has been overruled, doubted, qualified, explained, or alhrmcd; and to see what other applications have been made of the same or analogous principles." — Extract from the Preface. DIGEST OF THE U. S. SUPREME COURT DECISIONS. A Digest of the Decisions of the Supreme Court of the United States, from the Origin of the Court to the Close of the December Term, 1854. By B. K. Cuktis, one of the Associate Justices of the Court. 8vo. S5.50. This Digest embraces all the published decisions of the Supreme Court down to the present time, including seventeenth Howard. It is so arranged that it may be used in connection with the Keports of Messrs. Dallas, Cranch, Wheaton, Peters, and Howard, or with the twenty-one volumes of decisions as published by Mr. Justice Curtis (of which it fonns the twenty-second volume). It contains a table of all Acts of Congress construed or referred to by the court in their oi)inions, arranged in chronological order; with references to the cases, and an ap- pendix of practical directions for prosecuting writs of error and appeids to the Supremo Court of the United States, with the necessary forms; and also a table of the cases de- cided, and another of the cases cited by the court in their opinions. UNITED STATES STATUTES AT LARGE. Laws of the United States of America, from the Organizalion of the (lovernnieiit in ITHU to the present time. I'uljlisheil hy direction and under the patronage of Congress. Complete to 18.j5, including the Synojjtical Index. 11 vols. Royal 8vo. Slt.'»0. A Comph.'te Synoptictal Index lo the; liaws and 'I'reatic-s t)f the United StatcH of America, from .Miirdi 1. 1 7s:i, to .M.ncli .i, 18.")!, being Vol. X. of the I'nited SlatcH J^aws. I'rcpared under the direc- tion of the .Ser-rrLiry ol' llic Si'n;ilr. Uoyal Hvo. I'rice SI. 00. Lawrtof th.- SesHons of |S;j;j, 185G, 1857, and 185S-51). In Five Tarts, Uoyal Hvo, Htitrcvioii»iy to that year. In thitt I'dition the digest is oniitto"E\V EDITIOX. Commentaries on the Law of Marriage and Divorce, and Evi- dence in Matrimonial Suits. By Joel Prextiss Bishop, Esq. Third Edition, revised and enlarged. 8vo. S5.50. The present edition of this volume has been thoroughly revised, much of it has been rewritten, the matter has been retrenched in some places, and expanded in others ; new discussions of points have been introduced, and the whole has been so altered and im- proved as to make it essentially a new work. The cases are cited as far as published, down to the present time. BISHOP ON CRIMINAL LAW. XEW EDITION. Commentaries on Criminal Law. By Joel Prentiss Bishop, Esq., author of " Commentaries on the Law of Marriage and Divorce." Yol. I. Second Edition, revised and enlarged. 8vo. $5.50^ Commentaries on Criminal Law. By Joel Prentiss Bishop, Esq., Vol. IL, containing the Law of Specific Offences. Bvo. S5.50. " It is true, albeit strange, that in this country (England) no such work as a philosophi- cal treatise upon Cri-minal Law in fact exists. . . . " We have formed, after no slight examination, a favorable opinion of Mr. Bishop's book. Sure we are, at all events, that the author is really a conscientious' writer, and equally sure we are that he is quite sufficiently self-reliant, and not likely very readily to be led astray by erroneous dicta or fallacious reasoning. " Mr. Bishop treats his subject in a philosophical spirit; and although we might not always agree in bis conclusions, our impression on looking through this volume is very strong that he is a pains-taking, and truth-loving writer, and we can affirm that in style he is vastly superior to the great majority of writers of law books in this country, who would do well in their own treatises to imitate the excellences which throughout these pages are abundantly apparent." — London Law Magazine and Review, Nm. 1858. REDFIELD ON THE LAW OF RAILWAYS. NEW EDITIOX. A Practical Treatise on the Law of Railways. By Isaac F. Redfield, LL.D., Chief Justice of Vermont Second Edition, en- larged. Svo. S5.50. " Mr. Justice Hofrmnn, of the Superior Court of New York, in deciding the case of Owen r. The Hudson River Raiin^ad Company, cited the above-mentioned work, and took occasion to say, that he looked upon it as one of the most vahiable treatises that had been fur many years otlerod to the profession. In his humble jud;;ment, it would constitute a text-book, which might indeed be added to and improved, but could not be superseded." " To sum up our conclusion, after a somewhat more than usual considcmtion of the book, we find it to have performed the promise of the preface, and that the learned labors of a distinguished and able jurist have shed great light upon a difficult and com- plicated branch of legal learning." — American Law Iieitk)N. A Treatise on the Law of Suits by Attachment in the United States. By Ciiaki.ks D. Drakk, of St. Louis, Missouri. Second Edition. Revised and enlarged, with References to all Reported Cases of general utility contained in the Reports of the several State and United States Courts, down to the date of publication. 8vo. S5.50. "The book is remarkably well written, in a clear and easy style, with abundant re- search, and yet without redundancy. Decisions are cited from all the States, and they have all been faithfully examined, and carefully entered into the text by the author himself, so that the whole is his treatise, and not merely a compilation or digest." — Law lUporter. " It meet« an important want of the profession, hitherto wholly unsuppUcd." — Ckvt- land Herald. " The repeated citation of Mr. Drake's work by the Courts of the diflerent States, and \\A evc^ilay use in the office of the attorney and magistrate, furnish the best evi- dence of its general utility." — Jiichmond Examiner. BROWNE ON THE STATUTE OF FRAUDS. A Treatise on the Con.struction of the Siniiiic of l-'rands, as in force in Enjiiaml and llie United SlaU-s; with an Appi^ndix, containing the exi.sting Kiigli^h and American Statutis. Hy Cau.stkn Bkow.m., Ks(i., of the Boston Bar. bvo. $5.00. Thi* book aims to present a full view oi the I.uw, as held by tlio Knglish ami Amer- ican Court*, uiHjn the construction of the Statute 20 Cur. 2, cap. 8, with the modifica- tions under which it has been adopted in tlu- dillerent States of the Union, comprising the lute»t ruling* in both countries. With an App.-ndix, giving an Analytical view of the Knglish and American onactmont«, with their successive alterations. " I have lookwJ into it with a good tlcal of care. ... I think it is decidedly the best treatise which hnji been published upon those bruncliiw of the statute of which it speaks. And It U these cluusos of the ntatuto which are most frequently the subjecta of dispute in the courU of justice. The IJench and the Bar will Oiid the book a valuable and conven- ient one, presenting ns it docs clearly yet concisely all of the decisions of the Knglish and American courts ujkmj the subject. And it is still more vuluablu because it (.hows the change* which have been made In different Slates by hlututcs ami the decisions un- der them in tlio respective States." — Chiif Ju$Ucc Tanry, U. S. Supreme Court. PARSONS'S LAWS OF BUSINESS. The Laws of Business for Business Men in all the States of the Union. By Tiikopiiilus Pausoxs, LL. D., Professor In the Law School of Harvard University. 8vo. Cloth, 82.50. Sheep, 83.00. This work is perfectly trustworthy, and may be acted upon with entire safety. It covers the whole ground and extent of business, and gives not merely rules and direc- tions, but their reasons and principles plainly and fully. It has an ample collection of the best forms for all mercantile instruments, deeds, leases, wills, &c., together with a full table of contents, and a complete and exact index. " The plan of Professor Parsons has been to make a book which should place within the apprehension of every intelligent trader, and of every young man who proposes to engage in any department of business, at the cost of no more time than evei-y one can conveniently give to it, a useful knowledge of all the elements, or general rules and principles of the laws of business." — Boston Post. " The work is a manual which will be found indispensable to the merchant and trader, and which should be in every counting-house." — Boston Journal. " Ever}' man in business ought to know something of the law. . . . Professor Par- sons's book meets all needed requisitions. It is of moderate compass; the style has the merits, not often combined, of compactness and clearness ; the legal propositions are stated with entire accuracy, and j'et in language as much as possible divested of tech- nicality." — Courier. " It should be placed in the counting-room of everj- young business man for constant reference. With its aid he will readily find an answer to many of those questions about which he is now obliged to consult his seniors in business, or perhaps his lawyer, or else proceed in the dark." — Boston Daily Advertiser. STORY ON THE CONSTITUTION. NEW EDITION. Commentaries on the Constitution of the United States ; with a Preliminary Review of the Constitutional History of the Colonies and States before the Adoption of the Constitution. By Hon. Joseph Story, LL. D. Third Edition, revised and enlarged. 2 vols. 8vo. 87.50. " It is certainly a work which every statesman would wish to read, and which no law- yer who aspires to discuss questions of constitutional law in a competent manner, should omit from his Hbrary." — N. Y. Eve. Post. " The work is an indispensable part of every well-selected law librarj'." — St. Louis Re- publican. " Nothing more than a simple enunciation of a new edition of any of the profound and able works of the late Justice Story is required at the hands of an editor. The work of eulogy and commendation is so supei-fluous as to excite a smile at the thought that so great a jurist required the aid of the press. The demand for the writings of Justice Story, both in this country and in England, has increased since his death. New edi_ tions follow new editions with marvellous rapidity, but the demand still increases." — Richmond Examiner. STORY ON PARTNERSHIP. Commentaries on the Law of Partnership as a Brancli of Cominen-ial ami Maritime .Iiirisprudcnce, with Occasional Illustrations from till? Civil ami Forcijrn Law. IJy Hon. Josktii Stouy. Fifth Edi- tion, revised and enlarged bv E. II. 1{i;n.\i:tt, Escj. 8vo. S5.50. STORY ON PROMISSORY NOTES. >E\V EUiriii.N. Commentarifs on the Law of Promissory Notes, and Cnaran- lies of Note.s ami Checks on Banks and Hankers, with Occasional Illustra- tions from the Commercial Law of the Nations of Continental Europe. lU" Hon. JosF.rii Stouy. Fifth Edition, revised and enlarged by F,. II. I5K.NXKTT, Es«i. 8vo. S5.50. CRUISE ON REAL PROPERTY. A Digest ol" thi- Law of Keal I'ropcriy. By Wjlli.\M Cruise. Sccoml American froni the fuurlh London Edition, revised and enlarged, with Xotc.K and Illustrations from the Roman, Civil, an«en pcrfonnt'd in n manner which will do justice to his eniiiiciit rci)utation. No work which haj« ii|i|*cared for n long time will bo more valuable to students or to the profession gcDcmlly." — Law JttporUr. GREENLEAF ON EVIDENCE. A Treati.se on the Law of IMdenee. I>y Hon. Simon Gueex- i.i:a»'. Eighth ediliun. a vols. «vo. :i. .'<»). •* It i» no rnenn honor to America that licr kcIiooIh of jurisprudence iiave produced two of lh« flr»t writcm and be«t ciitceinoon Iho cxii>tinK Law of Contractu and the Law of Kvi- •hono from the New World than from all the lawyern who adorn lt*« cwuft* i>r Luro|Hi." — Ijondim Jmw Mat/aunt. AImj, nuincrouH ollur valuable mid iinportaiit Treatix's, by Ahhott, AXOKLL, CUKTItt, Ct'MIIINC, fill. 1.1 \ltl>. rAU.Hf)N.S, StoHV. UIkI Others, — lng«-llirr with nimieniiit Series <>[' K.-ports, — :»ll of which ;iif fully di'i»«rib'd ill rmr ('jii.-ilii'iif*, whii-h may be had on Mpplicali(.:i. THE LAW OF MORTGAGES, OF EEAL AND PERSONAL PROPERTY. BEING A GENERAL YIEW OF THE ENGLISH AND AMERICAN LAW UPON XHAT SUBJECT. BY FRANCIS MILLIARD, AL'THOK OF THE AMEKICAX LAW OF REAL PKOPEKTT, &C. " The case of mortgages is one of the most splendid instances in the history of our jurisprudence of the triumph of equitable principles over technical rules, and of the homage which those prin- ciples haye received by their adoption in the Courts of Law. "-^Chancellor Kent. SECOND EDITION, REVISED AND GREATLY ENLARGED. IN TWO VOLUMES. VOL. L BOSTON: LITTLE, BROWN AND COMPANY 1856. Kiitered nccording to. Act of Congress, in the year 1S56, Br Francis HiLLiAno, in the Clerk's Office of tlie District Court of the District of JInssnchusclls. »3 56 II I V I. r. hi u y. , <• A i\ t\ i: i i> a i. : l-I.IMIIi LV It. (iii the subject, together with the statu- tory provisions of the several States. The plan is such as to make the book equally applicable in all the States of the Union. It is believed, that the prescjut work is the first attempt to present a .systematic view of the Law oi' Jlor/f/at/cs of Personal Properli/. Until a recent }ieriod, this form of mortgage has been iiirici|iit'iil. .ind given occasion to few questions antj decisions. Without the security allorded hy rcf/i-s/ nil ion, \\\i\r\i is ;i practice now very generally adopted in the I iiiliij States, a conditional transfer of chattels, whi(di allows the seller to remain in possession and use of the j»roj»erly, lias uiniouhtedly liecn found to a great degree impracticable ; leading to the greatest PREFACE. Vll confusion and uncertainty of title, to frauds upon credi- tors between the mortgagor and mortgagee, and also to frauds by the former upon the latter, where the mortgage itself was a fair and honest transaction. The recording system has afforded a remedy for these evils ; and conse- quently the mortgage of personal property, from being a rare transaction, is becoming one of almost daily occur- rence ; and the conflicting rights of the parties, and more especially of third persons claiming under one or both of them, the construction of statutes, and the application of the principles pertaining to mortgages of real property, with such modifications as are demanded by the different nature of the subject-matter, give rise to numerous and continually multiplying questions for judicial decision. A large space in the present work is occupied with this branch of the general subject. The reader will notice, and the severe critic may do more than merely notice, that the present work is enti- tled neither a Treatise, nor a Digest, nor an Abridgment ; but simply The Law of Mortgages. The plan of the book is threefold ; first, to ari^nge the heads or topics in natural and philosophical order, avoiding, as far as possi- ble, the mixing up together of subjects which properly belong apart, or the separation of those which ought to be treated in connection ; second, facility of reference to each and every part of the work, by means of this arrangement, and of a very copious index ; and third, the incorporation of decided cases, including the facts and the opinions of judges, to such an extent, as to supersede, in a great measure, the necessity of reference to the original reports themselves. The plan is substantially Vlll PREFACE. the same as that of Mr. Angell's valuable work upon the Lav) of Carriers. It also resembles that of Cruise's Dir gest of the Law of lical JProperbj ; and may ^voll be descriltcd in ilie language of the preface to that work. — '•A systematic distribution is framed of the general principles of each title, supported by abridgments of the cases, in which those principles have been established or confirmed. It is but of late years that this mode of treating legal subjects has been adopted. Our abridg- ments and treatises on particular titles of the law, formerly contained little more than a collection of the adjudged cases that had been determined on each title, disposed without much method, and witlunit establishing or deducing any general principles." With regard to that particular topic of the law, which con.stitutes the subject-matter of the following pages; the work relating to 3Iort(/af/es, which has been chiefly in us§ lor many years, can hardly be said to fall within the category, or conform very closely to the standard, sug- gested l»y Mr. Cruise in the passage above cited. Mr. Coventry, the annotate »r (if P'on'oU on Mortijages, remarks, concerning that very learuiMl treatise, as follows : '' The author, it is t<» 1)e lamontcfl, lias not followed tliis nor any other particular divisiuii in the ensuing consideration of the estate ami interest of tlic niorlgagcc. Indcicd, it is sincerely lo In- wislicd 1li;it lie IkmI ;iil(iii(('(l ;i more .suc- cinct arranim i. \<;(»i;'~, I\ri i;i •^i, w mile li;i i' in Po»8K»8ION l.'»'.)-205 1 . Whether the iiiorlj;ngy a party iiaving a j)artial interest in the property ; claim for reimbur^cmciit. 37. An equity of redemption is assets. 38. And liable to legal process. 42. Hut it is not thus liable, in a .^uit upon the mortgage debt ; cases and dis- tinctions upon this subject. 56. Whether the indorsee of a mortgage note may levy upon the equity of re- demption. CO. Ciiittsi/ in an equity of redemption. Gl. Wlntber subjict to dower : i;ii;:lis!i and American law iq)on this subject. •<>«. < >n what terms the widow may redeem. CIIAI'TKK W'F. J'^QllTV OI liLl>I..Ml'TU>.\. TlK.MS nl lil.U ll.Mrili "V. Ar- (■OLNT OF A Mo|{T<;aGKE L\ POSSESSION. ill- I-IA- uiLrrv FOR Rents, ani> Clalm for Expendfh ke.s 117-1 1G I. Tlie mortgagcu is liable to account, a-* a •.i,,,-,,,.! <.r l..nli(/'; extent of his lia- l»ility. CONTENTS. XV 18. Mode of computing interest ; whether tlie mortgagee is chargeable -with in- terest ; annual rests. 27. What provisions in a mortgage will bind the party to pay interest. 31. Interest, in case of a particular tenant and reversioner. 37. For what repairs and other expenditures the mortgagee shall be allowed. 56. Sale of a part of the mortgaged property ; proceeds ^o be accounted for. 59. Accounting for rents, &c., to subsequent mortgagees, creditors, assignees, &c. 64. Receivers. 76. Parties in case of a decree to account for rents, &c. CHAPTER XYIL EXTINGUISHMEXT OF A MORTGAGE, BY PAYMENT, RE- LEASE, ETC 447-492 1. In general, payment of the debt pays the mortgage also. 2. Payment after breach of condition ; ivaiver as to time. Changing the security for a debt does not extinguish the mortgage. New notes, &c. 13. Effect upon the mortgage of legal and judicial proceedings, either between the parties, or in connection with strangers. 18. Of making the mortgagor the executor, &c., of the mortgagee. 20. Whether a deposit shall be treated as payment. • 22. Surrender of the note for a release of the right of redemption ; whether payment. 24. Exceptions and qualifications to the rule above stated. Extinguishment of a mortgage without direct payment ; by renewal of notes, appointment of execu- tors, legal proceedings, &c. 38. Application or appropriation of payments ; mutual claims and offsets. 46. Presumptions and circumstantial evidence as to pavment. Parol evidence. 52. The effect of payment upon the titles of the respective parties and their remedies. 61. Extinguishment of a mortgage, by a transfer of the land to the mortgagee. 75. Release or discharge of a mortgage. Discharge upon the record. 84, When a release may be avoided. CHAPTER XVin. Assignment of a Mortgage 493-538 1. What constitutes an assignment, and what a discharge, of a mort"-a"e. 24. Mortgage of indemnity ; when the law implies an assignment of^'sul.-h mort- gage. 27. Conditional assignment of a mortgage, whether itself a mortga<»e. 33. Form of assignment. "^ 35. What passes by an assignment ; whether a mortgagee, after assignment, can release or bring an action. 46. Whether he shall l)e party to a suit for redemption or foreclosore. 48. Consideration paid by the assignee, whether material. 49. For what amount the mortgagor is liable to the assignee. Whether the latter is bound by previous payments, set-offs, &c. 57. Guaranty by the mortgagee. 59. Effect of the mortgagor's Joining in the assignment. 62. Recording of an assignment. How far an assignee's title may be affected by fraud or notice. Xvi CONTENTS. CHAPTER XIX. Void and Voidarle Mortgages. Usury . . 539-500 1 General principle as to avoiding deeds. 2. Usury. 3. What constitates usury in a mortgage. 14. What does not constitute usury. 22. Statement of questions arising in relation to usurious mortgages. 24. When the sum legally due may be recovered. 25. Distinction between a bill for foreclosure, and a bill to redeem, in relation to usury. 28. What parties may be aflfeeted by usury in a mortgage. 31. What parties may avail themselves of such usury. 3S. What will preclude a mortgagor from setting up usury; effect of a prior judgment, &c. 44. Form of pleading usury. 46. Evidence — parol evidence. CHAPTER XX. Void and Voidable Mortgages. Want or Failtjre OF Consideration. Illeoal Consideration . 561-570 I. Want of consideration; as between the parties, and in relation to cred- itors, &c. 10. W:mt or failure of consideration, consisting in a defect of title. CHAPTER XXI. Void and Voidable Mortgages. Fraud between THE Parties and in Relation to Creditors. Fraud ON Tin: Part of a Mortgagee; Effect upon sub- sequent Incumbrancers 571-598 1. Fraud between the parties. 5.. Fraud as to crey him of a subsetiueut deed ; dcliv- cry of title-deeds to the mortgagor, &c. 34. liiniitations and restrictions of tlie rule above stated. 44. Mortgage from client to attorney. CHAPTKK XX 11. Eqi itable Mortgage. Deposit oi Title-Deeds 599-612 1. Kquitaltle licnfi. .'1. I )u[»oHit of deedi ; ronslilutf'S n mortgage. I. F-tablishmcnt of the doctrine ; case of Russil v. /iiissil. f,. tiualifi'. Heath 6 Hcirnc i;. Campbell 635 Page Belchior r. Collins 175 Beldiiig r. Manly 226, 227 Bell V. Hamniond 359 r. Mayor, cScc. 420, 430 V. i\Iorse 223 Benbow v. Townsend 45 Bend v. Su!:i[uchannah 57 Bennett v. Butterworth 419 V. Holt 87 r. Union 19,33,118 Bennock v. Whipple 34 Bentham v. Haincourt 428 Bentley v. Phelps 56 Benzein v. Lenoir 361 Bergen v. Bonn«tt 131,*132 Bergcr v. Hioster 468 Berney v. Sewell 444 Berry v. IVIutual, &c. 610 Berrysford v. Millward 584 Besley v. Lawrence 325 Best v. Carter ^ 19 V. Schermier* 441 Betton V. Williams 652 Bevaut v. Pope 17 Bibb t-. Williams 665 Bickfbrd r. Daniels 53 Bigolow ('. ToplifF 55 Billiiighiirst v. Walker 349 Birch r. Wright 159,164 Bird u. Gardner 4U0 Bishop V. Warner 563 Black V. Morse 326 Blackburn v. Pennington 662 V. Warwick 425 Blackwcll c. Overby 54 Blair v. Bass 54, 231 Blair's case 258 Blakemore v. Byrnsidc 57, 96 IMaiichard v. C(jli)urn 247 V. Kenton 16 Blaney v. Pearcc 158 liloodgood V. Zcily 67 Blount )-. Hipkins 354 Blvdenburgh c. Cothoal 543 Bl'yer r. Mu, 65H c. Wa.le 611 Bolton V. Bailanl 890, 401 Bonhain r. (I.ilioway 4(12 I'. NewcomI) 6H, 69 INDEX TO CASES CITED. XXI Page Page Bonithon v. Hockmore 419 Brown v. Leach 149, 154 Booker v. Gregory 424 V. Markham 78 Boon V. Barnes 63: !, 634 V. Nickle 32 Booth V. Barnum 286 V. Sewell 448 Borst V. Boyd 359 V. Staples 113 Boston, &c. V. King 214 V. Stead 302 Boston Iron Co. v. King 425, 436, 409 V. Stewart 149, 207 Bottomly v. Lord Fairfax 392 V. Story 181 JBottorf V. Conner 627 V. Vanlier 633 Bourne v. Littlefield 427 V. Worcester, &c. 372 Bower v. Crane 173 V. Wright 57, 277 Bowes V. Seager 534 Brumfield v. Palmer 636 Bowker v. Bull 312 Brundige v. Poor 6 Boyd V. Stone 48 Bryan v. Cowert 29, 30, 58 Boylston v. Carver 256 Buck V. Livingston 342 Bozon V. Williams 608 V. Sherman 383 Brace v. Duchess, &c. 266 Budeley v. Massey 21 Bradford v. Marvin 644 Buell V. Tate 114 V. Potts 569 Bulkley v. Chapman 228 Bradley v. Snyder 77 ,434 BuUard v. Bowers 415 Braman v. Wilkinson 672 Bumgardner v. Allen 107 Branch, &c. v. Fry 186 Bumpus V. Dotson 263 Branch Bank v. Furness 366 V. Plattner 565 Bragg V. N. E. &c. 144 Burchard v. Phillips 299 Brainerd v. Brainerd 56 Burdett v. Clay 232, 449 Bratton, &c. 384 , 665 Burgess v. Sturgis 657 Brawley v. Catron 629 V. Wheat 358, 623 Breckenridge v. Auld 28 Burnett v. Deniston 130, 131 V. Brooks 419 V. Dennison 277 V. Ormsby 479 V. Pratt 246 Brewer v. Staples 318 Burns v. Hobbs 572 Brick V. Getsinger 207 V. Taylor 614 , 625, 637 Briggs V. French 571 Burton v. Baxter 231 V. Hill 651 V. Pressly 449 V. Sholes 547, 556 557 V. Slattery 78 Brinkerhoff v. Lansing 451 577 V. Wheeler 312 V. Yansciver 625 Bush V. Livingston 542 Brisbane v. Stoughton 119 Bussey v. Page 211 Briscoe v. Bronaugh 632 Buswell V. Davis 449, 681 V. King 112 Butler V. Butler 350 Bristoe v. Knipe 112 V. ElHott 309 Bristol V. Hungerford 266 V. Paige 161 Britton v. Updike 326 Butt V. Bondurant 550 Brizick t'. Manners 608 Brooke v. Warwick 356 Brooks V. Avery 544 C. V. Harwood 412 Broome v. Beers 580 Cadwallader v. Mason 137 Brown v. Beers 580 Calkins v. Calkins 216 V. Blydenburgh 518 V. Munsoll 373 V. Cole 448 Callum V. Branch, &c. 311 V. Cram 140, 141, 163 Cameron v. Irwin 74, 130, 163,447 V. Dewey 52 Campbel v. Knights 494 V. East 661 Campbell v. Baldwin 634, 647, 648 V. Lapham 412, 501, 502 V. Low 9 xxu INDEX TO CASES CITED. Campbell r. Matomb r. Worthington Carcw r. Johnston Carey r. Rawson Car|)en c. Providence Carradino r. O'Connor Carris r. MoClary Carter v. Bennett V. Carter f. Dennison V. Roikett Casborne v. In<_disb V. Scarte Casey i: Ruttolph Cass c. Martin Cassidy r. Rhodes Castlenian i". Belt Catheart's Appeal Cator c. Charlton Cavis V. McClary Center r. P. and M. Bank Chadbourne v. RacklitF Chamberlain c. Thompson Chambers v. Goldwin r. llise r. .Manldin Champlin r. AVilliams Chapman c. Armistead V. Beechara V. Chapman V. llujihcs r. Mull r. Smith V. Tanner v. Turner Charles v. Clai/ctL V. Dunbar Charter r. Stevens Chase r. M'Donald V. Palmer Chcllis v. Stearns Clurry r. Monro Chester v. (Jreer V. Whcelwri^^ht Chewning v. Pro'ii ♦ icdlto I'. (»aj»iiinr (:i;ib.iii;4li r. Hyerly 577,688, Cla^ttlt v. Salmon (JiaiUjrnu i'. Crockett Page Page 207 Clarendon v. Barham 356 55 Clark V. Beach '228, 229 443, 527 1-. Bell 657 33 r. Bull 285 235 t". Flint 527 128 V. Henry 83 180, 182 c. Ridjjley 441 233 V. Smith 220, 431, 433, 436, 58 437 550 Clarke t'. Curtis 137 441 255 V. Sibley 360 364 18 V. Stanley 305 13i) 142 Clay V. Willis 119 50G Clinton r. Hooper 8 412 dough r. Elliott 407 103 Clower V. Rawlings 618 ,647 655 170 188 Clowes V. Dickenson 326 303 Coates I'. Cheevcr 501 273 V. ^^'ood^vo^th 57 182 Coker v. Pearsall 188 233 672 Colcord V. Seamonds 655 50C Coleman v. BaVik, &c. 665 141 281 Coles V. Coles 396 77 ^ V. Perry 19,86 85 Collett r. Munden 273 301 Collins V. Carlile 287 327 Colquhoun v. Atkinson 277 173 Cohpiitt V. Thomas 628 168 Colton V. Smith 13 601 Columbia v. Lawrence 235 58 Colwell V. Woods 32 360 ('olman v. Packard 151 422 Commercial, tScc. v. Cunnin, ;ham 286 623 Comstock V. Stewart 19 1,22 Conger v. Lancaster 105 18 359 Conner v. Banks 660 661 300 439 Conovcr r. Mutual, ^cc. 144 235 130 Conrad r. Atlantic, &c. 286 282 284 r. Harrison 338 137 Contributors v. Gibson 448 151 Converse v. Cook 241 514 340 Conway r. Alexander 86 5') 2 593 t'. Decrlield 117 2(J2 471 Cook V. Colyer 571 106 V. Hinsdale 521 324 Coombs V. .Ionian 282 I'tO, 165, V. ^Varrcn 147 417 Cooper V. Davis 209 210 18 859 V. IJImann 231 135 r. Whltm^v 20 S4i Copeland ;•. Copcland (i(;8, 670 528 Copis r. Middlclon 311, ;t 1 3 ,5y3 ,594 Coppin V. Coppin (123 487 Conlcr V. Morgan 1 21 C51 Cornell r. Preaeott 33 1 INDEX TO CASES CITED. XX 111 Page CorninfT v. Murray 667 Cotterell v. Long 18 V. Purchase 27, 28, 73 Cottington v. Fletcher 47 Courtney v. Scott 66 V. Taylor 99 Coutant V. Servoss 132 Cowan V. Green 665 Craft i: Billiard 57 V. Webster 535 Crafts V. A spin-wall 658 Craig V. Tappin 285 Crane v. Caldwell 645 V. Dewing 291 V. March 387 I'. Palmer 638 Crawford v. Boyer 299 CuUum V. Branch, &c. 451 V. Emanuel 484 V. Erwin 233 301 Camming v. Gumming 326 V. "Williamson- 245 Cunningham v. Davis 549 Curtis V. Lyman 669 V. Tripp 580 Gushing V. Ayer 326 329 Cutler V. Haven 223 V. Lincoln 5,476 501 Cults V. York 520 D. Dale V. Shirley 301 Danforth v. Smith 409, 410 Darling v. Chapman 16, 149 Davenport v. Bartlett 34, 13 7 Davidson v. Beard 665 Davis V. Anderson 136 V. Battine 455 V. Clay 613 V. Fargo 470 V. Maynard 455 V. I^Iilis 319 V. Thomas 91 Day V. Clark 671 Dean v. De Lezardi 668 Dearborn v. Dearborn 155 Dearing v. Lightfoot 671 V. Watkins 671 Deaver v. Parker 379 De Butts c. Bacon 542 De Forest r. Hough 457 Deibler r. Barwick 652 Delahay v. ISIc Council 57 Demarest v. Winkoop Deming r. Comings Den V. Dimon V. Spinning Denton v. Nanny Dcstrehan v. Scudder Dewey v. Bulkley Dexter v. Arnold V. Phillips Dey V. Dunham Dick V. Balch V. Maury Dickenson v. Jackson Digby V. Craggs Dixie V. Davis Dobson V. Land Dockray v. Noble Doe V. Barton V. Bucknell V. Cadwallader V. Clifton t'. Cox V. Day V. Giles V. Goldsmith V. Goldwin V. Goodier V. Hales V. Lawrence V. Lewis V. Lightfoot V. Maisey V. McLoskey V. Olley V. Simpson V. Stone V. Tom V. Warburton V. Williams Donley v. Hays Donnels v. Edwards Dorkrey v. Noble Dorr r. Peters Doton v. Russell Dougherty i: McColgan Douglass V. Peele Downer v. Fox Doyle V. White Driver v. Clark V. Hudspeth Dryden v. Frost Dudley r. Cadwell Duncan i'. Drury Dunham v. Dey 472, 474, 538 145, 220, 520 475 397, 399 119 574 249, 418, 432 173 40 669 232 179 528 168 437 225 160, 190 177,184 184 190 168 156, 170 161 194 156 185 180 196 180 157 165 145 184 180, 181 190 169 183 160 230 246 496 106 477 7, 86, 430, 432 666 307 263 656 658 675 117 570 668 X X I V INDKX TO CASES CITED. Pace Dunn V. (Irant 661 I Dunshee r. I'anneleo' 424, 450 Durham c. Aklen 583 Duvall c. Bibb 632, 647 DwiMrht r. Newell 642 D/er V. Lincoln 559 V. Morton 632 Dyson t*. ilorris 24(? E. Eagle V. Pell 438 Earl of Belvedere v. Rochford 347 Eastman v. Foster 321 Eaton V. Green . 87, 95 r. Jaques 200,201,203 V. Simonds 399, 404,411,419, 494 V. Whiting 248 Eddlestone r. Collins 6 Edmonds v. Crenshaw 286 I". Povcy 268 Edrington r. Harper 86 Edwartls r. Bodine 568 r. Ferguson 104 V. Jones 195 V. ^'arit•k 2 1 7 Elder j>. Kouse 103 Ellieott r. United States, &c. 442 Elliott V. Maxwell 54 V. Patton 365, 370 EUifl t;. Guavas 256 r. Higgins 49 r. Messervic 597 Ellison r. Daniels 145, 224 Ellsworth i: Mitchell 301, 558 Elwys V. Thompson 372 Emerson t;. Thompson 173 J^mcry v. Owings 261 Endsworth i: Grillith 72 Engle I'. Haines 330 Enstone v. Friday 451 Krskine »•. Townsend .(2!) lOrving r. Beauchamp 65G Eskridgc v. McClurc 636, 651, 657 Estcs t'. Cook 1 73 Evans v. Elliott 180, ih:. V. Merriken 161 V. Thomas 213 Evcrtson r. Booth. 309, 522 V. Ogdcu 330 Ewer V. Hobbs 136 F. Page Farquhar v. Morris 4*8 Farmer's, &c. r. Edwards 69 Farrant r. Lovel 213, 214 i: Thompson 208 Fav r. Brewer 140 Feich V. Taylor 142, 218 Felton V. Brooks 238 Ferguson v. Ferguson 156 r. Kimball 108 Fetter v. Cirode 264 Fink V. Martin 564 Firemen's, &e. *'. Bay 6 Fiske V. Fiske ' 109 Fitch ('. Cotheal 6 Fitchburg, &c. c. Melven 175, 191 Fitzgerald v. Beebe 298 Flagg V. Flagg 151 ?'. Mann 53,83,101 Flanders v. Barstow 452 V. Lamphear 155 Ford u. Russell 128 Foster v. Briggs 583 Fowler v. Rice 34 Fox ('. Clark 574 Franklin c. Gorham 215 Frazee v. Insley 76 Freeby v. Tupper 387 Freeman r. Baldwin 29 I'. Edwards 168 Frelinghuysen c. Coldcn 299 French »;.' Fuller • 173 V. Kennedy 261 V. Lyon S7 V. Sturdivant 36 Fricdiy v. Hamilton 38 Frink c. Branch 264 Frothingham v. MiCusick 208 V. .Shephard 12 Fuller i>. Hodgdon 80 V. I'ratt 30 /'. Wadsworth 173 Furbush i\ Goodwin 224, 225 G. (Jager. Ward -106 (Jalt I'. Jackson M (iamliril v. Doe 14 2 (Janlner r. Astor 509 r. Gerrish 1 16 r. llrarlt 212 v. Webl)er 286 (iarroih v. Sherman 217, 221 INDEX TO CASES CITED. XXV Page Page Garther v. Teaguc 87 Great Falls v. Worcester 140, 145, Htes V. Adams 337 151 General v. Hardy 120 Gree v. Lord 423 George's, &c. v. Detwold 151 Green v. Dcmoss 643, 651 Gibson V. Bailey 257 V. Fowler 627 V. Crebore 356, 410, 414, V. Hart 220, 221 423, 424, 503 V. Price 577 V. McCormick 343 V. Ramage ■331 Gilbert v. Averill 340 V. Storm 471 V. Maggord 7,8 V. Tanner 119, 278 Gilkeson ??. Snyder 616 Greenwood v. Taylor 300 Gill V. McAttee 619, C56, 671 Greer v. Chester 280 Gilleland v. Farling 564 Gregg V. Wells 579 Gillett V. Balcom 162 Grosvenor v. Day 128 V. Campbell 221 Groton v. Boxborough 147, 166 V. Powell 449 Growning v. Behn 645 Gillis V. Martin 33 Gubbins v. Creed 79 Gilman v. Brown 626 Gurney v. Sepping 520 Given V. Doe 240 V. Marr 509 H. V. Tout 231 Givens v. McCalmont 433 Hadley v. Chapin 467 Glasscock v. Robinson 653 654 V. Houghton 10 Glidden v. Andrews 337 Hadlock v. Bulfinch 449 ,464 479 V. Hunt 527 Haggarty v. Allaire 78 Glover I'. Payn 86,87 Hagthorpe r. Hook 430 434 Godfrey v. Watson 436 Haigh, ex parte 601 Gooch V. Gooch 9 Haley r. Bennett 614 627 Goodall's case 5 Haliwell v. Tanner 342 355 Goodhue v. Berrien 320 Hall V. Bell 306 Goodloe V. Clay 323 V. Byrne 104 Goodman v. Grierson 80, 92 100 V. Dench 142 V. Kine 212 Halleck i-. Smith 647 Goodtitle v. Morgan 190 212 Hallock V. Smith 652 Goodwin I'. Richardson 136 ,21? ,218 Halsey v. Reed 328 ,329 , 343 Gordon v. Hobart 213 Hamet r. Dundas 42 V. Lewis 418, 428, 430, 439, Hammond r. Washington 531 441 ,446 Hammonds v. Hopkins 31, 70 , 360 Gore V. Jenness 211 , 213 Hampton v. Hodges 207 Goring V. Shreve 376 ,381 V. Spencer 47 Gorson V. Blakey 119 Hanna v. Countryman 149 Gossin V. Brown 313 Hanson v. Derby 213 Gould V. Newman 240 Harbinson v. Harrell 436 ,665 V. Tancred 22 Harmer v. Priestley 17 Gouldsworth v. Knights 190 Harmon v. Short 149 Grace v. Mercer 579 Harold v. Whitaker 195 Graggs V. Bailey 652 Harper v. AVilliams 622 Graham v. King 301 ,320 Harriett, &c. 255 V. Newman 233 Harrington v. Price 611 Grant v. Bissett 277 Harris v. Norton 670 r. Duane 368 Harrison r. Eldridge 475 Graves v. Lyons 622 r. Lemon 27 V. Sayre 137 V. Phillips, &c. 74 Gray v. Baldwin 206 V. Trustees, &c. 29,31, 35, V. Jenks 23 , 14C ,267 1 481 VOL. I. C XXVI INDEX TO CASES CITED. Page Hart r. Clialkor 2G2 llartpole c. Walsh 4 Ilarti^liorn r. Hubbard 153 Ilartwell r. IJlocken 106 Ilartz r. Woods 885 Ilarvie c. Banks 147 UaskvW r. Haskell 492 Hastinjrs v. Pratt 167 Hatch V. Dwight 217 (•.Kimball 114, 494 595 Haven i: Low 140 Hawkins v. May 288 Hawley r. Bennett t}G7 668 r. Bradford 397 Ilayden r. Smith 512 Hayes v. Hall 6GI Hayraer v. Haymcr 366 Haynes r. Stevens 114 Huad r. Egerton 305 Heath v. Williams 138 Hel)ron i: Centre, &c. 1 Hedges i: Hedges 533 Heighway i-. rendlcton M 490 Heinkle v. Allstadt 326 Henderson i*. Herrod •232 233 V. Stewart 517 Henry v. Bell 105 V. Davis 105 Henry's case 415 Hepworth r. Heslop 595 Herbert r. Hanrii.k 665 Hctfield V. Newton 557 Hewett V. Snare 344 Hewitt r. Loosemoi'e 611 Heycr v. I'ruyn 335 Hicks V. Bingham 279 r. Hicks 70, 9;{ 102 Hiern v. Mill 608 Hiesti-r t'. Madiera GO Higgon r. Mortimer 208 Hiles V. Moore 444 Hill I'. Jordan 178 V. I'ayson 47G V. Bobcrt-son 16 r. Smitli 386 Hilliard >: Allen 4 21 Hills r. Elliott «6, lo:) 491 Hilton V. Crist 325 Hinson r. I'artec 57 Hit< hcock /•. Harrington 370 396 Hilrliman v. Malton i(w; 209 Holart r. Satdmrn 149 152 Hobson r. Bfll 1 25 Ho. Barnard 113 Sumpter v. Cooper 611 Swabey v. Swabcy 508 Swarthout v. Curtis 672 Sweet V. Van AVyck 515 Swett V. Horn 16 Svmons v. James 342, 344, 355 Spader r. Lawler Spirras v. Caig Spofford V. Hobbs Sprague v. Graham Sprigg V. Lyles Spring V. Haines Spurgeon v. Collier State V. Laval State Bank v. Campbell V. Tweedy Stapp V. Phelps Stabback v. Leat Stafford v. Ballou V. Van Rensselaer Stansell v. Roberts Stamford, &c. v. Benedict Stark V. Boswell Stamper v. Johnson Stedman v. Gasset Stevenson v. Black Stephenson i'. Thompson Stehley v. Irvin Stewart v. Anderson V. Hutchins V. Ives V. Preston Stetson V. Gulliver Stevens v. Brown V. Cooper Stephens v. Sherrod Stemmons v. Duncan Steele v. Adams St. John V. Turner Stockton V. Johnson Stocking V. Fairchild Stoney v. American, &c. V. Shultz Stone V. Evans Story V. Johnson XXXIV INDEX TO CASES CITED. Tabele v. Tabele TaniiLT V. Wells Tasburgh i*. Ecklin Tavlor c. Ailains r. AUoway r. Baldwin V. Cliowning V. Cole V. Foote V. Luther V. Maris r. Thomas i;. TowiKsend I'. ^Veld Tcaff i". Ross r. Tiidford Teed v. Carruthers Teetor i-. Pierce Ten Eyck i: Holmes Tenneut v. Dewees Terry v. Woods Tenlon v. Curtis Thatcher i-. Gammon Tharp v. Feltz Thayer r. Cam[)l)cll r. Richards Thompson v. lioyd r. Chandler V. Dillenduler f. Drake V. Mcdill r. Mack V. I'atten V. AVilliams Thomaston, &c.. Thomaston v. Stimpson Tiiomes i;. Cleaves Thorneyeroft v. Crockett Thornton v. Knox Thorn hrougli i'. liakcr ThoriK! r. Tliorne Thred-ill V. I'intard 'Ihuraton c. Kciinclt Thunder r. IJelcher Tice r. Annin Tichenor »•. Dodfl Ticijout i: Harmon 'I'iornan i'. Heam V. l*iM)r Tillolson c. IJoyd TilCord r. .JanicH Tillin^haHt r. Fry Tillcy t;. Daviaj 53, 202, 420, Paco 390 277 36 649 628 039 119 580 652 50 298 607 431 27, 30, 149 464 146 453 324 329 420 232 4 558 409 217 110 394 300 441 575 650 005 58 651 42 555 541 4 .'to 0J7 210 142 0;{5 25a 17;i 381 328 502 051 6 100 320 37;i 272 632, 620, Titus I'. Neilson 391, Toby V. Read Toft V. Stephenson Toll V. Hiller Tooms V. Chandler Torrey v. Bank, &c. Towle V. Hoit Towler v. Buchannans Trammell r. Simmons Trenton, &c. v. WoodruH Trip[) V. Vincent Troth I'. Hunt Trulock V. Robcy Trull v. Skinner Truscott c. King Tucker v. Kccler V. Thurston TuU V. Owen Turner r. BouchcU r. Caincrons Tuthill V. Dubois Tweddcll V. Tweddell Tyler i;. vEtna, &c. V. Lake V. Taylor Tyson v. Rickard U. Pace 396, 397 162 634 458,471 112 285 372 465 645 444, 490 340, 449 305 370,418 74 294,672 161 361 23 128 186 605 348, 352 626 501 244, 511 540 Union Bank, &c. r. Edwards 295 r. Stallord 449 Union, &c. r. Emerson 431 U. States r. Hooe 285 V. Hodge 316 Upham V. Brooks 115, 4 76 Upshaw V. Hargrove 039 Vail i". Foster 04 7 Vallance r. Savage 180 Van Bergen r. Demarcst 128 Van Huren r. Oliiistftad 50 Van Duren r. 'l\M 626 Van Duyne c. 'I'hayer 218, 250, 397 Van Hook r. Somerville 537 Van Ness r. Hyatt 370, 377 Van I'elt r. McCraw 210 \'an Rensselaer r. Aikiu 464 Van X'ronker c. i')a.stmau 413,414 Van Wagner /•. Van Wagner 28, 285 Vanderkemii r. Shelton 501, 535 Vanncler r. Vanneler 288 Va»ser v. Vasser 67 INDEX TO CASES CITED. XXXV Page Verner v. Winstanley 90 Weeks v. Eaton 225 Vernon v. Bethell 61 Weidner v. Foster 180 Viscount, &c. V. Morris 358, 359, Wells V. Morse 371 ,494 367, 370 447 Welch ?,'. Adams 173 , 186 Vose V. Handy 243 Welford v. Beezely Wellborn v. Williams 577 651 W. Wentz V. Dehaven Western, &c. v. Eagle 475 307 Wade V. Cooper 314 West Branch, &c. v. Chester 408 V. Howard 509 AVesterdell v. Dale 203 Wade'3 case 3 Westervelt v. Haff 13, 14 Waddle v. Cureton 468 West V. Jones 589 Wadsworth v. Loranger 58 V. Thornburgh 631 Waijer v. Chew 335 Wetberington v. Banks 213 Wakeman v. Banks 171 Wharf I'. Howell 53 102 Wall V. Boisgerard 263 Wheeler v. Bates 173 Waller v. Tate 388 v. Branscomb 185 V. Todd 565 V. Montefiore 157 Wallis V. Long 485 Wheelwright r. Loomer 333 Walton V. Withington 420 Whittrick v. Cane 50 Walker v. Reeves 202 Whitbread i\ Smith .6 V. AValker 47 Whitbread's case 602 Walcop V. IMcKinney 149 Whitney r. French 32 216 Walling r. Aikin 5S ,66, 282 V. McKinney 523 Wales V. Mellen 149, 152 156 White V. Butler 300 Warner v. Everett 305 V. Denman 664 V. Gouverneur 443 523 546 V. Dougherty 647 Warden v. Adams 222 V. Hillacre 267 274 Ward r. Sharp 550 V. Knapp 625 Warren v. Hamstead 517 V. Sasanavc 632 Warburton r. Lanman 304 V. Stover 651 V. Mattox 590 V. Todd 482 Waring v. Smith 216 V. Whitney 136 V. Ward 351 Whittemore v. Gibbs 223 Washburn v. Goodwin 389 AVliitiiig v. Beebe 285 Watts V. Symes 265 AVhittaker v. Dick 452 Watson V. Di .kens 57 285 Whitworth v. Gaugain 606 V. Willard 650 WikofF V. Davis 326 Watkins v. Lockett 57 Wilder r. Houghton 166 Waters i'. Randall 60 V. Smith 651 Waugh V. Riley 5, 473 484 V. Whittemore 154 Way V. Patty • 636 Wilson V. Hardesty 550 Wease v. Peirce 562 V. Hay ward 234 Weaver v. Toogood 335 336 V. Hooper 172 Webb V. Flanders 218 479 I'. Troup 118, 119, 132, I'. Patterson 31 217 ,495 t. Robinson 632, 639 652 Wilson, ex parte 164 V. Russell 195 Williams v. Bosan(iuet 200 201 204 Webber v. Webber 257 V. Birbcck 535 Wedge V. Moore 406 V. French 22, 244 V. Russell 195 V. Hilton 245, 26l' 438 Weed V. Beebe 622 654 V. Kelsey 574 i\ Covin 103 V. Owen 92,265 311 313 V. Lyon 663 r. Roberts 646 V. Stevenson 18 V. Stevens 528 XXXVl INDEX TO CASES CITED. Pago 'Williams V. Sorrell 534 i: Stratton G25 V. Roberts 64G r. Thorne 336 V. Thurlow 469, 480 V. "Woods 638 Willett 1-. Winncll 71 "Wilkins r. French 22, 244 V. Humphreys G52 "Wilcox V. Morris 59, 103 Wilkinson r. Hall 153,157 "Winter v. Garrard 4G9 V. Lord Anson G25 "Winn V. Ham 550 Win^ r. McDowell 6G8 "Wiiiborn c. (jorrcU 622 AViiislow I'. ^Merchants, &c. 161 "Wiseman v. lleid 629 "Withers i: :Morrell 567 "Wolbert r. Lucas 114 Wolcott V. Sullivan 522, 527, 531 TVomble V. Battle 617, 620, 622 "Wood V. Colvin 130 V. Felton 423 I'. Jones 361 Woods I'. Bailey 653 V. Huntinjrford 350 Woodruff V. llobb 33 Wood worth v. Goodman 670 V. Guzman 18 Wooden V. Haviland 569, 571 Woodard r. Fitzpatrick Woodward v. Woodward Woodson V. Perkins Woodbury v. Aikin Woolen r. Hiller ; Worthin: or dead jded^'C d'll'- fer.s from another form of security formerly in use, ternied vadium vivum, or lU'inf/ plcdfje. Tlii:) <;onlract or conveyance has become nearly obsoleti', and CU. I.] THE LAW OF MORTGAGES. 3 upon a condition, defeasible by the performance of the con- dition according to its legal effect.^ 3. The name mortgage originally signified, that the estate conveyed became dead or extinct to the mortgagor, unless the condition was performed at the time appointed. A mortgage was a feoffment upon condition, or the creation of a base or determinable fee, with a right of reverter attached to it. The debt was required to be tendered at the time and place pre- scribed ; and, in general, the transaction was held subject to the strict rules which governed conditions.^ ' 4 Erskinc v. Townsend, 2 Mass. 495. - "Wade's Case, 5 Co. 114; Goodall's Case, ib. 95; Lit. § 332; Co. Lit. 205. therefore requires only a brief notice. The vadium vivum was where a man borrowed a certain sum of another, and made over an estate of lands to him, until he had received that sum out of the issues and profits thereof, and was so called because neither the money nor the lands were lost ; for the latter were constantly paying off the former, and were not left as a dead pledge in case the money was not paid. 1 Pow. 3 ; Coote, 43. Still another form of conveyance by way of security, but one rarely adopted in practice, is the Welsh mortgage. In a Welsh mortgage, the profits keep down the interest, instead of the principal, as in the vivum vadium; and, of course, no length of possession gives the mortgagee an absolute title. But, where the profits are excessive, equity will order an account. 1 Pow. 373, a, and n, E. See Thayer u. Mann, 19 Pick. 538; Conway r. Shrimpton, 5 Bro. Pari. 187, Another form of Welsh mortgage is where the deed is made in trust, that the mortgagee, after paying interest and expenses, shall apply the surplus proceeds to the principal. 3 Ib. 1148, a: Coote, 207. In a Welsh mortgage, no covenant for payment of the debt is inserted, and the mortgagee has no remedy to compel redemption or foreclosure in equity, though the mortgagor may redeem at any time. Coote, 222, 223. In some instances, the estate is conveyed to the mortgagee and his heirs, till from the rents and profits he shall receive principal and interest, which is in the nature of a Welsh mort- gage, and was compared by Lord Hardwicke to a tenancy by elegit, so that the estate ceased upon payment of the debt, and the mortgagor might main- tain ejectment, unless the mortgagee had remained in possession twenty years after such payment ; which time would also bar the equity of redemp- tion. And his Lordship said, the mortgagor had the same right as the conu- sor under the elegit had, to come into a court of equity for an account. In a similar case, time was held no bar to redemption, although, by the mort- 4 THE LAW OF MORTGAGES. [cil. I. 4. All property, real or personal, corporeal or incorporeal, movable or immovable, may be the subject of mortgage. Thus, advowsons, rectories, and tithes; reversions and reniaiiukTs; possibilities ; (^/) rents; franchises. But (it is said) a debtor's wearing apparel, bed, or other necessary articles, beasts of the plough, tools of trade or profession, as the axe of a carpenter or books of a scholar, not being sub- ga^or's own showing, more than sixty years liad elapsed since the mortgagee took possession. Orde v. llcming, 1 Vern. 418; Coote, 223. In Ilartpole r. Walsh, (5 Bro. P. C. 275,) a bill to redeem a mortgage in the nature of a Welsh mortgage was dismissed in the Irish Chancery, and on appeal to the English House of Lords the judgment was aflirmed. In that case, a second mortgage had been made to the same party, conditioned to pay the whole debt at any time after eighteen months' notice ; which notice had long since been given. Coote, 223. But in a later case, (Teulon v. Curtis, Younge, 019, ) Lord Lyndhurst considered this decision to have been made on the ground of the impossibility of taking the long and complicated accounts after the lapse of ninety years, and of unreasonable delay in prosecuting the suit for redemption. In that case, a reversion in foe, expectant on a life-estate, had been demised for five hundred years, redeemable on payment of the mortgage debt, but without any definite time fixed for payment. The mort- gagor covenanted to pay the debt on demand ; and that, until payment, the mortgagee might enter and enjoy the premises. Lord Lyndhurst held this to be in the nature of a Welsh mortgage, and dismissed a bill filed for fore- closure. Mr. Coote says, of the origin of mortgages, — " In early tiuus, the Jews were the great money-lenders. It was held usury (or Christians to lend money at interest; any C, who married the other danj:;liter. Moore u. Poland, I Ilalst. Cli. .OH. A /y.h n. : Clinioii r. II Sliri.I. 'A. 08. ■' 1 rt>w. f). (j) I?y the feudal law, tlic niortj»a;To, as well as absolute alienation of laml, rcfiuirod tlic consent of the lord. (Ilanville says, — "Null! lieeal iViiduni vcndcrc vcl pignorarc sine permission e iliius doniini." The maxim of tlie feudal law was, — " Feiidalia, invito domino, auf a;^natis, non reete ^^ullji<•i- untur liypolliecf, rjuamvis fruetus posse esse, recei)tum est." Tend. lib. 2, tit. f>') ; J5af. Abr. Murlijai/r, A. CH. I.] THE LAW OF MORTGAGES. 15 remained, and might be recovered by action ; for it was a duty, distinct from the condition, and therefore not lost by the tender and refusal.^ 26. In the performance of conditions, a distinction is made between those which are to create, and those which are to destroy, an estate ; for the former may be performed, by con- struction of law, as near the condition as may be, according to the intent ; but the latter are to be strictly construed, unless in special cases. The conditions of mortgages were classed under the former of these heads ; for though, by per- formance, the estate was to be divested out of the mortgagee, yet it was with intent to reinstate the mortgagor in his inher- itance.2 27. The doctrine, as to tender of performance of the con- dition of a mortgage, is stated by the court in New Hamp- shire as follows ; showing that the ancient law was as rigid in protecting the rights of the mortgagor, where he was guilty of no neglect, as in decreeing an absolute forfeiture of his estate, for the slightest non-compliance with the condition of the mortgage. 28. " At common law, when lands were granted upon con- dition that the conveyance should be void upon the payment of a certain sum at a particular time by the grantor ; if he paid the money, or made a legal tender of it, at the day, he immediately acquired a right of entry, and the land was for- ever discharged from the incumbrance. ^ Coke, in his com- mentary upon this section of Littleton, says, that ' 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 feoffer enter by force of the con- dition, yet the debt or duty remaineth ; ' ' as if A. borrowed of B. £100, and after mortgageth land to B. upon condition for payment thereof, if A. tender the money to B. and B. refuseth it, A. may enter into the land, and the land is freed 1 1 Pow. 5, 6; Co. Lit. 219. i; Coote, 206, rt ; 213, a ; 221, b ; Wyatt's case, 47. Cro. Car. 427. • - 1 Tow. G ; Co. Lit. 219, I ; 205, a ; '■^ Lit. 338. 16 THE LAW OF MORTGAGES. [ciI. I. forever of the condition, lint yet the debt remaineth and may be recovered by action of debt.' And the law is without doubt the same here at this day. If the condition of a mort- gage is performed at the day, or if a legal tender is made and refused, the land is forever discharged from the incum- brance. And at common law, if the mortgagor neglected to pay at the day, tlie estate of the mortgagee became absolute, and the land was gone forever."^ (k) 29. If time and place of payment were fixed, tender must be made accordingly ; if no place were fixed, the money be- ing a sum in gross, and collateral to the title of the land, the mortgagor was bound to seek the mortgagee and tender the money personally, if within the realm, and it was not suffi- cient to tender it on the land. If a place were named, it seems, a notice of readiness there would be sufficient. So, attendance at the mortgagee's house, in case of previous notice. If no time were appointed, the mortgagor had his whole life for payment of the money, but his heirs could not pay it, unless expressly mentioned. If a time were fixed, though the condition mentioned only the mortgagor himself, his heir, executor, administrator, or the guardian of the heir, ' Per liiclinnl-on, C!i. .J. Swett r. ton. 4 Bil>l). 451 ; Kiiij; c. Tlu- Stato. &c. Horn, 1 \. If. 332, 333. Darlin-,' v. 7 Cusli. 7. Sec Merritt v. Lambert, 7 Cliupman, 14 Mass. 104 ; Hill ;■. Uot.ert- rait,^', 344. son, 24 Mis.s. 368; Blancliard v. Keii- (L) "But if the money is not [y.ud by tlie day, llic condition on wliicli tlie land was to revert to the n>ortons v. Welles, & Nash v. Preston, Cro. Car. 190; 17 Mass. 421; Pow. on Mort. 9, 10. Noel v. Jcvon, 2 Frecm. 43 ; Bcvant r. 2* 18 THE LAW OF MORTGAGES. [CH. I. 33. Bat it has been held, that there is no curtesy to the husband of a mortgagee, unless there has been a foreclosure, or redemption is barred by lapse of time.^ 34. Mr. Coventry, the learned annotator of Powell on Mortgages, remarks,^ that many modern conveyancers have substituted for the usual condition of a mortgage, an agree- ment by the mortgagee to rcconvci/, on payment of the debt. The advantage of a condition is, that, upon performance of it, the estate ipso facto revests in the mortgagor, without the necessity, as in the other case, of a reconveyance ; while it is also attended with the disadvantage, that in case of an assignment of the mortgage, payment to the mortgagee him- self might revest the title in the mortgagor, and thus a wrong be done to the assignee. He proceeds to remark, however, that this inconvenience is rather imaginary than real, because no debtor would be likely to pay a mortgage without having it delivered up to him.^ It is said, that if the condition be for a reconveyance, it can be fulfilled only by such reconvey- ance.* 34 a. Conveyance Ijy a deed absolute upon its face, to secure a debt due from another person, with an agreement by the creditor, to convey to the debtor, upon payment of the debt. Held, these two instruments constituted a mortgage."^ 35. The precise form in which the condition is expressed, or the name given to the transaction by the jiarties, is im- material, more especially in e([uity, })rovJcl('d the substance distinctly appears. Thus a deed, made in terms to secure certain debts recited therein, is a nu)rlgage.''' f/) rojiC, ill. 71. See iiifiu; /Juicr in JCijiti- " Skinner c. C"ox,4 Dev, 59; liiildwin ti'H of /iiilrinjition. r. .Jenkins, '2.T Miss. '20G\ Cotunil v. ' Ciisliorii V. Inj^lisli, 7 Vin. 157. Lon;:, '20 Ohio, 404; Koliinson r. Far- =* 1 l' Chap. 3. " Parsons v. Welles, 17 Mass. 423. (/;) Lord Il.'ile remarks, (Roscarrick r. Barton, 1 Clia. Cas. 219,) that, in the fourteentli year of Iliclianl II., parliament would not'admit of an cijuity of redf;mi)tion. Dut it i.s .said not long after to have strufo-lcd into existence. About two hundred years ago, Chief Baron Hale called un efjuity of redemption an ancient rUjltt. Ilardrcs, 409 ; Co. Lit. 204, b, n. 1. CH. I.] THE LAW OP MORTGAGES. 25 eery had established its equitable jurisdiction. And in the first year of Charles I., there is a case in which this right is supported, as a thing of course." 45. It was in reference to this interference of a court of equity with mortgages, that Lord Hale made the remark so often quoted, that, " by the growth of equity on equity, the heart of the Common Law is eaten out, and legal settlements are destroyed." ^ 46. Chancellor Kent says : ^ — " The English law of mort- gages appears to have been borrowed, in a great degree, from the Civil Law ; and the Roman hypotheca corresponded very closely with the description of a mortgage in our law. , The land was retained by the debtor, and the creditor was entitled to his actio hypothecaria, to obtain possession of the pledge, when the debtor was in default ; and the debtor had his action to regain possession when the debt was paid or satis- fied out of the profits, and he might redeem at any time before a sale" 47. On the, other hand, Mr. Butler, whose authority upon such a point is entitled to great respect, was of opinion, that mortgages were founded on the Common Law doctrine of conditions.^ Judge Story remarks,^ that, whatever truth there may be in this remark, as to the origin of mortgages of land in the English law, there is no doubt that the notion of the equity of redemption was derived from the Roman law, and is purely the creature of courts of equity. 48. So Mr. Coote remarks,^ that the Roman hypotheca closely corresponds with our idea of a mortgage. The sub- ject in pledge was retained by the debtor, and the creditor was, in default of payment, driven to his actio hypothecaria to obtain possession, and at any time before sentence the debtor might redeem. By that law, the debt was the principal, the security an incident, and when the one ceased, 1 Eoscarrick v. Barton, 1 Ch. Cas. 219. ^ 2 Story, Eq. § 1005. 2 4 Comm. 136; Chapman i". Turner, * Ibid. 1 Call, 252. 5 Coote, 40. VOL. I. 3 26 THE LAW OF MORTGAGES. [CH. I. the other ceased also ; and, until sentence, the ownership of the debtor was not displaced. ( Tick. 181 ; 317. acr. Whitney v. Frcncii, 25 Vorm. 0G3. '-^ 10 Ohio, 433. « Brown v. Nicklc, 6 Barr, 3 Dela. St. 1829, 91. i^ Jaques v. Weeks, 7 Watts. 261; 5 Bassett i-. Bassett, 10 N. H. 64. See Manuf'rs, &c. v. Bank, &c. 7 W. & S. Tifft V. Walker, ib. 150. 335. 6 N. H. Rev. St. 245. (f/) The exception applies to the assignee in insolvency of the grantor. Stetson V. Gulliver, 2 Cush. 494. VOL. I. 4 38 THE LAW OF MORTGAGES. [CH. II. with notice is bound without registration. But not a judg- ment creditor or execution purchaser.^ 26. In the case of Friedley v. Hamilton,'^ decided in Penn- sylvania, it was held, that an absolute deed and defeasance, made at the same time, constitute a mortgage ; but unless the defeasance is recorded, the conveyance is to be considered as an unrecorded mortgage, and postponed to a subsequent judgment, although the deed itself has been duly recorded. Gibson, C. J., remarks : — " Deeds, which are parts of the same transaction, constitute but one instrument. The mortgage in this instance, (for such it undoubtedly is,) consisted of an absolute conveyance, and a bond with condition to reconvey on payment of six thousand dollars by the grantor. The absolute conveyance has been recorded ; but, according to the letter of the act of assembly, the mortgage, which consists of all its parts, has not ; and it remains to be seen, whether it be well recorded within the equity of the act. The sum of the argument in support of the affirmative is, that, as the parties interested were bound to take notice of the absolute convey- ance, which was undoubtedly well recorded, enough was done to lead to an inquiry into the true nature of the trans- action, which is said to be equivalent to full notice. Con- structive notice from facts is a conclusion of law, which can be drawn only from facts actually within the knowledge of the party, and never from those of which he had only con- structive notice ; else we should have construction on construction, and inference on inference, without beginning or end. The registry of a deed was intended itself to contain all the essential parts of' full and complete notice of every fact necessary to be known, instead of barely putting the party on the scent, and requiring him to run all around the world after the grantor and the grantee, seeking information as to the true nature of the transaction. The deed recorded here was notice of nothing but what it purported to be, and 1 Mich. Ilcv. St. 2G1. 2 17 S. & K. 70. CH. II.] DEFEASANCES. 39 by that the creditor was informed that the land had been conveyed unconditionally." 27. In the case of Jaques v. Weeks,i in the same State, it was held, that in case of a deed and defeasance, the recording of the deed alone was not sufficient, within the recording acts, as against a subsequent bond fide purchaser or creditor of the grantor wdthout any other notice ; that if a purchaser have notice of the deed and defeasance, he is in equity bound in all respects like the party under whom he claims ; but that it is otherwise with a judgment creditor, or an execution purchaser, because a judgment has priority over an unrecorded mortgage. Sergeant, J., remarks : ^ — "No reason exists, why a difference should be made, in the duty of the parties to put the lien on record, where but one instrument is used, and where there are two. The great object of the recording acts is, to compel those, who claim a priority of conveyance or lien, to place the true nature of the transaction on record, so that all may have recourse to it for correct information ; but, if the deed alone be recorded without the defeasance, a false notice of the transaction is given. To allow this to be valid, leaves it in the power of the parties to hinder and defeat pur- chasers and creditors, by making that, which was in reality a mortgage, bear the appearance of an absolute deed, or other- wise, just as it suits their purposes. The mortgagee may thus become a secret trustee for the mortgagor as to the sur- plus beyond the money actually due. To say that the mort- gagor may or may not record the defeasance, as he pleases, and that if he did not, he thereby agrees that the deed shall be absolute, is to enable a party to make it either a mortgage or absolute deed, at his pleasure ; whereas the character of the instruments is indelibly stamped upon them at their original formation, constituting them in law a mortgage with all its incidents ; and, if it were once a mortgage, it always continues to be so, not liable to be changed in this respect by posterior acts or omissions." ' 7 Watts, 261. 2 lb. 268. 40 THE LAW OF MORTGAGES. [CH. II. 28. Upon the same point, Chancellor Kent remarks :^ — "A deed absolute upon its face, though taken by way of mort- gage, is certainly a lawful instrument, and the party is only subjected to the hazard of having it defeated by a subsequent mortgage duly registered." 29. In the case of Dey v. Dunhaiii,^ a deed was made to the defendant, absolute on its face, with full covenants, and acknowledged and recorded as a deed on the day of its date. It was admitted, however, that the deed was taken in the first instance as security for the payment of three notes, payable in six months, and bearing date about the same time with the deed, in January, 1810. Afterwards, on the twenty-seventh of July, 1810, about the time the notes became due, other notes were given in lieu of them, and an agreement under seal executed by the defendant, admitting that the former deed was only held as security, and if the substituted notes were paid, the deed was to be given up, and the lots recon- veyed. This agreement was never registered. The Chan- cellor remarks,^ this agreement, though not registered, " is to be considered in connection with the deed, and relates back to its date, so as to render the deed from its commencement what it was intended to be by the parties, a mere mortgage securing the payment of the notes. As a mortgage, the deed and the subsequent agreement ought to have been registered, to protect the land against the title of a subsequent bond fide purchaser. This is the language of the statute concerning the registry of mortgages ; and recording the deed, as a deed, was of no avail in this case, for the plaintiff was not bound to search the record of deeds, in order to be protected against the operation of a mortgage." Upon these grounds it was held, that the title of the plaintiff", who claimed under a sub- sequent conveyance from the grantor in trust to pay debts, should prevail over that of the defendant, although a schedule annexed to such conveyance stated that " the title to the fifty 1 James v. Johnson, 6 Johns. Ch. 432. « 2 Johns. Ch. l89. - 2 Johns. Ch. 182. CH. II.] DEFEASANCES. 41 lots is in the name of the defendant, given as collateral security to pay certain notes." To charge the trustee with notice, there should have been a statement of the amount, and num- ber, and times of payment of the notes. The plaintiff might not have inferred, from the schedule, that the defendant held any thing more than a nominal title, and perhaps as a mere trustee upon some extinguished debt. It was not even said to be a subsisting debt. 30. .The rule, as to the recording of a defeasance, applies only to a bond from the grantee to the grantor ; not to a bond from the grantor to the grantee, secured by the conveyance. Thus, a statute in Maine provided, that the title to an estate, in the possession of any person other than the party to a bond, deed, or other instrument of defeasance, shall not be affected by it unless recorded. Held, a bond made by the mortgagor to the mortgagee, and secured by the mortgage, did not come within this provision.^ 30 a. A bond of defeasance is valid in Maine against an attaching creditor of the grantor, whose attachment was made before the Revised Statutes, and who at the time of attachment had express or implied notice of the bond.^ 1 Noyes V. Sturdivant, 6 Slicpl. 104. 2 M'Laughlin v. Shepherd, 32 Maine, 143. 42 THE LAW OF MORTGAGES. CH. III. CHAPTER III. PAROL DEFEASANCES. "Whether a mortgage can be created by parol agreement, or proved by parol evidence. Doctrines of law and equity upon the subject, ted States. Practice in the Uni- 1. The rules stated in the last chapter, in relation to defea- sances, are alike applicable in courts of law and of equity ; giving to a deed and defeasance the same operation and effect, in all respects, as to a mortgage, made by a single in- strument. In addition to this weU-settled principle, courts of chancery have sometimes adopted the further one, that in equity an absolute deed may be shown to have been given as security, and thus made to operate as a mortgage, by any instrument in writing, though not under seal, and even by parol evidence. It has been said,' the fact of a deed's being given as security determines its character, not the evidence of the fact. Also, that parol evidence that a deed is a mortgage is not heard in contradiction of the deed, but in explanation of the transaction, to prevent the perpetration of fraud by the mortgagee.2 (a) 1 Miami, &c. v. Bank, &c., Wright, 249. 2 Bank, &c. v. Sprigg, 1 McL. 183, 184. See Hughes v. Edwards, 9 Wheat. 489 ; Morris v. Kixon, 1 How. 118. (a) So it is said, (Holmes r. Fresh, 9 Mis. 201,) that an absolute deed is not to be treated as a mortgage, unless all parties, not the grantor alone, so considered it. So, that the treatment of an absolute deed as conditional by the (jrantee, makes it a mortgage. Nichols v. llcynolds, 1 Ang. (R. I.) 30. So it has been held, that taking judgment for the amount of the considera- tion of a deed, is evidence to show it a mortgage. Ilamet v. Dundass. 4 IJarr, 178. But it has been held, that an absolute deed cannot be turned into a mortgage by private minutes made by the grantee. Thomaston, &c. V. Stimpson, 8 Shepl. 195. CH. III.] PAROL DEFEASANCES. 43 2. It is to be observed, however, that this rule seems to be a departure from that established principle of evidence above referred to, which excludes parol proofs, to control or vary written instruments. In general, the rules of evidence are the same in law and equity. Their jurisdiction and power are different, in reference to facts and circumstances which have been legally proved ; but the principles which govern the means of proof are substantially the same. " Equity foUows the law." Blackstone says : ' — " The rules of property, rules of evidence, and rules of interpretation in both comets are, or should be, exactly the same." Again : ^ — " Both courts will equitably construe, but neither pretends to control or change a lawful stipulation or engagement." The only deviation, in a court of equity, from the rules of evidence adopted in courts of law, is thus pointed out by the same author : ^ " When facts, or their leading circumstances, rest only in the knowledge of the party, a court of equity applies itself to his conscience, and purges him upon oath with regard to the truth of the transaction ; and, that being once discovered, the judgment is the same in equity as it would have been at law." So Judge Story says : ^ — " The modes of seeking' and granting relief in equity are also di^erent from those of courts of common law. The latter proceed to the trial of contested facts by means of a jury ; and the evidence is generally to be drawn, not from the parties, but from third persons, who are disinterested witnesses. But courts of equity try causes without a jury ; and they address themselves to the con- science of the defendant, and require him to answer upon his oath the matters of fact stated in the bill, if they are within his knowledge ; and he is compellable to give a full account of all such facts, with all their circumstances, without evasion or equivocation ; and the testimony of other witnesses also may be taken, to confirm or to refute the facts so alleged." The following remarks of the same author, in other connec- 1 3 Comm. 434. 3 ib. 437. 2 Ib. 435. • 4 1 Comm. on Eq. 29. 44 THE LAW OF MORTGAGES. [CH. III. tions, would seem to indicate, that he does not regard this peculiarity in the practice of a court of equity, as any depart- ure from the general rule of law with regard to parol evidence. He says : ^ — " Relief will be granted in cases of written instru- ments " (for mistake) " only where there is a plain mistake, clearly made out by satisfactory proofs. The rule, as to rejecting parol evidence to contradict written agreements, is by no means confined to such cases," (within the statute of frauds.) " It is founded upon the ground, that the written instrument furnishes better evidence of the deliberate inten- tion of the parties, than any parol proof can supply." The same author remarks : ^ — "As to what constitutes a mortgage, there is no difficulty whatever in courts of equity, although there may be technical embarrassments in courts of law. The particular form or words of the conveyance are unim- portant ; and it may be laid down as a general rule, subject to few exceptions, that whenever a conveyance, assignment, or other instrument, transferring an estate, is originally intended between the parties as a security for money, or for any other incumbrance, whether this intention appear from the same instrument, or from any other, it is always considered in equity as a mortgage. Eveji parol evidence is admissible in some cases, as in cases of fraud, accident, and mistake, to show that a conveyance, absolute on its face, was intended between the parties to be a mere mortgage or security for money." [b) 1 1 Comm. on Eq. 173, 174. * 2 Comm. on Eq. 335. Qj) In Morris v. Nixon, (1 How. 118,) tlie bill charged a fraudulent attempt to liold property unconditionally, under a deed absolute in form, but intended as a mortgage ; and parol evidence was admitted, that the parties met upon the footing of borrowing and lending, with an offer to secure the lender by a mortgage. It also appeared, that a bond was given to the lender. Held, a mortgage in equity, unless some subsequent bargain of a different nature were proved. CH. III.] PAROL DEFEASANCES. 45 3. Mr. Greenleaf says : ^ — "If a grantee fraudulently attempts to convert into an absolute sale that which was originally meant to be a security for a loan, the original design of the conveyance, though contrary to the terms of the writ- ing, may be shown by parol." 4. The same writer elsewhere remarks : ^ — " K the language of the deed is plainly that of an intent to make a mortgage, it is decisive ; and if the parties had a different intent, the mistake is relievable only in equity, upon a bill specially for that purpose. But if the deed is in terms absolute, or doubt- ful in meaning, it may be shown by parol evidence of the circumstances to have been intended for a mortgage." 5. He further says '.^ — " There are three descriptions of cases which are treated as mortgages in courts of equity. Fnst, where the relation of debtor and creditor, in respect of the money which formed the consideration of the conveyance, is still subsisting. This relation is essential to every mortgage, founded on the agreement of the parties. Thus, a convey- ance to the creditor, in trust to satisfy his own demand, is a mortgage, (c) Secondly, cases of fraud on the part of the creditor, or of such misconduct as ought in equity to admit the debtor to a right to redeem the land. Thus, a purchaser at a sheriff's sale, under a contract with the debtor that he may redeem, will be regarded only as a mortgage. Thirdly, cases, where by accident or mistake an absolute conveyance was made, when only a mortgage was intended. In all these cases, parol evidence is admissible to show the actual trans- action and the circumstances of the case. Where the deed * 1 Greenl. Ev. 431. ' lb. 86, n. * 2 Greenl. Cruise, 80, n. (c) So, on the other hand, where one person took a mortgage in the name of another, declaring that he intended the mortgage for the benefit of the latter, and that the principal should be his after his own death, and received the interest during his life ; it was held, that after his death the mortgage belonged to the other person. Benbow i\ Townsend, 1 My. & K. 506. 46 THE LAW OF MORTGAGES. [CH. III. is absolute in its terms, but the grantor claims it to be in truth only a mortgage, the burden of proof is on him, to show the real intent of the parties, and that the present form of the transaction arose from ignorance, accident, mistake, fraud, or undue advantage taken of his situation." 6. There can be no doubt of the admissibility of parol evi- dence to prove an absolute deed a mortgage, under any of the circumstances stated by Mr. Greenleaf. Mistake, surprise^ and fraud, (to which, perhaps, should be added, trust,^ are special grounds of equity jurisdiction ; and may in all other cases, as well as the case of mortgages, be proved by parol evidence, notwithstanding the existence of a written agree- ment between the parties, because the general rule of evidence, above referred to, is controlled by these alleged reasons for equitable relief. It will be seen, that in some cases the admis- sion of parol evidence to prove a mortgage has not been thus restricted. The reasons for thus restricting it, however, have been forcibly set forth by learned judges, even, in some instances, where they have been compelled by authority to decide against their own convictions. 7. The early English cases upon this subject are mostly predicated upon some one of the special grounds above referred to ; and, where the general rule alone has been appli- cable, parol evidence has been rejected. 8. In Jason v. Eyres,^ divers proofs touching parol declar- ations were offered and read on both sides, of which the Court would take no notice, but rejected them. 9. In Joynes v. Statham,^ an agreement for a mortgage was drawn by the mortgagee, the mortgagor being able only to make his mark, and the mortgagee omitted to insert a covenant for redemption. Upon a bill of foreclosure, the Court permitted the mortgagor to read evidence to show the omission. The Lord Chancellor said: — " Suppose an agree- ment for a mortgage drawn by the mortgagee, the mortgagor being a marksman, and the mortgagee omit to insert a cove- 1 2 Cha, Cas. 35. 2 3 ^tk. 387. CH. III.] PAROL DEFEASANCES. 47 nant for redemption, and then brings a bill to foreclose ; shaU not the mortgagor be at liberty in this court, upon reading evidence, to show the omission ? " 10. In the case of Maxwell v. Montacute,i a person agreed to lend money on mortgage, and it was proposed that the borrower should make an absolute deed, taking a defeasance from the grantee. The deed was executed, but the grantee refused to give back a defeasance. Lord Nottingham ad- mitted parol evidence of the agreement, and decreed in favor of the mortgagor. 11. In Walker v. Walker,^ Lord Hardwicke remarked : — " Suppose a person who advances money should, after the borrower has executed the absolute conveyance, refuse to execute the defeasance, will not this Court reUeve against the fraud ? " 12. Parol evidence has been received of an absolute gran- tee's demanding and receiving interest; this being considered not a variation of the agreement, but an explanation of what it was meant to be.^ 13. Where the plaintiff brought a bill for reconveyance of an estate, upon repayment of the consideration named in the deed, and the defendant in his answer denied any right of redemption, but admitted an agreement to hold in trust for the plaintiff's wife, &c., after repayment of the consideration ; the Court decreed an execution of such trust.* 14. The doctrine upon this subject in Massachusetts has been well expressed, as follows ; more particularly w4th refer- ence to instruments not under seal, offered as defeasances, but, of course, applicable a fortiori to mere verbal agree- ments. " In chancery, whenever it appears from written evidence, that land is conveyed as a pledge to secure the pay- ment of money, the conveyance will be treated as a mort- gage, in whatever form the land was pledged ; and if we had all the equity powers of a court of chancery, I should be 1 Free. Ch. 526. 3 i Pow. 151, rr. - 2 Atk. 99. See also Young v. * Hampton v. Spencer, 2 Vern. 288 ; Peachy, 2 Atk. 257. Cottington v. Fletcher, 2 Atk. 155. 48 THE LAW OF MORTGAGES. [CH. III. satisfied that the conveyance in this case, with the written (unsealed) contract of reconveyance, would be deemed in equity a mortgage, and the grantee (grantor) would be allowed to redeem. But the equity powers of this Court are derived from statute, and are extremely limited. We can relieve mortgagors only in cases where the lands are granted on condition, by force of any deed of mortgage, or bargain and sale with defeasance. Now a defeasance of any instru- ment of conveyance must be of as high a nature as the con- veyance, must be executed at the same time, and is to be considered as a part of it ; so that the conveyance and de- feasance must be taken together, and considered as parts of one contract. If, therefore, the conveyance is by deed, the defeasance must be by deed." " 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 incum- bered by any bond or other deed, or instrument of defeasance, unless they are registered. This provision canno.t avail to enlarge our jurisdiction, which was not within the purview of the act. What shall be deemed an instrument of defea- sance, must still be determined upon the principles of the common law." ^ 15. The same doctrine has been thus expressed in a sub- sequent case in Massachusetts. " The object of this bill would seem to be, to devest the mortgagee's estate by parol evidence of a promise founded on no legal consideration. If here were written evidence, the want of consideration would be fatal to the claim. And without such evidence, it would be unhinging our whole system of titles in real estate, to de- feat the operation of a legal instrument under seal, in this way. We are called on to enjoin against the use of a mort- 1 Per I'arsuns, Cli. J. Kclleran v. Flint?;. Sheldon, 13 Muss. 443 ; Saun- Brown, 4 Mass. 443. The correctness dors v. Frost, 5 Pick. 259; Bodwell i;. of this decision has never heen qucs- Webster, 13 Pick. 413; Boyd v. Stone, tioned. 22 Pick. .530. See ch. 18, s^" ; 11 Mass. 342. CH. III.] PAROL DEFEASANCES. 49 gage deed, by verbal proof that the respondent had given up his estate. The proposition is self-evidently false.^ (d) 15 a. In Maine, parol evidence is inadmissible to reduce an absolute deed to a conditional one, or to show that it was intended merely as a trust.^ 16. In New York, this question has often arisen, both at law and in equity, and has given rise to various and conflict- ing decisions. 17. In Moses v. Murgatroyd,^ where an assignment was in form absolute, but the assignee in his answer admitted it to be otherwise, parol evidence was received. 18. In Marks v. Pell,'* which was a bill to redeem, the complainant relied upon certain confessions of the defendant, the grantee ; but the Court decided that the evidence was insufficient^ the defendant having been seventeen years in the peaceable occupation of the premises as apparent owner, (e) 19. In Stevens v. Cooper,*^ where several parcels of land were mortgaged, it was held, that the mortgagor or a pur- chaser from him could not set up a parol agreement made at the time of the mortgage, that in case the mortgagor should sell either of the lots, the mortgagee would release such lot from the mortgage, on being paid so much per acre by the purchaser. 20. In Strong v. Stewart,^ it was held, that parol evidence is admissible that the defendant fraudulently attempted to convert a loan into a sale, when a mortgage was intended. 1 Per Parker, Cli. J. Hunt v. ^ 1 Johns. Ch. 119. 5 ib. 405. Maynard, 6 Pick. 492. * 1 Johns. Ch. 599. 6 4 joi^ns. Ch. 167. 2"Ellis V. Higgins, 32 Maine, 34. (d) In 1736, an estate was conveyed by a deed in form absolute. In 1 742, the grantee conveyed by a deed, which recited that the second grantee had purchased the first grantor's right of redemption in the estate. Held, the recital raised no presumption that the former deed was a mortgage. King V. Little, 1 Cush. 436. ((?) Admissions of the grantee, with accompanying circumstances, were held sufficient, in Mclntire v. Humphreys, 1 Hoffm. Ch. 31. VOL. I. 5 50 THE LAW OF MORTGAGES. [CH. III. 21. In Jackson v. Jackson/ it was held, that where a mort- gage is conditioned for the payment of money, evidence is inadmissible of its being actually given to indemnify the mortgagee as bail for the mortgagor, and that no damage has been thereby incurred. So also of declarations by the mortgagee, that the mortgage was not a lien, unless a sub- sequent mortgagee was thereby misled. 22. In Whittick v. Kane,^ parol evidence was held admis- sible to show a deed a mortgage, but not as against bond fide purchasers without notice. 23. In Patchin v. Pierce,^ parol evidence was held inad- missible at law, to show that the sum intended to be secured was less than that mentioned in the deed. Chief Justice Nelson remarked : — " An absolute deed may in equity be turned into a mortgage by parol proof ; but that is on the assumption of fraud in the grantee, upon which ground the action of the Court is sustained. If there is a mistake in the mortgage as to the amount of indebtedness of the mortgagor, the remedy, as in all cases of this kind, is to be sought in a court of equity." 24. In Van Buren v. Olmstead,^ it is held, that an execu- tion purchaser may redeem, where an absolute purchase is shown by parol to have been a mortgage. 25. In Holmes v. Grant,^ it is held, that, in general, where a contract and conveyance are made upon a negotiation for a loan, equity will treat it as a mortgage, whatever may be the form, if the lender agree to receive back his money with legal interest, or a larger amount within a certain time, and to reconvey ; if it appear that the real transaction was a loan. And gross inadequacy of price is a strong circumstance in favor of this construction. 26. In Swart v. Service,*^ it was held that a defendant in ejectment may set up the defence, that a deed absolute in form was in fact a mortgage, and the mortgage debt paid by 1 5 Cow. 173. 8 12 Wend. 61. ^ g Paige, 243. ' 1 l'aif,'c, 202. See Walton * 5 Paige, 9. « 21 Wend. 36. V. Cronly, 14 Wond. 63. CH. III.] PAROL DEFEASANCES. 51 the mortgagor, and may offer parol evidence of these facts, without connecting himself with the title of the mortgagor. 27. In this case,^ Cowen, J., remarks : — "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 Roach v. Cosine,^ and Walton v. Cronly's Administrator,^ equally applicable to a court of law, and has, it seems, ceased to be the subject of a contest ; for no objection to the doctrine is now made. For one, I was always at a loss to see on what principle the doctrine could be rested, either 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 on much the same foot- ing 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 doctrine is settled, and I am not disposed to examine its foundations, at least without the advantage of discussion." 28. In the same case, Mr. Justice Bronson, dissenting, re- marked : * — "I cannot agree with my brethren, in following one or two recent cases, which hold that an absolute deed can be tiurned into a mortgage in a court of law, by parol evidence. Where the transaction was intended as a mort- gage, and through fraud or mistake, the conveyance has been made absolute in its terms, a court of equity, acting upon well established principles, can reform the deed. But this will only be done on a direct and appropriate proceed- ing for that purpose, and after such ample notice to aU par- ties in interest, as will tend most effectually to guard against surprise, fraud, and false swearing. And, besides, a court of equity can and will protect third persons who may have 1 21 Wend. 38. - 9 Wend. 227. 3 14 Wend. 63. * 21 Wend. 39. 52 THE LAW OP MORTGAGES. [CH. III. parted with their money on the faith of the deed. But a court of law has neither power nor process to reform a deed. If parol evidence to contradict or insert 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 ob- vious danger of fraud, surprise, and perjury. And beyond this : when a court of law turns an absolute deed into a mortgage, it has no power to protect a bond fide purchaser. Other mischiefs will be likely to result from admitting such evidence ; but, without attempting, at this time, to point them out, I shall content myself with dissenting from what I deem a new and very dangerous doctrine." 29. In Eckford v. DeKay,^ the Chief Justice, in giving the opinion of the Court, remarked, that the particular recital of the indebtedness, as the consideration for the land conveyed, was one of the strongest indications that the parties in- tended an absolute deed. If the consideration had been stated generally, the fact of its being received in payment of this particular debt, must have been proved aliunde^ by a written receipt or parol evidence ; whereas, here it appeared on the face of the deed. 30. In the case of Webb v. Rice,^ the plaintiff claimed under a warranty deed from one Moore, and the defendant under a subsequent warranty deed from the same person. The plaintiff's deed was duly recorded, as such. The de- fendant offered parol evidence, to prove the plaintiff's deed a mortgage, of certain declarations of the plaintiff, subsequent to his deed, importing an agreement on his part to restore the land upon certain payments to be made by Moore, but not definitely showing the terms of such agreement. Held, the evidence was competent and sufficient to defeat the action. Bronson, J., again dissented, upon substantially the same grounds as in the former case. ' 26 Wend, 39. See Brown v. Dewey, 2 Barb. Sup. Ct. 28. ^ i Hill, 606. CH. III.] PAROL DEFEASANCES. 53 30 a. In a late case it is said, parties to a deed, absolute on its face, or their privies, cannot, by evidence, vary its terms, or show that, in fact, it was a mortgage, and intended as such ; and this is the rule in equity as well as at law.^ 31. In Pennsylvania, in the case of Peterson v. Willing,^ parol evidence was admitted to prove, that a mortgage run- ning to one person was intended as security for another. In the same State it has been held,^ that if the question, whether a mortgage or not, depend upon writings, it is for the court ; if upon parol evidence, for the jury. In another case,* Sergeant, J., remarks : — " When it is once ascertained^ that the conveyance is to be considered and treated as a mortgage, then all the consequences appertaining in equity to a mortgage are strictly observed, and the right of redemp- tion is regarded as an inseparable incident." 32. In New Hampshire, as in Massachusetts and Penn- sylvania, the rule is adopted, that before equity will ijiterfere for the relief of a supposed mortgagor, the fact of a mortgage must first be established by legal evidence. In the case of Bickford v. Daniels,^ Judge Woodbury remarks : — " The practice and decisions must have been inadvertent, which would permit a court of common law to sit in chancery to settle a question, which must be settled or agreed before they are empowered to apply any chancery principles to the case." (/) 33. In North Carolina, although a deed, absolute on its face, cannot be turned into a mortgage, by parol evidence of a concurrent agreement to that effect ; it may be, by evi- 1 Taylor v. Baldwin, 10 Barb. 582. * Jaques v. Weeks, 7 Watts, 268. = 3 Dal. 506. 6 2 N. H. 73. See Runlet v. Otis, 2 MVharf r. Howell, 5 Binn. 499. N. H. 167; Clark v. Hobbs, 11 N. 11. Ace. Carter v. Carter, 5 Tex. 93. 122. (/) So, it is said by Judge Story : — "A court of law may be compelled, in many cases, to say that there is no mortgage, ■when a court of equity would not hesitate a moment in pronouncing that there is an equitable mortgage." Flagg V. Mann, 2 Sumn. 527. 5* 54 THE LAW OF MORTGAGES. [CH. III. dence of facts and circumstances, which, to the apprehen- sion of men versed in business, and judicial minds, are in- compatible with the idea of a purchase, and leave no fair doubt that a security was intended.' The omission of a clause of redemption must be alleged to have occurred by- ignorance, mistake, fraud, or undue advantage, such as gross inadequacy of price.^ 34. Conveyance for forty dollars, of an interest in a gold mine, proved to be worth four hundred dollars. The grantor was, at the time, in great distress for money, and the alleged price was not paid at the preparation or execution of the deed, nor any security given for it. The grantees, having afterwards sold the interest for four hundred dollars, retained forty dollars, and paid the grantor sixty dollars more from the proceeds. The grantor declared that the conveyance was made in trust, in presence of the grantees, who did not deny it. After the deed, the grantor remained in possession, as before, taking the profits. Held, a mortgage.^ 85. In Indiana, in the case of Conwell v. Evill,* the com- plainant brought a bill in equity to redeem certain premises, which he had conveyed to the defendant by an absolute deed. The bill set forth, that the deed was intended for a mortgage ; but the answer expressly denied it. It was held, that though the intention alleged might be proved by parol evidence, such evidence, to be effectual, must be very clear and decisive ; and that evidence of the defendant's admis- sions should be received with great caution. It was further held, that proof of the property's having cost the plaintiff about three times as much as the defendant paid for it, and of the plaintiff's having retained possession two years after the conveyance, did not warrant a presumption that the ' Blackwcll V. Ovc'i-l)y, 6 Ired. E(i. J Blackwcll v. Overliy, 6 Ircd. Eq. 38. 38 ; McLaurin v. Wri},rht, 2 ircd. Cli. * 4 Blackf. 67. Sec Blair v. Bass, 4 94 ; Elliott v. Maxwell, 7 Ired. Eq. Blackf. 539 ; Aborn v. Burnett, 2 Blac'.-.f. 246 ; Sellers v. Stalayc, II). 13. 101. •■' Kelly ;;. Bryan, 6 Ired. 283. Sec Strcator v. Jones, 1 Mur. 449. CH. III.] PAROL DEFEASANCES. 55 deed was a mortgage, against the form of the deed and the answer of the defendant. 36. In Vermont, it is well settled, that a court of chancery- will treat an absolute deed of real estate, given to secure the payment of a debt, as a mortgage, as between the imme- diate parties, especially if the grantor remains in possession, though the defeasance rests wholly in parol.' 37. In this State, the rule proceeds upon the ground, that when there is an attempt to set up such an instrument as an absolute conveyance, there is a fraudulent application or use made of it ; and this is a proper ground upon which chan- cery may proceed.^ (g) 38. In Connecticut, the following case has been very re- cently decided. A deed was made with the following con- dition : " In case pays to the sum of $1,600, with interest, &c., on or before the 1st of January, 1843, then this deed shall be void," &c. The premises being afterwards mortgaged a second time, in a bill for foreclosure, brought by the first mortgagee, parol evidence was offered to prove, that immediately before the execution of the deed to him, there was a settlement of their concerns between him and the mortgagor, and about eleven hundred dollars found to be due ; that he then agreed to advance enough more to make up sixteen hundred dollars, surrendering all the previous evi- 1 Campbell v. Worthington, 6 Verm. ^ 13 Verm. 349. 448 ; Baxter v. Willey, 9 Verm. 280 ; Wright V. Bates, 13 Verm. 348 ; Mott V. Harrington, 12 Verm. 119. (g) A testator conveyed a farm to the defendant, taking back a bond and mortgage. The executor brings a bill in equity to compel performance df the bond, according to the plaintiff's construction thereof The answer set forth the bond and mortgage, and a performance of the condition. Held, the question of the construction as well as performance of the bond was to be tried at law, and a bill in equity did not lie. Washburn v. Titus, 9 Verm. 211. The admission of an absolute grantee, that the deed was made for a debt due him, is insufficient to make it a mortgage. Bigelow v. Top- liff, 25 Verm. 273. 56 THE LAW OF MORTGAGES. [CH. III. deuces of debt, and taldng a mortgage for the whole ; which arrangement was effected by the mortgage ; and that the mortgagee had no other security. Held, parol evidence of these facts was admissible, being consistent with the terms of the deed.i 39. The Supreme Court of the United States remark, as follows : — "A deed, absolute on the face of it, for property, offered to secure a loan in a case in which the parties origi- nally met upon the footing of borrowing and lending, will be considered a deed in the nature of a mortgage, to secure a loan, though another consideration shall be in the recital of the deed than the loan, unless it shall be proved that the par- ties afterwards bargained for the property independently of the loan ; or, if it shall appear that the chief inducement of the grantor, in making the deed, was to procure the loan ; or that the grantee, after the execution of the conveyance, treated the money which he had advanced, as a substantial part of the consideration, and not as a loan." ^ 40. So, it has been held in the Circuit Court of the Uni- ted States, that where a deed is in form absolute, in equity it may be proved to be a mortgage, by admissions of the grantee that it was such, and that a defeasance was to be made and filed with it ; by proof of moneys paid by the grantor, corresponding in amount with interest rather than rent ; of his possession, long subsequent to the deed ; of the relation of debtor and creditor between the parties ; and of the excess of value of the land over the sum paid. The Statute of Frauds is not applicable.^ (h) 1 Bacon v. Brown, 19 Conn. 29. 1 How. 127. Sec Taylor v. Luther, 2 Sec Brainerd v. Brainerd, 15 Conn. Sumn. 228. 575. '-^ Bcntlcy v. riielps, 2 Woodb. & Min. 2 Per Wayne, J. ; Morris v. Nixon, 426. (h) It may be seen, from the following additional citations, that the doc- trine upon this subject, in the United States, is quite unsettled, the Courts of each State, having apparently been governed in their decisions by its own local law or practice, and by the particular circumstances of the several oases which have come before them. CH. III.] PAROL DEFEASANCES. 57 The following facts were held to show, that a deed, absolute on its face, could only have been intended as a mortgage. The consideration expressed was less than one third the value of the land, and the grantor could then have sold it for its value ; under the same arrangement under which the land was conveyed, and about the same time, the grantor took a bill of sale, absolute on its face, for some perishable property, and it was admitted that it was only a security ; the grantee remained in possession of the land for nearly two years, before It was claimed by the grantor, without any charge of rent ; the sum paid on the mortgage of the perishable estate exceeded the amount due on that mortgage ; and the sum alleged as the value of the land, and the purchase-money, was the precise and peculiar fraction of S31.40. Kemp v. Earp, 7 Ired. Eq 167. It has been held, in the same State, that an answer in equity, accom- panied by other circumstances, may prove an absolute deed to be a mort- gage ; but not parol declarations against the deed and the answer. Allen V. McRae, 2, 325. See McLauriu v. Wright, 4, 94. In Tennessee, a defeasance may be proved by parol, or by a subsequent bond. Brown v. Wright, 4 Yerg. 57. So, where a conveyance is made in consideration of a preexisting debt, absolute upon its face, but it is proved that there was a condition existing, and a part of the same transaction, the Court will construe the transaction as a mortgage. Hinson v. Partee, 11 Humph. 587. See Scott v. Britton, 2 Yerg. 215 ; Yarborough v. Newell, 10 lb. 376. But in case of a parol con- dition to a written contract, omitted by fraud or mistake, equity will not re- form, unless there be full, clear, and unequivocal proof Perry v. Pearson, 1 Humph. 431. See Overton v. Bigelow, 3 Yerg. 513 ; Zane v. Dickerson, 10 Yerg. 373. So, in Arkansas, parol evidence is admissible in equity. Blakemore v. Byrnside, 2 Eng. 505. But this is on the assumption of fraud. Jordan v. Fenno, 8 Eng. 593. So, in Illinois. Hovey v. Holcomb, 11 111. 660. See Coates v. Woodworth, 13 111. 654 ; Delahay v. McConnell, 4 Scam. 156. In Missouri, an absolute deed cannot be shown to be a mortgage, at law. Ilogel v. Lindell, 10 Mis. 483. Parol evidence has been held inad- missible in Mississippi. Watson v, Dickens, 12 Sm. & Mar. 608. But, in a later case, it is decided, that an absolute deed may be proved a mortgage by a contemporary or subsequent parol agreement. Prewett v. Dobbs, 13 Sm. & Mar, 431. See Craft v. Bullard, 1 S. & M. Ch. 366 ; Yasser v. Yasser, 23 Miss. 378. In Maryland, in the case of Watkins i\ Stockett, 6 Har. & John. 435, parol evidence was held inadmissible of a condition, unless in case of fraud, surprise, or mistake. Ace. Bend v. Susquehanah, &c. 6 H. & John. 128. But in such case it is admissible. Bank of West- minster V. Whyte, 1 Maryland, Ch. 536. And it has been since held, that if the intention of the parties was to secure a debt, the deed is a mortgage. Bank, &c. v. W^hyte, 3 Md. Ch. 508. In Texas, parol evidence is admis- 58 THE LAW OF MORTGAGES. [CH. III. sible to show that a deed, absolute on its facBj^was intended as a mortgage. Stamper v. Johnson, 3 Texas, 1 ; Carter v. Carter, 5 Texas, 93. As to the rule in Virginia, see Ross v. Norvell, 1 Wash. 14. In Alabama, Hudson v. Ishell, 5 St. & P. 67 ; English v. Zane, 1 Port. 328 ; Chapman v. Hughes, 14 Ala. 218; Bryan v. Cowart, 21 Ala. 92. In Kentucky, Murphey v. Trigg, 1 Monr. 72 ; Lewis v. Rolands, 3 Monr. 406 ; Lindley v. Sharp, 7 Monr. 248 ; Thompson v. Patton, 5 Litt. 74 ; Reed v. Lansdale, Hardin, 6. In Delaware, Wadsworth v. Loranger, Ilarring. Ch. 113. In Georgia, U. S. Dig. 1848, 119. In South Carolina, except in case of fraud or mistake, the evidence must be clear and convincing. If the answer deny the allegations of the bill, it cannot be overcome by the testimony of one witness. Arnold V. Mattison, 3 Rich. Eq. 153. Equity will not relieve a grantor who makes an absolute deed to protect the property from his creditors ; nor his administrator. lb. CH. IV.] REDEMPTION CANNOT BE RESTRICTED. 59 CHAPTER IV. DOCTRINE OF EQUITY IN THE CONSTRUCTION OF THE CONDITION OF A MORTGAGE. RESTRICTION UPON THE RIGHT OF REDEMP- TION, ETC. 1. The right of redemption cannot be restricted. 15. Though the condition is con- tained in a separate defeasance. 18. Application of the rule to col- lateral or subsequent negotiations be- tween the parties. 21. Not applicable in case oi family settlements. 25. Exception in case of corpora- tions. 28. Release of the equity of redemp- tion, or cancelling of a defeasance ; whether valid. 44. Contract to pay more than the mortgage debt and interest. 51. Subsequent agreement to limit the time of redemption. 56. The mortgagor has the benefit of any new acquisitions made by the mort- gagee. GO. Case of Flagg v. Mann. 62. Conditional assignment of a mort- gage. 1. A MORTGAGE being intended simply for security, and the nature of the transaction affording opportunity and temptation to the lender to take advantage of the necessities of the borrower ; courts of equity have strenuously resisted all attempts to abridge the right of redemption, and held even express agreements for that purpose to be wholly void ; contrary to the otherwise universal principle — ^^ modus et conventio vincunt legem^ ^ The maxim upon which they proceed is, " once a mortgage, always a mortgage." (a) Thus, it has been held, (though under the circumstances of ' Coote, 49. See Youle v. Richards, Saxt. 534. (a) Unless it would operate fraudulently on subsequent purchasers with- out notice.. Miami, &c., v. Bank, &c., Wright, 249. See Wilcox v. Morris, 1 Mur. 117; Stover v. Bounds, 1 Ohio, (State,) 107. The civil law al- lowed no clog upon the right of redemption. 2 Story's Eq. § 1019. An agreement, in a mortgage, or an instrument in the nature of a mortgage, that, upon breach of the condition, the property shall become absolute in the mortgagee, is a nullity. Walling v. Aikin, 1 McMulIau, Ch. 1. 60 THE LAW OP MORTGAGES. [CH. IV. this particular case — m/ra, p. 68 — the decision was after- wards reversed,) that the heir of the mortgagor may redeem, though the right to redeem the mortgage is, in terms, limited to the life of the mortgagor himself, who covenants that it shall never be redeemed after his death.' So, a jointress or assignee may redeem, though an express covenant limits the right to the heirs male of the body of the mortgagor. The connection between a mortgage and a right to redeem, has been said to be as inseparable as that between a distress and replevin.^ 2. The rule thus stated has been recognized by numerous and eminent judges in various forms, but all embodying sub- stantially the same general principle. 3. " The law has always contemplated with jealousy any attempt to evade its provisions, in respect to the right of redemption of estates conveyed for security. And while, by reason of a breach of the condition of the deed, the estate becomes absolute in the mortgagee in law ; yet equity has always preserved to the mortgagor a right of redemption of the mortgaged premises." ^ 4. " A very distinguished chancellor said, a century past, that there had been a constant contest between equity and the rapacity of those who had attempted to take undue advantage of the poverty of those with whom they had dealings." ^ 5. " It is not very material to criticize the precise language, which either party to the suit employs in the relation of the transaction, or to stop long in scrutinizing the various propo- sitions made, or by which party they were made. If the transaction in the first instance appears to have been intended as a pledge or mortgage, with a proviso for a reconveyance within a certain time, such circumstance will vitiate the sale, and turn the absolute conveyance into a mortgage, and the ' Newcomb v. Bonham, 1 Vcrn. 7. * Per Huston, J., Iliester v. Madiera, 2 Howard v. Harris, 1 Vcrn. 33, 190. 3 W. & Scrg. 387-8. 3 Per Hubbard, J., Waters v. Kandull, 6 Met. 483. CH. IV.] REDEMPTION CANNOT BE RESTRICTED. 61 proviso will be rejected as repugnant to the rule of equity, that the right of redemption cannot be limited or restrained." ' 6. " Any agreement that the assignment was to be an absolute sale, without redemption, upon default of payment on the day, was unconscientious, oppressive, illegal, and void." 2 7. " The consideration which induced courts of equity to adopt this maxim, and to reject provisos and agreements, converting that into a sale which was originally a mortgage, on a given event, or on payment of a further sum, was, that if such provisos and agreement^ were allowed, there would have been a door open for the imposition of every kind of restraint on the equity of redemption, and thereby the bor- rower, through necessity, would have been driven to embrace any terms, however unequal or cruel ; which would have tended greatly to the furtherance of usury, and the conversion of the equitable jurisdiction of the Court into an engine of fraud and oppression." ^ 8. In the case of Spurgeon v. CoUier,* Chancellor North- ington remarked : — " The policy of this Court is not more complete in any part of it than in its protection of mortgages ; and, as a general rule for that purpose, a mortgage once redeemable continues so till some act is done afresh by the mortgagor to extinguish the redemption ; and a man will not be suffered in conscience to fetter himself with a limitation or restriction of his time of redemption. It would ruin the distressed and unwary, and give unconscionable advantage to greedy and designing persons." The same judge remarked, in the case of Vernon v. Bethell : ^ — " This Court, as a court of conscience, is very jealous of taking securities for a loan, and converting such securities into purchases ; and therefore it is an established rule, that a mortgagee can never provide, at the time of making the loan, for any event or condition on which the equity of redemption shall be discharged and the ' May V. Eastin, 2 Port. 414. ' Pow. 116 a, n. ■•'Per Kent, Chancellor, Henry y. Davis, * 1 Etlen, .59. 7 Johns. Cha. 42. * 2 Eden, 113. VOL. I. 6 62 THE LAW OF MORTGAGES. [CH. IV. conveyance become absolute. And there is great reason and justice in this rule ; for necessitous men are not, truly speak- ing, free men ; but, to answer a present exigency, will submit to any terms that the crafty may impose upon them." 9. So with respect to any express provision in the mort- gage, that the mortgagor shall not claim relief in chancery, it is said : — " Equity is part of the law of England, and there- fore it cannot in any manner of way be provided by agree- ment, in case of a mortgage, that the Court of Chancery should not give relief. For such an agreement would be contrary to natural justice in the creation of it, and prove a general mis- chief, because every lender would by this method make himself chancellor in his own case, and prevent the judgment of the Court." ' 10. In the case of Jason v. Eyres,^ the right of redemption was limited only to the father, not to his heir, who claimed to redeem. The Lord Chancellor decreed it a mortgage, saying, that if the father had lived after three years, (the time fixed for payment of the money,) it could not be denied but he might have redeemed it; and that no mortgage, by any artificial words, can be altered, unless by subsequent agree- ment. 11. In Bowen v. Edwards,^ lands worth <£200 per annum were mortgaged for £250, and a deed was sealed for the absolute sale of them, if the money should not be paid at the end of seven years. The mortgagee, before his death, exhib- ited a bill against the mortgagor for the land or the money. Held, the mortgagor might redeem from the son of the mort- gagee, after the seven years had expired. 12. In the case of Howard v. Harris,* Howard mortgages land, and the proviso for redemption was thus : — " Provided that I myself or the heirs males of my body may redeem. The question was, whether his assignee should redeem it ; and it was decreed he should ; for if once a mortgage, always > Treat, of Eq. lib. 1, c. 1, §4- ^1 Rep. Ch. 222. ^ 2 Clia. Cas. 33. * 1 Vein. 33, 190. CH. IV.] REDEMPTION CANNOT BE RESTRICTED. 63 a mortgage. In this case part of the mortgaged estate hap- pened to be in Mrs. Howard's jointure, and it was admitted that she thereby was entitled to a redemption of the whole mortgage. In a note to the above case it is stated, that the words of the proviso are, " that if he or the heirs of his body paid the £565, the mortgage-money and interest at two years' end, the conveyance to be void." Then a further sum of money was borrowed by Howard, and the above-mentioned proviso was released by the deed, and another proviso contained in such last-mentioned deed, that " if he or the heirs of his body begotten should at a given day therein mentioned pay <£ 1,000, then," &c. And the mortgagor covenanted that no person should have the power or benefit of redemption except him- self and the heirs of his body. 13. In Sevier v. Greenway,' a mortgage was made for one thousand years, to secure <£80, which by assignments came to the defendant, Greenway. In November, 1799, a convey- ance was made, reciting these facts, and that Greenway had lent to the plaintiff, then owning the equity of redemption, the further sum of £50, and had contracted to purchase the mortgaged property at X150, from which Greenway was to retain the X50 and £80 ; and declaring that the plaintiff granted and released the premises to the defendants, Greenway and Marchant, their heirs and assigns, to the use of Marchant during the life of Greenway, in trust for him ; remainder to Greenway and his heirs ; provided, if the plaintiff within two years wished to repurchase, and paid Greenway <£150 with interest, the defendants should reconvey. On the 11th of January, 1800, articles of agreement were made, reciting, that the plaintiff was entitled to and possessed of the prem- ises, being very much out of repair ; and that, not being able to repair, he had applied to Greenway to repair them at his own expense ; that Greenway might do this, let the premises, and retain them till his expenses, with interest, should be 1 19 Ves. 412. 64 THE LAW OF MORTGAGES. [CH. IV. repaid ; the plaintiff, who had been tenant in tail, agreeing to levy a fine, and Greenway covenanting to repair the premises standing upon mortgage; and upon being reimbursed to deliver up the articles to be cancelled. August 12, 1800, articles of agreement were made, reciting that Greenway had expended X40 in repairs, and the plaintiff had applied to him for further repairs, and for a further loan of £10, and providing that in consideration of this loan the plaintiff would cause the tenants to quit the premises needing repairs, so that Greenway might enter and repair; that Greenway should let them, and receive the rents till repaid the £40, <£10, and all sums to be laid out, with interest ; that the plaintiff should not meddle with the letting of the premises, or receipt of the rents, till Greenway was fully paid ; that the proviso of 1799 should be observed, and the plaintiff should not repurchase till payment of the <£160 and the further sums, with interest. The fine was levied, and Greenway had been long in posses- sion. The value of the premises in 1799 was variously estimated from £15 to £40 per annum. The plaintiff brings a bill for redemption, and Greenway by his answer alleges great improvements, as well as repairs, and claims as pur- chaser. Per Sir William Grant, M. R. : — " If this had rested upon the conveyance of November, 1799, possession being taken, I do not see why it should be considered otherwise than as a sale. Much stress, however, need not be laid upon the circumstances relating to the taking possession, as the agreement of January, 1800, precludes that question ; provid- ing, that a fine shall be levied of the premises expressed to be standing upon mortgage ; and the third instrument goes further, providing for a further loan of XIO. I shall therefore decree upon this as a mortgage." The accounts were accord- ingly directed, with rests ; the defendant to be allowed for repairs and lasting improvements, and the costs of taking the accounts ; but having insisted on a purchase, no costs to the hearing. 14. In Clench v. Witherly,^ a copyhold estate was uncon- 1 Cas. Temp. Finch, 376. CH. IV.] REDEMPTION CANNOT BE RESTRICTED. 65 ditionally surrendered to the use of a third person, but a judgment given at the same time, as further security, with a note in writing under the hands of the parties to the surren- der, agreeing that if the surrenderor should within a twelve-' month pay to said third person the consideration-money of the surrender, and all his disbursements for fines, he should surrender back the premises to the surrenderor and his heirs, and acknowledge satisfaction on the judgment. Upon a bill brought sixteen years after the expiration of the twelve months, held, the surrender and judgment were mere securities for the repayment of money, and a redemption was decreed. 15. If the condition for redemption, restricted to the joint lives of the, parties, is contained in a separate defeasance, the restriction will still be set aside. 16. Mortgage for .£1,000. A third person offered to pay off the mortgage and advance .£200 more, and the mortgagor thereupon conveyed absolutely to him, with the usual cove- nants, including a covenant for further assurance, and the grantee by a separate deed covenanted to reconvey to the grantor upon payment of the two sums in their joint lives, it being agreed that the grantor should be tenant of the prem- ises at the rent of £70 per annum. The grantor was after- wards arrested at the suit of the grantee for arrears of rent, carried to prison, and thence removed by means of the grantee to the house of another person, where the grantee endeavored to persuade him to give up the defeasance. He refused to do so, but made a bill of sale of all his property to his son, and soon afterwards died. The son was soon induced to give up the defeasance, and the grantee then claimed an absolute title. A redemption was decreed, partly upon the ground that if a restriction upon the equity of redemption were in any case allowable, the conduct of the defendant in this case would in equity render the right of redemption absolute, he having prevented the exercise of the right stipulated for, by fraud, oppression, and imposition.' ' Spurgeon v. Collier, 1 Ed. 55. 6Q THE LAW OF MORTGAGES. [CH. IV. 17. In Jaques v. Weeks,^ a stipulation in the defeasance, that on failure to pay within one year the defeasance should be void, was held not sufficient to overrule the legal character of the instrument as a mortgage, or restrict the right of redemption to one year. 17 a. A. having purchased land and taken a conveyance to a surety for the price, as indemnity to the surety, entered into a contract with B., by which B. was to pay the balance of the purchase-money remaining due, to take a conveyance from the surety, and to convey to A., upon payment of the money advanced by B., at a time specified. A. was to remain in possession and enjoyment of the land in the mean time, paying a rent equal to the interest of the debt to B., and to make payment without assistance from any one. Held, a mortgage, and that A. was entitled to redeem, though the money was not paid at the day, without reference to the source whence he derived the money.^ 17 b. An agreement to convey land absolutely, given merely as security, will be subject to the rule above stated, and construed as a mortgage. 17 c. The maker of two notes gave an instrument to his sureties on the notes, reciting that the notes were given for the purchase of land, and then added : — "In case I fail to pay said notes, I do bind myself, my heirs, &c., to convey to said sureties the aforesaid land." Held, a mortgage, and, on fail- ure of the principal to pay the notes, that so much of the land as would satisfy the claim of the sureties should be sold, and that the sureties were not entitled to an absolute conveyance.^ 18. The unrestricted right of redemption will be extended to transactions between the parties, in the nature of security for the debt, subsequent to the original mortgage. Thus if after forfeiture of a mortgage, and execution issued upon the bond secured by it, other property is conveyed to secure a 1 7 Wfitts, 261. 3 Courtney i'. Scott, 6 Litt. 457. 2 Walling V. Aikin, 1 McMullan, Ch. 1. CH. IV.] REDEMPTION CANNOT BE RESTRICTED. 67 portion of the debt, redeemable on payment of a certain sum at a future day ; the conveyance will relate to the original transaction, and be held a mortgage. Hence, if after the day of payment the land is conveyed to a bond fide purchaser, even though six years have elapsed since the day of paym nt, the mortgagor will be entitled to an account, and to be cred- ited with the price for which the property was sold.' 19. A third person may also have the unlimited right to redeem, under certain circumstances, although there is no direct mortgage from him to the party of whom redemption is claimed. 20. One having an equitable title to land, sold it, and received a part of the price ; but, finding difficulty in obtain- ing the balance, made another sale to another person, upon condition that he would advance such balance, and give the first purchaser six months to pay it ; in which case the first purchaser was to have the land, otherwise the second pur- chaser should have it. This contract was approved by the first purchaser, who accordingly promised to pay the money to the second, and soon afterwards removed from the land, and the second purchaser took possession. The first pur- chaser, having failed to pay the money within the six months, brings a bill in equity to redeem. Held, as there had been no treaty for a sale, nor any discussion concerning the ade- quacy of the price, which was far less than the real value, the transaction constituted a mortgage, and a redemption was decreed.2 21. It has been held, in England, that where a mortgage is made to or for a relative or wife, the right of redemption will not be allowed beyond the time stipulated, the circumstances raising a presumption that the mortgage was intended to be beneficial to the mortgagee. In case of marriage settlement, non-fulfilment of the condition is an election to abide by the settlement, and no redemption allowed, especially after the mortgagor's death, and against a bond fide purchaser from ' Bloodgood V. Zcily, 2 Caines's Cas. ^ Pennington v. Ilanby, 4 Munf. 140. inEr. 124. 68 THE LAW OF MORTGAGES. [CH. IV. the wife. It is said,' that in these cases the contract will be considered as wearing a kind of double aspect ; and that there is no danger of any fraud or practice against the mort- gagor, which is the mischief intended to be prevented by the maxim, that an estate cannot be a mortgage at one time, and an absolute purchase at another. 22. Thus where one conveyed to a relation by marriage, by an absolute deed, taking back another deed, which pro- vided that the land might be redeemed during the life of the grantor ; held, the heir of the grantor could not redeem.^ 23. In the case of Tull v. Owen,^ a husband and wife made an absolute conveyance of her land by way of sale with fine. Subsequent deeds passed between the parties, which indicated that the original deeds were intended to operate as a mortgage ; and there was an express recital of the fact in one of the deeds produced from the possession of the person claiming as purchaser, but not signed by him. After the lapse of many years, and the death of the wit- nesses, the heir of the wife brings a bill to redeem, upon the ground that the deeds passed an absolute estate only during the life of the husband. Held, the bill should not be main- tained. 24. A conveyance in fee was made to the husband of the grantor's kinswoman, in consideration of <£ 1,000, with a redemise for ninety-nine years, if he should so long live, containing a covenant, that if he should pay <£ 1,000 with interest at any time during his life, the grantee should recon- vey ; and if he did not pay the money, his heirs, &c., should have no power to redeem. After the grantor's death, the money not having been paid, his heir brings a bill to redeem. It was held, in reversal of a decree of Lord Nottingham, that the bill could not be maintained, for the following reasons : — It was proved, that the grantor intended in this transaction to 7nake a setllement, and to confer a kindness and a benefit M Tow. 127 a. 8 4 Y. & Col. 192. - Kiii}^ V. IJioinley, 2 Abr. Eq. 595; Bonliam v. Newcoinlj, 2 Vent. 364. , CH. IV.] REDEMPTION CANNOT BE RESTRICTED. 69 upon a mortgagee, in case he should not redeem during his life. The right of redemption being extended to the lifetime of the grantor, no foreclosure would have been allowed while he lived, even if the bargain had proved unfavorable to the grantee, by the long continuance of his life ; hence, on the other hand, no equity should be raised to deprive the grantee of the estate, upon his death. The decision was afterwards affirmed in parliament.^ 25. An exception has been allowed to the general rule against restricting the period of redemption, in the case of corporations, whose charter provided for such limitation. But the language of the charter will be strictly construed in favor of the mortgagor. 26. Thus it has been held in New York,^ that upon failure of the mortgagor, under the act of 1837, for loaning the United States' deposit fund, to pay the interest on the day it fell due, the loan commissioners became seized of an abso- lute estate in fee ; and after the day of sale, payment not being made, the mortgagor cannot maintain ejectment. 27. A mortgage was made to a corporation, whose charter provided, that whenever the corporation should purchase real estate on which they had made loans, the mortgagors should have the right of redemption, on payment of the debt and costs, so long as it remained in the hands of the corporation unsold. The corporation having contracted to sell the prop- erty, one third of the purchase-money having been paid, and possession taken by making surveys, &c. ; held, the right of redemption was not thereby extinguished. To produce this effect, an actual conveyance must have been executed.^ 28. Another application of the same general principle, is that relating to a release of the equity/ of redemption to the mortgagee, or a purchase of it by him subsequent to the original transaction. Upon this subject Professor Greenleaf 1 Bonham v. Newcomh, 2 Vent. 3G4 ; ^ The Fanners' &c. v. Edwards, 26 1 Pow. 127 o ; Wolstan v. Aston, Hardr. Wend. 541. 511. 2 Olmstead v. Elder, 2 Sandf. Sup. 325. 70 THE LAW OF MORTGAGES. ' [CH. IV. remarks as follows : ' — " The general rule is well settled, that the mortgagee shall not, at the time of the loan, contract with the mortgagor for an absolute purchase, in case the money shall not be paid as agreed. The case of Tasburgh v. Echlin has been thought to justify an exception to this rule, where payment of the debt and interest is limited to a par- ticular period. But a late writer remarks, that this case was determined on circumstances so special, that it is scarcely an authority for any subsequent case, and is hardly applicable to the point to which it has been adduced." (b) 29. It is said, a condition that if the mortgagee, on failure of the mortgagor to pay the debt when due, pay him a fur- ther sum, the former shall become absolute owner, is void ; though an agreement to give the mortgagee the right of pre- emption, in case of a sale, has been assumed to be valid. Chancellor Kent, hovi^ever, suggests that this agreement, also, would be void.2 At any rate, it will be very strictly con- strued, and the fairness and value must be shown by clear and convincing proof. Loose expressions of the mortgagor, that he had received satisfaction for the land, without iden- tifying it, are insufficient proof.^ The mortgagee will not be allowed to make use of the incumbrance, as a means of obtaining the equity of redemption for less than its value.'* 30. Mortgage for .£200, with a bond conditioned, that if the sum were not paid at the day, and if the mortgagee should then pay the mortgagor the further sum of .£78 in full for the purchase of the land, the bond should be void. The £200 not being paid, and the mortgagee having paid. 1 2 Grccnl. Criiiso, 97 n ; 1 Tow. 133; » Ilolntluc v. Gillesi)io, 2 Johns. CIi. Cootf, ;i(), 33; Mi-Gan v. Marshall, 7 34; Ilaininomls r. Ilopkiiis, 3 Yerj^. Iliiiiiph. 121. Slc Tliompsou j;. iLu'k, 525; Mclvinstiv v. Coiilv, 12 Ala. 078. Harriii-. Cli. 150. * Hicks v. lliVks, 5 Gill. & J. 85. - 4 Kent, 142. * (h) It has been held, that mere iiiadcfjuacy of price is no ground for set- ting aside a purchase of the equity of redemption by the mortgagee in con- sideration of tlie debt. Purdie v. Millet, Taml. 28. CH. IV.] REDEMPTION CANNOT BE RESTRICTED. 71 the <£78 ; held, the infant heir of the mortgagor might re- deem.^ 31. In St. John v. Turner,''^ it was said to be a great objec- tion to the transaction, that the plaintiff appeared to pay nothing for the equity of redemption, but it was thrown into his bargain. 32. A mortgage of anticipation was made of an estate in the West Indies, and upon an account taken, it appearing that the mortgagor owed the mortgagee a large sum, he released the equity to the mortgagee and his heirs. The consideration of the conveyance was five guineas ; no release was given of the covenant for payment of the money ; and the mortgagee, while in possession, kept an account as such ; and both in conversation and by letter stated himself to be a mortgagee in possession, within twenty years from the com- mencement of the suit to redeem. Held, thirty-three years after the release, the mortgagor might redeem.-^ 33. Mr. Powell says : * — "If the mortgagor sells the estate to the mortgagee for even less than its value, whether accord- ing to a stipulation in the mortgage or not, without any cir- cumstances of fraud or indirect influence, it seems, equity will not relieve him. If there be two persons ready to purchase, the mortgagee and another, the mortgagor stands equally between them, and if the mortgagee should refuse to convey to another purchaser, the mortgagor can compel him, by applying the purchase-money, to pay off the mortgage. It can, therefore, only be for want of a better purchaser, that the mortgagor can be compelled to sell to the mortgagee; but courts view transactions even of that sort, between mort- gagor and mortgagee, with considerable jealousy, and will set aside sales of the equity of redemption, where, by the influence of his incumbrance, the mortgagee has purchased for less than others would have given." 1 Willett V. Winncll, 1 Vern. 488. * 1 Pow. 123 a, n. ; Webb v. Rorkc, •■^ 2 Vern. 418. 2 Sili. & Lcf. 673 : Dougherty v. McCol- 8 Vernon v. Betliell. 2 Ed. 110. gan, 6 Gill & J. 275. 72 THE LAW OF MORTGAGES. [CH. IV. 34. In Wrixon v. Cotter,^ it was held, that though the mortgagee cannot, by the mortgage itself, or a deed made at the same time, reserve the right of purchasing the estate at a certain price, to be paid the mortgagor if he shall not redeem within a limited time ; yet he may purchase the right of redemption, if he does not use the mortgage in inducing the mortgagor to part with it for less than its value. 35. So it has been held, that where a mortgagee, after recovering the land for condition broken, for a further con- sideration obtains a release of the equity, at the same time giving the mortgagor a promise to sell and convey on pay- ment of the whole money within a certain time ; at the end of this time the mortgagee's title becomes absolute. The latter bargain is considered as an original contract to convey upon certain terms ; more especially, after the lapse of so long a period as sixteen years.^ 36. In the case of Tasburgh v. Echlin,^ above referred to, the crown, having granted a patent for certain land for a term of years, at a certain rent, granted another patent to another person, not noticing the former. The former term having nearly fifty years to run, and being worth X200 per annum, the second patentee, in consideration of X200, by lease and release conveyed to the first, with condition that he might reenter upon repayment within five years ; but on failure of payment at the time, the estate of the grantee should be absolute and indefeasible, both in equity and at law, and the grantor forever debarred from all right and relief in equity, and the grantor hereby released forever his right to redeem, on such failure. There was no covenant to pay the X2()0. Th(^ five years having expired, the grantee brings a bill for foreclosure, to which the grantor never made any answer or defence, and it was decreed that he should be foreclosed, unless the money were paid upon a certain day. 1 1 Ridt'. 295. 8 2 Bro. Tarl. 2G5, 2 Endswortli v. Grifiitli, 2 Abr. Eq. 595. CH. IV.] REDEMPTION CANNOT BE RESTRICTED., 73 More than thirty years afterwards, the lands having risen in value, the heirs of the grantor bring a bill in equity against the heirs of the grantee, alleging surprise and imposition in procuring the decree, and praying redemption. A decree was rendered for the plaintiffs, but reversed in the House of Lords. The grounds of argument for the defendants were, the terms of the conveyance, waiving all right of redemption ; the reversionary character of the estate, yielding no present profit, and worth at the time not over .£200; and the want of any covenant to pay the money, and therefore of any mutuality in the transaction, which is necessary to constitute a mortgage. 37. One of two joint tenants made a conveyance for X104, in form absolute, but admitted to be a mortgage. This deed was cancelled, and another similar one made for a larger consideration, including the .£104, and covenanting that the grantor would not make partition without consent of the grantee. The receipts for the money spoke of it ?iQ purchase- money. Two years after the second deed, it was agreed that the grantor should have back the land, on payment of prin- cipal, interest, and costs. The other joint tenant being in possession, the grantee recovered the land in ejectment, and occupied sixteen years. Upon a biU to redeem, brought by the grantor ; held, though the covenant against partition was a recognition of the plaintiff's remaming interest in the land, and the first deed was admitted to be a mortgage, yet the transaction, on the whole, was a subsequent agreement for repurchase, and after the lapse of so many years, the redemp- tion was barred.^ 38. Upon this subject, the Court in New York remark as follows : — " I am aware of no principle, which inhibits a mort- gagee from purchasing in an outstanding title, and enforcing it against his mortgagor ; on the contrary, a defective title must often be cured in this way, to avoid a loss of the debt. Actual payments of prior incumbrances entitle the mort- 1 Cottercll V. Purchase, Cas. Temp. Tal. 61. See Hunt v. Tyler, 2 Aiken, 233. VOL. I. • 7 74 THE LAW OF MORTGAGES. [CH. IV. gagee, in equity, to hold till the mortgagor shall reimburse them ; and in some cases, if the mortgagee can get them in by assignment, he superadds a legal title, paramount to that of the mortgagor, and valid against an ejectment. The effect of the mortgagor's repaying the money is merely to avoid the effect of the mortgage. If the mortgagee have acquired .a paramount title, the act of payment will not enure as a purchase of it. As between mortgagee and mort- gagor, no estoppel (of landlord and tenant) exists against the latter. The mortgagee is rather the landlord ; the mortgagor being in strict law, considered as a quasi tenant at will. Whether equity might not, in a proper case, consider the mortgagee as a trustee, and on that ground decree that he shall stand as a purchaser for the mortgagor's benefit, on being reimbursed, is another question." ^ 38 a. So it has been held in that State, that a mortgagee may by a contract subsequent to the mortgage purchase the equity of redemption ; though the transaction will be viewed with suspicion. 2 39. So the Court in Massachusetts remark, that a defea- sance may upon sufficient consideration be cancelled as between the parties, so as to give an absolute title to the mortgagee, the rights of third parties not having intervened.^ 39 a. Thus where a bond executed at the same time with the deed was two years afterwards given up, and a new bond substituted ; it was held, that the latter constituted a mere personal security, and the grantee became absolute owner.* 39 b. But where the demandant in a suit for foreclosure produced a conveyance to himself, and then offered evidence of the execution and existence of a bond of defeasance of the same date, and the tenant then produced a bond of subse- quent date and different conditions ; held, the latter was not 1 Per Cowcn, J., Cameron v. Irwin, Harrison v. riiillips, &c. 12 Mass. 4o5 ; 5 Hill, 280, 281. Marshall y. Stewart, 17 Ohio, 356; Youle '■^ lif^mscn V. Hay, 2 Edw. Ch. .').'J.5. v. llichards, Saxt. 534. ■'Trull V. Skinner, 17 Tick. 213; * Rice i'. liice, 4 Pick. 352. CH. IV.] REDEMPTION CANNOT BE RESTEICTED. 75 of itself proof that the former had been cancelled by agree- ment, with intent to render the conveyance absolute.^ 39 c. An assignment of such bond to an assignee of the mortgagee does not extinguish the right of redemption ; the bond being a chose in action, not assignable, and the law not allowing a right of redemption to be voluntarily parted with, except by the ordinary forms of conveyance. Hence, after such assignment, a creditor of the mortgagor may acquu-e a title to the land by the levy of an execution.^ 40. But it is said, no case can be found, in which it has been determined that the mortgagee can, by force of any agreement made at the time of creating the mortgage, entitle himself, at his own election, to hold the estate free from con- dition, and cutting off the right in equity of the mortgagor to redeem. Such an agreement would not be enforced as against a mortgagor, nor is it to be confounded with a sale upon condition.'^ 40 a. The Supreme Court of the United States hold, that the purchase of an equity of redemption from the mortgagor, by the mortgagee in possession, especially if the former is in needy circumstances, is to be carefully scrutinized when fraud is charged ; and constructive fraud, or an unconscien- tious advantage, are sufficient in equity to avoid the pur- chase.* 40 b. The release of an equity of redemption and surren- der of a defeasance by a needy mortgagor, for no considera- tion, or in consideration of the correction of a mistake in the amount due, which the mortgagee was bound in equity to correct, the mortgagee being in possession, denying the right to redeem, and having originally by design so drawn the defeasance as apparently to cut off the right of redemption before the time when the equity was released ; will be set aside in equity .^ 1 Stetson V. Gulliver, 2 Cusli. 494. * Russell v. Southard. 12 How. 139. - Porter r. Millet, 9 Mass. 101. & Ibid, s Per Hubbard, J., Waters i'. Ran- dall, 6 Met. 484. 76 THE LAW OF MORTGAGES. [CH. IV. 40 c. But, the mortgagor having filed his bill to redeem, nearly twenty years after the mortgage became due, and sixteen years after the release ; held, the account of the rents and profits should be restricted to the time of filing the bill.^ 41. It is said, in Kentucky, a subsequent conveyance by the mortgagor to the mortgagee " must be fairly done, in a transaction that will bear the light, and upon a consideration, the particulars of which the mortgagee will be able, at least, to state, if not to prove. It would be strange, indeed, if the Court of Chancery, which so carefully guards the equity of redemption from all restraints that the party may attempt to impose in the mortgage which creates it, or in any other con- temporaneous deed, should thenceforth abandon it to the arts or influence of the mortgagee, who, having already a hold upon the property by the original contract, comes into every new transaction with the mortgagor with increased advantage." ^ 41 a. Where a mortgagee knowingly and understandingly cancels his mortgage, taking instead of it an absolute deed ; a second mortgage will have precedence of his title under such deed.2 42. Where the subsequent purchase from the mortgagor is made under an appraisement of the property, this absence of any unfair terms in the transaction will render it legally valid. 43. In the case of Austin v. Bradley,^ Austin conveyed to Bradley certain lands, upon condition that the grantor should indemnify the grantee from certain liabilities on his account. After breach of condition, Bradley agreed to accept from Austin an absolute title, and Austin agreed to convey to him by absolute deed of warranty at an appraised value, the balance, if the land was appraised to exceed the debt, to be paid in one year to Austin. Austin having died, 1 Russell V. Southard, 12 How. 13'J. ^ Frazee v. Inslee, 1 Green, Ch. 239. '^ Per Marshall, J., Perkins v. Drye, * 2 Day, 4G6. 3 Dana, 177 ; ace. Slicckell v. Hopkins, 2 Md. Ch. 8'J; Adams v. McKeiizie, 18 Ala. 698. CH. IV.] REDEMPTION CANNOT BE RESTRICTED. 77 the balance was tendered to his executors within the year, and a conveyance demanded. The plaintiffs, children and legatees of Austin, then file a bill in chancery against Brad- ley to redeem. Held, the petition should be dismissed. 44. Upon the general principle of protection to mortgagors, equity does not sanction an agreement to turn interest into principal at the end of a specified period ; because it is a stipulation for a collateral advantage, and because it tends to usury, though not actually usurious.^ 45. K the mortgagor agree by a distinct contract to pay the mortgagee a sum over and above the debt, interest, and cost ; such contract will be set aside as unconscionable ; for, it is said, a man shall not have interest for his money, and a collateral advantage besides for the loan of it, or clog the redemption with any bye agreement.^ (c) 46. A person, taking a mortgage as security for a loan, took from the mortgagor, at the same time, a covenant to convey to the mortgagee, if he thought fit, certain ground- rents of the same value. Upon a bill to redeem ; held, the 1 Chambers v. Goldwin, 9 Vcs. 271 ; ^ Jennings v. Ward, 2 Vern. 520. Coote, 501, 502. (c) It was stipulated, in a mortgage, that upon failure to pay the interest, the mortgagee might treat the mortgage as clue, britig an action upon it, and also claim damages. Held, a valid agreement. Ruling v. Drexell, 7 Watts, 126. An agreement, that the mortgagee shall have the use of the property instead of interest, is not usurious, unless such use amounts to more than legal interest. Joyner v. Vincent, 4 Dev. & B. 512. Where a slave was mortgaged, and the mortgagee to have the increase, it was held the agree- ment was not usurious, though such increase exceeded legal interest, if the mortgagee was to take as donee, and not on account of the loan, and this might be shown by parol evidence. lb. Where a note is secured by mort- gage, the maker cannot, as against a third person, owning the equity of redemption, increase the charge upon the land by confessing a judgment, and thus compounding the interest. McGready v. McGready, 17 Mis. 597. Where by statute a penalty is imposed for omitting to make payment of school money loaned ; it is held to be imposed only on the borrower, and not secured by the bond or mortgage. Bradley v. Snyder, 14 111. 262. 7* 78 THE LAW OF MORTGAGES. [CH. IV. plaintiff might redeem on paying the sum loaned, with inter- est and costs.i 47. An agreement, that the rate of interest shall be raised if not punctually paid, is treated as a penalty, and will be relieved against, even in case of gross default. But an agreement, that on punctual payment the interest shall abate, will be sustained, if strictly performed ; not otherwise.^ 48. K the increased rate of interest is in consideration of forbearance, and not a part of the original agreement, and is of reasonable amount, it seems equity will not relieve. The forbearance is treated as equivalent to a further advance. But interest cannot be converted into principal as against a subsequent charge, of which the mortgagee had notice.^ 49. The agreement for an abatement of interest will not be defeated by a single breach of it, unless the terms require this construction. Thus in the case of Stanhope v. Man- ners,* it was agreed, that as often as the interest should be paid half-yearly on the appointed days, or within three months next after, a certain deduction should be made. The first half year's interest was not paid within the time, but the second, at the reduced rate, was tendered within the time, and refused. Held, the agreement was not annulled by the former failure, but the construction should be, that in every instance where the tender was made in time, it should be accepted. 50. The intention of the parties to convert interest into principal must clearly appear ; and, in general, by some writing under their hands. It is not enough that an account be stated between them.^ 51. An agreement, subsequent to the making of the mort- gage, between any one interested as mortgagee and the mortgagor or his assignee, to limit the right of redemption to any certain time, is invalid. 1 Jennings v. Ward, 2 Vcm. 520. Brown v. Barkham, 1 P. Wms. f>''i2 ; 2 Cootc, 511, 512. See Manjuis, &c. Cootc, 502; ace. llaggarty v. Allaire, V. Iliggcns, 2 Vcrn. 134; Mayo v. Ju- &c. 5 Samil'. 230. (lah, 5 Munf. 495. * 2 Ed. 199. 3 Burton v. Slattcry, 5 B. V. C 233 ; ^ Coote, 502. CH. IV.] REDEMPTION CANNOT BE RESTRICTED. 79 52. Bill in equity for a foreclosure by a mortgagee against the mortgagor and his creditors, having an interest in the right of redemption. A decree being obtained, the defend- ant, one of the creditors, paid and took an assignment of the mortgage, and agreed with the other creditors, that they might redeem within a certain time. The defendant had possession twenty years, and the other creditors file a bill for redemption. Held, the plaintiffs stood in the confidential relation of mortgagor to the defendant ; and the decree not being assigned to him, the agreement above mentioned was void, and the plaintiffs might redeem.^ 53. The same general principle has been applied to the case of a lease firom mortgagor to mortgagee, which is in the nature of a partial surrender of the equity of redemption. 54. In the case of Gubbins v. Creed,^ the heirs of a mort- gagor filed a bill against the heirs and executors of the mortgagee, to set aside a lease made by the mortgagor to the mortgagee, charging that it was made at a gross under- value, and in consequence of threats of foreclosure. Upon two issues of law, ordered by the Com-t, the jury negatived both these averments. But Lord Redesdale subsequently decided, that the issues at law should not have been ordered, and set aside the lease as in its nature usurious and contrary to public policy, ordering the master to take an account of principal and interest, to charge the defendants with the rent up to the first day of payment after filing the bill, and add any sums paid for permanent improvements, with interest. 55. In the case of Wright v. Bates,'^ an absolute deed was given, with a parol agreement to reconvey upon payment of a certain sum. Subsequently the grantee leased to the grantor, and in order to conceal the true nature of the trans- action, and destroy the right of redemption, covenanted to reconvey to the grantor on payment of a certain sum of money by a specified time. After this time had elapsed, he conveyed to a third person having notice of the defeasance. 1 Exton I'. Greaves, 1 Vera. 138. '- 2 Sch. & Lef. 214. » 13 Verm. 341. 80 THE LAW OF MORTGAGES. [CH. IV. Held, the transaction constituted a mortgage ; that the re- lease and covenant did not impair the relation of the parties as mortgagor and mortgagee; and that the second grantee should reconvey to the mortgagor on payment of the sum due in equity upon the morgage. Bennett, J., said : ^ — " When there is an attempt to set up such an instrument as an abso- lute conveyance, there is a fraudulent application or use made of it ; and this is a proper ground upon which chan- cery may proceed." 56. Upon the same general principle, where a mortgagee obtains the renewal of a lease or any other advantage in consequence of his mortgage, the mortgagor, upon redemp- tion, is entitled to the benefit of it.^ (d) " The law does not permit the mortgagor to be tolled of his equity of redemption by such a shift." ^ 57. The plaintiff assigned to the defendant, as security for a debt, the lease of a farm. Subsequently, a contract was made, by which the plaintiff, in consideration of a sum ex- pressed but not paid, agreed to give up to the defendant half of the farm, and the defendant took possession, surrendered the lease to the landlord, and took a new lease. Held, the plaintiff might redeem the whole premises, and have the entire benefit of the new lease.^ 58. Upon a similar principle, where a mortgagor's estate has been sold on execution, while he was in possession, a subsequent mortgagee cannot overreach the purchaser's right of redemption by an absolute release to him from the mort- gagor, and buying in an old incumbrance ; but the estate 1 13 Verm. 349. " Per Bennett, J., Wright v. Bates, '^ Slee V. Mauhuttan, &c. 1 Paige, 48 ; 13 Verm. 350. Coote, 42'J. * llolridj^c v. Gillespie, 2 Johns. Ch. 30. (J) The general pi-Inciple stated in tlic text has been applied in favor of a mortgagee, as well as a mortgagor. Thus, if the mortgagor allow the land to be sold for taxes, and buy it, the mortgagee has the benefit of the title. Fuller V. Ilodgdon, 25 Maine, 243. CH. IV.] REDEMPTION CANNOT BE RESTRICTED. 81 will be charged wdth the actual expense of buying in such incumbrance.^ 59. In the case of Price v. Price,^ the conveyance was in form absolute, but the real consideration was a sum of money paid to the creditors of the grantor. Upon a bill filed for reconveyance, the grantee claimed the benefit of the secu- rities as mortgagee. The Court held, that he had mixed up the characters of trustee, mortgagee, and agent, and decreed an account without allowing interest on either side ; and though a small balance was found due him, yet on further directions the Court refused to allow him interest on it, and decreed a reconveyance and payment of the balance then become due from him, and, he having lost some of his vouchers, refused him the costs of takmg the account, (e) 60. The following case, somewhat remarkable and noto- rious for the amount of property involved, the length of time and variety of forms in which it was litigated, and the learn- ing and ability displayed in its discussion and adjudication, serves to illustrates many of the topics considered in this chapter. 61. On or about June 13, 1823, one Frye, as guardian, by license of Court, conveyed certain lands to Luther Richard- son, who, on the 14th of May, 1825, quitclaimed them, sub- ject to incumbrances, to Prentiss Richardson, his brother, 1 Miami, &c. v. Bank, &c., Wright, 249. ^ 15 l. j. Clianc. 13 N. S. (e) An execution in favor of a bank was levied upon certain slaves of the debtor, who, being about to satisfy it by payment of the notes of that bank — worth only fifty per cent, of their par value — was prevented from doing so by the representations of a third person, that such payment would not be good. The latter, however, by an agreement with the debtor, paid the exe- cution in this money, and took one of the slaves, with a condition of restora- tion in three months, upon repayment of the sum advanced. Upon a bill in equity, filed after the expiration of that time, the Court held the transaction was a mortgage, and decreed a redemption upon payment of one half the nominal value of the bank-notes by which the execution was discharged. May V. Eastin, 2 Port. 414. 82 THE LAW OF MORTGAGES. [cH. IV. upon a secret parol trust for himself. May 6, 1826, the two Richardsons, with the wife of Prentiss, for the nominal con- sideration of $2,000, quitclaimed to Walker and Fisher, who gave back a bond for $10,000 to Luther, reciting that he had quitclaimed to the obligors, and stipulating to reconvey to him whenever, within five years, he should repay what they expended in discharging incumbrances and making improve- ments. At the same time they leased to him a part of the land for five years, for the annual rent of one cent, unless there should be a previous redemption, agreeably to the bond. On or before May 13, 1831, the land was claimed by Frye's heirs, upon the ground of an invalidity in the guardian's sale. Soon afterwards, the plaintifi" and Mann, one of the defendants, agreed by parol to purchase at their joint ex- pense, and for their joint use, the title of Luther, and to extinguish the claims of Walker and Fisher, and of the Frye heirs, on their equal and joint account ; which agreement was never abandoned. May 13, 1831, the plaintiff and Mann, in pursuance of this agreement, received a quitclaim deed from Luther, and an assignment of the bond from Walker and Fisher. July 27, 1831, Walker and Fisher quitclaimed to Mann alone ; and afterwards the Frye heirs quitclaimed to Adams. August 6, 1831, Mann and Adams severally quitclaimed to each other one moiety of the prem- ises and of their respective interests therein. August 8, 1831, Mann quitclaimed his moiety to Fuller for $40,000, and Fuller mortgaged back to Mann, as security for four notes of $10,000 each, given for the price. The plaintiff brings a bill in equity, to set aside the deeds of Mann to Adams and to Fuller, as a fraud upon the plaintiff, and for a recon- veyance of one moiety of the premises to the plaintiff, upon payment by him of a moiety of the sums paid in perfecting the title. Held, the deed to Walker and Fisher and their accompanying bond, being parts of the same transaction, were to be treated as if contained in one instrument ; and being in reality designed for security, and showing an CH. IV.] REDEMPTION CANNOT BE RESTRICTED. 83 attempt to evade the law relating to mortgages, constituted an equitable mortgage to Walker and Fisher for their ad- vances, and not a conditional purchase, which requires- a sale for A'^aluable consideration ; that this construction was fortified by the fact, that the grantees were not to have immediate possession, and that a fair price for a purchase of the land was not paid ; that Luther, when he conveyed to Flagg and Mann, had an equity of redemption sufficient in a court of equity to make the parties tenants in common, and create between them a privity of title and estate ; and a decree for relief of the plaintiff was passed, having reference to the respective rights and liabiJities of the several defend- ants, as depending upon their various interests in the prop- erty, according to the above statement.^ 62. Substantially the same rules have been applied to the conditional assignment of a mortgage itself, wliich have been stated above, as established for the protection of mortgagors against any restriction of the right of redemption. 63. Assignment of a mortgage, provided, that if certain receipts shall amount to $300, the assignee shall reassign, and account for the excess above that sum ; if they fall short of such sum, and unless the assignor in one week pay the deficiency, the asssignment to be absolute. The receipts were less than $300. Held, equity would decree a redemp- tion upon making up this sum, the transaction being a mort- gage or pledge, not a conditional sale.^ 64. In the case of Clark v. Henry ,'^ the plaintiff was in- debted to the defendant upon promissory notes for $225, and executed to him an assignment, in terms absolute, of a mortgage held by the plaintiff against one Davis, for $1,065.03. The notes were destroyed by the parties, and the defendant gave the plaintiff a written agreement to sell him the mort- gage, if he would pay the defendant $225 by a certain day. Several times previous to this day the defendant declared 1 riagg V. Mann, 2 Suran. 48G. 3 2 Cow. 324; S, C. 7 Johns. Cb. 40. '^ Solomon v. Wilson, 1 Whart. 241. 84 THE LAW OP MORTGAGES. [CH. IV. that he held the assignment as security for his debt. Pay- ment not being made at the day, the plaintiff brings a bill in equity to redeem. Held, the assignment was not a con- ditional sale, but a mortgage ; and the plaintiff entitled to redeem upon payment of the $225, and interest. In giving the opinion of the Court, Woodworth, J., remarks : ^ — " The case warrants the inference, that Clark supposed the papers were so drawn as to defeat the right of redemption, if there was a failure of payment, and that the word ' sell ' was in- serted, instead of the more appropriate term reassign, so as thereby to obtain a mortgage of |1,065 for the inadequate consideration of $225. The whole operation seems to be devised for the purpose of overreaching an ignorant man who could neither read nor write. There cannot, however, be any doubt that the writing executed by the appellant was per se a defeasance merely. On what terms was the appel- lant to sell ? Not for the value of the security, but for the amount of the original debt, not equal to one fourth of the mortgage. This speaks a language not to be mistaken. The instrument must be construed as a covenant to re- assign." 12 Co^y. 331, CH. v.] CONDITIONAL SALE. 85 CHAPTER V. CONDITIONAL SALE, AS DISTINGUISHED FROM A MORTGAGE. 1. There is a certain description of conveyance, similar in form to a mortgage, but to which the rule against restricting the right of redemption is not applicable ; to wit, a sale vnth an agreement to repurchase, or, as it is usually termed, a con- ditional sale, {a) 2. " A mortgage and a conditional sale are nearly allied to each other. The difference between them is, that the former is a security for a debt, and the latter is a purchase for a price paid, or to be paid, to become absolute on a particular event ; or a purchase accompanied by an agreement to resell upon particular terms. The only difficulty is, to ascertain the character of the transaction. When it is once deter- mined to be a mortgage, all the consequences of account, redemption, and the like, follow, notwithstanding any stipu- lation to the contrary. For the power of redemption is not lost by any hfird conditions ; nor shall it be fettered to any point of time, not according to the course of the Court." ^ 3. Various circumstances have been resorted to, for the purpose of determining whether a particular conveyance should fall within one t>r the other of these classes. The precise language used is generally held of little consequence. Thus, the words "redeem," (b) "repurchase," &c., may have 1 Per Ruffin, J., Poindexter v. McCannon, 1 Dev. Eq. 375, 376. (a) The civil law recognized the distinction between mortgages and con- ditional sales. 2 Story's Eq. § 1019. (A) In the case of Chambers v. liise, 2 Dev. & Bat. Eq. 305, the jilaintiff brought a bill in equity to redeem certain negroes, transferred by him to the defendant by a common bill of sale, with this condition : " If the said VOL. I. 8 gg THE LAW OF MORTGAGES. [CH. V. one or another signification, according to the circumstances of each case. The relative situation, and the precedent, ac- companying, and subsequent acts of the parties are regarded as of much more importance. The leading incidents of a mortgage are these : the relation of debtor and creditor, and the continuance of a debt between them ; retaining of pos- session by the grantor ; great excess of value in the property over the consideration paid; — although this has been held not of itself to raise the presumption of a mortgage. On the other hand, the necessitous condition of the grantor ; the reservation of a power, on his part, to annul the bargain ; the lapse of a long period before any claim to redeem ; the approximation of the consideration paid to the cash value of the property ; the absence of any agreement to repay the purchase-money,(r) making the grantor's right to repurchase, and the grantee's right to recover the price, mutual and re- ciprocal ; are circumstances which favor the construction of the transaction as a conditional sale.^(f/) The question as 1 Slec V. Manhattan Co. 1 Paige, 56 ; Cranch, 218 ; Dougherty v. McColgan, Glover v. Payn, 19 Wend. 518; Poin- 6 G. & Johns. 275; Coles v. Perry, 7 dexter v. McCannon, 1 Dcv. Eq. 373 ; Tex. 109 ; Russell v. Southard, 12 How. Bacon v. Brown, 19 Conn. 29; Robin- 139; Streator i'. Jones, 3 Hawks, 423; son V. Cropsey, 2 Edw. 146 ; AVright y. Hopkins v. Stephenson, 1 J. J. Marsh, Bates, 13 Verm. 350; 3 Atk. 278; 341 ; Oldham !\ Hallcy, 2 J. J. Marsh, Holmes V. Grant, 8 Paige, 243 ; 2 Barb. 113; Edrington v. Harper, 3 J. J. Marsh, Sup. 28 ; Goodman v. Gricrson, 2 Ball 353 ; Robinson v. Farrelly, 16 Ala. 472 ; & B. 274; Conway v. Alexander, 7 Gait v. Jackson, 9 Geo. 151. Jacob Hise is not satisfied with the said negroes, or if the said negroes are not satisfied with the said Hise, then the said Chambers has privilege and authority to redeem the said negroes, at any time that he shall pay or cause to be paid to the said Jacob Hise the $300, or a negro girl to the satisfaction of the said Hise." The subscribing witness deposed, that the parties intended only what appeared on the face of the instrument ; and there was no evi- dence that the transaction was a loan. It was held by the Court, that the paper was not on its face a mortgage, and, there being nothing else shown in tlic case to make it one, that the bill sliould be dismissed. (c) This fact is held not to be decisive. Russell v. Southard, 12 How. 139. Tiie promise may be a parol one. Hills v. Eliot, 16 Mass. 33. See Scott V. Britton, 2 Yerg. 215. (il) 'J'hc relation of Inndlord and tenant is consistent with that of mort- gagor and mortgagee. Hence a lease does not change a mortgage to a con- CH. v.] CONDITIONAL SALE. 87 to the nature of the conveyance is a question of fact and in- tent for the jury.i 4. A sale with an agreement to repurchase.^ though nar- rowly watched, is construed like any independent agreement between strangers, and the right of redemption restricted to the time appointed. But in equity, the transaction will al- ways be construed a mortgage, if possible.^ In case of a conditional sale, the title passes to the vendee, and he has the intermediate rents and profits.^ 5. Gibson, Ch. J., says:^ — " It is too late to say that what was intended to be security for a loan may become a con- ditional sale by the accidental form of the transaction ; or, that an agreement to make it such, in default of payment at the day, shall not be relieved against, or that a jury are not the proper judges of the intention, or that a purchaser, with a part of the purchase-money in his hands, may be protected beyond reimbursement." 1 Gaither v. Teaguc, 7 Ired. 460; Green, Ch. 264; Ketchum v. Johnson, Kunkle v. Wolfersberger, 6 Watts, 131 ; 3, 370; King v. Newman, 2 Munf. 40; Page V. Foster, 7 N. H. 392. French v. Lyon, 2 Root, 69. ^4 Kent, 143, 144 ; Eaton v. Green, '■^ Bennet v. Holt, 2 Yerg. 6. 22 Pick. 529, 530 ; Turnipseed v. Gun- * Kunkle v. Wolfersberger, 6 Watts, ningham, 16 Ala. 501 ; Scott v. Henry, 8 131. Eng. 112. See Crane v. Bonnell, 1 J— i ditional conveyance. Kunkle v. Wolfersberger, 6 Watts, 131. An agree- ment for future reconveyance at an advanced price, at the election of the grantor, is no evidence of a mortgage. Glover v. Payn, 19 Wend. 518. Where all the clauses of an instrument are consistent with a conditional sale, but some inconsistent with a mortgage ; it ■will be construed as being the former, and not the latter. Thus, where the agreement, after stating the re- ceipt of a certain sum, used the words — "and put a negro in his hands as security ;" and also the following words, " if the money is not paid at or be- fore, &c., the said, &c., is to have the said negro for the said " sum ; it was held to be a conditional sale, because the former words might have full effect by construing the sale defeasible till the time named, while the latter coidd have no effect, unless after that time the sale became absolute. Chapman v. Turner, 1 Call, 251. A grantor bound himself in a large sum, as liqui- dated damages, to procure a release of dower, and afterwards wrote a letter to his wife, requesting such release. Held, these facts did not disprove a mortgage. Russell v. Southard, 12 How. 139. 88 THE LAW OF MORTGAGES. [CH. V. 6. On the other hand, in Floyer v. Lavington,^ Lord Chancellor Cowper remarked, that this Court had heretofore gone too far in permitting redemptions. In the same case, he further remarked,^ that here several circumstances con- curred, which, though each of them singly might not be of force to bar the redemption, yet all of them joined together were strong enough to prevail over it. 7. So, Chief Justice Marshall says:^ — " If the vendee must be restrained to his principal and interest, that principal and interest ought to be secure." " To deny the power of two individuals, capable of acting for themselves, to make a con- tract for the purchase and sale of lands defeasible by the payment of money at a future day, or, in other words, to make a sale with a reservation to the vendor of a right to repurchase the same land at a fixed price and at a specified time, would be to transfer to the Court of Chancery, in a con- siderable degree, the guardianship of adults as well as of infants." 8. So, it is said, if parties intend an absolute sale, a con- temporaneous agreement for a repurchase, not acted upon, will not, of itself, entitle the vendor to redeem.* 9. So, in another case it was said : — "As on the one hand no act of a scrivener can turn that which was intended as a mortgage into an absolute sale ; so, on the other, it must not be permitted to designing men to turn a real, though defea- sible sale into a mortgage, without the free consent of the other contracting party." ^ 10. In the case of McDonald v. McLeod,^ Gaston, J., re- marks: — " It is not questioned but that a deed, absolute upon its face, may be shown by extrinsic facts to have been exe- cuted as a security for the payment of money, and to have put on the form of an absolute deed by reason of the igno- rance of the draftsman, or from mistake of the parties, or 1 1 r. Wms. 270. 4 Per Lord Cottenliam, 5 M. & C. 3uC. '^ Ibid. 272. '' Per Koiine, J., Cliiipiniin v. Turner, '' Conway v. Alexander, 7 Crancli, 1 Call, '250. 237. ^ 1 Ircd. Eq. 226. CH. v.] COia)ITIONAL SALE. 89 because of undue advantage taken of the necessities of the debtor. In examining transactions between borrowers and lenders, and between necessitous men and their creditors, courts of equity, aware of the unequal relation of the par- ties, and of the facility by which the former may be surprised into improvident arrangements, and of the moral coercion which the latter can exercise over their apparent freedom of action, are particularly attentive to any circumstances tend- ing to show an inconsistency between the form of an act, and the intent of the parties, and wiU take great pains, when their suspicion is thus excited, to get at the substance of what was done or intended to be done by them. But, un- questionably, it is a conclusion of reason, and therefore must be the presumption of every Court, that solemn instruments between parties able to contract, declare the truth in regard to the subject-matter of their contract, until error, mistake, or imposition be shown." Upon these grounds it was held, in the above case,^ that where the instrument was an abso- lute bill of sale, (of a slave) and the sum paid not greatly disproportionate to the value, and it did not appear that the agreement, for restoring the slave to the seller upon repay- ment of the price, was made before or at the time of the execution of the bill of sale, and the purchaser had refused to take a mortgage, and seven years had elapsed without any claim by the seller; the transaction should not be treated as a mortgage, nor the seller allowed to redeem. 11. The doctrine of a conditional purchase has been par- ticularly applied to conveyances by way of rent-charge ; in regard to which it is suggested, that if the estate of the grantee did not become absolute on breach of condition, the property would be very precarious ; for if, after the term agreed upon, the estate were redeemable, it would be only a personal estate ; but if considered as absolute, it would be a freehold, and must be conveyed as such, which would create great confusion.^ In this class of cases, moreover, the absence of 1 1 Ired. Eq. 221. 2 i Pow. 13O. 8* 90 THE LAW OF MORTGAGES. [CH. V. any covenant to pay the debt is relied upon, as a ground for restricting the right of redemption to the time limited in the deed. In some of them, also, the lapse of time has been an additional reason for refusing relief. Thus, in Floyer v. Lav- ington,! a rent-charge was granted, upon condition that the grant should be void upon the grantor's making certain pay- ments during his life. There was no covenant to pay ; the rent-charge was much less than the interest of the money, and the grantee had conveyed the rent-charge, after the grantor's death, given a collateral security to the purchaser for quiet enjoyment, and the purchaser had afterwards made a marriage settlement of it. Held, after sixty years the right of redemp- tion was gone. 12. Thomas Mellor mortgaged to the Whiteheads, and the latter to Cartwright for X200, Thomas and his son joining in the latter mortgage. To secure the interest, Cartwright leased to the son for five thousand years, at the rent of ,£12 per annum for the first three years, and .£10 the remainder of the term ; and if the £200 and interest were not paid in three years, the land to be reconveyed. Receipts were given, sometimes as for interest, and sometimes for a rent-charge. The last receipt was about forty years subsequent to the lease. Ten years after this receipt, a bill to redeem was brought by the grandson of Thomas, the estate having nearly doubled in value since the mortgage. Held, it could not be sustained.^ 13. But in Verner v. Winstanley,^ one of the plaintiffs, having become embarrassed, applied to the defendant for a loan of X300, for which he should take an assignment of a rent-charge of <£50 per annum. The assignment was accord- ingly made, with a covenant, that the plaintiff might at any time repurchase and reassume the rent-charge, on giving three months' notice, and paying £350 and all arrears. The plaintiffs also gave their joint and several bond to the de- fendant in the sum of £700, conditioned to pay <£3d0 in 1 1 r. Wins. 268. 2 Mellor v. Lccs, 2 Atk. 494. ^ o Scli. & Lcf. 393. CH. v.] CONDITIONAL SALE. 91 about eight months, and also for the regular and punctual payment of the rent-charge. Held, the assignment was a mortgage ; partly upon the ground of the clause for redemp- tion, and the additional sum of £50 to be paid by the plain- tiff; but chiefly because the defendant did not take on him- self the whole risk of the annuity, but received the security of the bond. 14. In the case of Davis v. Thomas,^ the plaintiff mortgaged certain property to Twyning for X 1,200, and afterwards bor- rowed £200 more on the same security. In the same year, the plaintiff executed a deed of release, for a valuable consid- eration, of the equity of redemption, to the defendant, the mortgagee. Soon afterwards, the defendant demised the premises to the plaintiff for ninety-nine years, at a rent of a hundred guineas a year ; and upon the lease was indorsed an agreement, signed by the morgtagee,that if the plaintiff regu- larly paid the rent due at Lady-day by the 4th of June, and the rent due at Michaelmas by the 26th of October, he might repurchase the premises for .£1,850 at any time within five years ; but if default were made in payment of the rent within those periods, the agreement to be void. The plaintiff failed in such payment, and distresses were made for the rent ; but within the five years he applied to repurchase, and tendered the arrears of rent. The defendant refused to resell ; and the plaintiff files a bill to have the benefit of the agreement or be let in to redeem. The biU imputed fraud to the defendant, and represented the estate as having been in 1820, the date of the release, worth about £3,000, but those allegations were not proved. Lord Chancellor Brougham decided, that the instruments above referred to did not all constitute one trans- action, the party having first mortgaged his estate, two years afterwards conveyed it, and three months subsequently, upon obtaining a lease from the purchaser, procured to be indorsed upon the lease, by way of indulgence, a power to repurchase on certain terms ; that as the party acted understandingly and 1 1 Russ. &, My. 506. 92 THE LAW OF MORTGAGES. [CH. V. used the most stringent words to make time of the essence of the contract, he did not come in due time or entitle him- self by his conduct to the benefit claimed by him. 15. In the case of Holmes v. Grant,^ a debtor conveyed his farm to his creditor for the amount of the debt, which was about the value of the farm, by a warranty deed, and the grantee surrendered and discharged his securities for the debt, and the same day gave the grantor a written agreement, that if the grantor could find a purchaser for the farm within one year, he might have all he could obtain beyond the debt, with interest. It was held, that this transaction was not neces- sarily a mortgage, even though the agreement were given simultaneously with the deed, and in virtue of a previous bargain therefor. 16. In the case of Perry v. Meddowcroft,- the purchase- money of an estate was paid by a third person on behalf of the purchaser, and a further sum advanced, with an agree- ment that the deed should be made to the third person, and if the purchaser repaid the money with interest by a certain day, the agreement to be void ; otherwise the sale was thereby absolutely confirmed to the other party. Held, a conditional purchase. 17. In the case of Williams v. Owen,^ an estate was con- veyed absolutely in consideration of .£550, (the value of the property,) and an agreement given back, that if the grantor repaid this sum and the cost of the conveyance within a year, the grantee would reconvey, having his option either to retain the intermediate rents or to receive interest. Held, a condi- tional sale. 18. In Goodman v. Grierson,^ it was held by Lord Man- ners, that where the trustees of a settlement of .£1,000 portion, charged on estates, accepted part of the estate " in lieu and satisfaction " of the X 1,000, with power for the owner of the estate to reassume the premises at any time within ten years, 1 8 Taigc, 243. •' 10 Sim. .380 ; .'J M. & Cr. 30G. 2 4 Bcav. l'J7. * 2 Ball & B. 274. CH. v.] CONDITIONAL SALE. 93 on payment of that sura, the transaction was a conditional sale, because the trustees had no remedy for the deficiency, if the estate proved insufficient. 19. After two successive mortgages to different persons, the mortgagor conveyed in fee to the first mortgagee. The deed recited, that the debt of the grantee was due, and that the mortgagor had agreed to convey to him absolutely, subject to the payment by the grantee of the second mortgagee's debt. This debt was accordingly paid. The grantor took back an agreement from the grantee, that upon the grantor or his heirs paying the grantee or his heirs, at the end of two years, the sum named in the deed, the grantee or his heirs would convey to the gi'antor. It was further expressed, that the grantor should pay the grantee one hundred and twenty-five dollars per year. Two months afterwards, the grantor exe- cuted the following release : " AH my right and claim in, &c., that I have deeded to, &c., and I give him possession," which was taken by the grantee. The right of redemption was worth from fifteen hundred to two thousand dollars, and the purchase made for sixteen hundred dollars. No compulsory measures were taken or threatened by the grantee against the grantor. No covenant or obligation remained on the part of the grantor. Held, a conditional sale.l 20. Where the owner of land conveyed it, in order that the grantee might be able to sell it, account with the grantor for a certain sum, and retain the balance for his services ; and afterwards the grantee reconveyed, provided that if he paid the grantor the sum above mentioned, the deed should be void ; the transaction was held not a mortgage, but a condi- tional sale. In this case, the Court remark : — " Turner was the mere agent of Porter to sell the land, and was to have for his trouble what he could obtain above two thousand dollars. There was no debt due from Turner to Porter for which the land was put in pledge. Turner had undertaken to do no act for the performance of which the land was mortgaged. 1 Hicks V. Hicks, 5 Gill & J. 75. 94 THE LAW OF MORTGAGES. [CH. V. Turner was to be the purchaser in case he could sell, and in that case alone." ^ 21. In the case of Robinson v. Cropsey,^ a transaction was held to be a conditional sale and not a mortgage, although there was an express agreement that the vendor might redeem by paying a certain sum in one year, and the costs of inter- mediate improvements, if any, upon the buildings ; but if there should be no sale, that he should not have the use of the farm : upon the ground, that it was evident from the whole transaction, that the parties intended an entire discharge of the debt, which fully equalled the value of the land at that time. 22. Land was conveyed by an absolute deed, and on the same day a covenant executed by the grantee, reciting that the deed was given for the purpose of paying a specified sum, and agreeing not to transfer the land within one year without the grantor's consent, and if the latter should within that time find a purchaser, he would convey to him, on receiving the sum, with interest, for which the land had been conveyed to him ; and if such sale should not be made within the year, it should be left to certain persons to determine what further sum he should pay the grantor for the land, which sum he covenanted to pay. The grantee brings ejectment against the grantor for the land. Held, the conveyance was not a mortgage, and the action could be maintained.^ 23. In Baxter v. Willey,* it appeared that the defendant executed to the plaintiff the promissory note upon which the action was founded, with two others, and conveyed to him certain land in Canada, but did not take up the notes ; that the plaintiff then gave back to the defendant a writing, stat- ing that the deed was made in payment of these notes, but agreeing to reconvey, if at the end of two years the defendant would pay the amount of the notes with interest. This writing was transferred to others for a valuable consideration, 1 Porter V. Nelson, 4 N. II. 130. '-^ Baker v. Thnislier, 4 Dcnio, 493. 2 2 Eihv. Cii. 138. * 9 Verm. 276. CH. v.] CONDITIONAL SALE. 95 and had since been lost. The defendant was to retain pos- session during the two years. Evidence was offered, that the plaintiff had acknowledged the notes were paid. Held, the action could not be maintained, because by the laws of Canada, the defendant would have no equity of redemption in the land. 23 a. In case of an absolute deed, and a writing back, giv- ing the right to repurchase within three years, the lapse of more than half the period of the statute of limitations without any attempt to redeem, will have an important bearing upon the question of the right to redeem.^ 23 h. More especially will redemption be denied in such case, where the securities are given up, a full price paid, and the grantee hjis apparently in good faith sold the land.^ 24. A written agi'eement to reconvey, upon repayment of the consideration named in the deed, unsealed, and therefore insufficient to constitute a legal mortgage, makes an equita- ble mortgage, and not a sale with the right to repurchase.-^ 25. The following distinction has been made between mortgages and conditional sales, in reference to the evidence, by which they may be respectively proved. " A formal con- veyance may certainly be shown to be a mortgage by extrin- sic proof, while a formal mortgage may not be shown to be a conditional sale by the same means. In the one case, the proof raises an equity consistent with the wTiting, and in the other would contradict it." * 26. It has been sometimes contended, that even where a transaction is construed to be not a mortgage, but a condi- tional sale, equity will still afford relief against the strict enforcement of the contract between the parties. Upon this- subject, the following remarks have been made : — 27. " It is contended for the defendants, that even should this be considered a conditional sale, and not a mortgage or security for a subsisting debt, yet a court of equity may 1 Mellish V. Kobertson, 23 Venn. 003. * Per Gihson, C. J. ; Kunkle r. Wolf- '■^ Ihitl. ersbcrger, 6 Watts, 130. ^ Eatou V. Green, 22 Piek. 526. 96 THE LAW OF MORTGAGES. [CH. V. relieve against a forfeiture for a breach in failing to repay the money in time, because compensation can be made, and under the circumstances relief ought to be granted. It is a familiar head of equity jurisdiction to relieve against a for- feiture or penalty upon the principle of making compensation. But the present is not a case of forfeiture. The owner of the jjroperty sold his estate ; and there is no proof of the price having been inadequate. He made it a part of his contract — and I must presume the price was fixed with reference to the event — of having the privilege of redeeming, or, which is the same thing, repurchasing, within one year, by paying a certain amount of money. Time consequently was of the essence of the contract ; and performance necessary to regain the estate with which, by his voluntary contract, he had parted ; not that non-performance works a forfeiture and divests a title and estate already in him. In such cases, equity does not interfere ; because it would be varying the express terms of the contract, and giving to the party a bene- fit of extension in point of time, for which he has not stipu- lated. No fraud, accident, or mistake is charged as a cause of his not having availed himself of the privilege within the time appointed." ^ (e) 1 Per McCoun, V. Clianc, Robinson v. Cropsey, 2 Edw. 147. (fi) The following form of decree was passed by the Court in Pennsyl- vania: — "If the said John Mortimore refunds to said Rankin the considera- tion-money aforesaid, with lawful interest thereon, in one year from this date, then this deed to be void and of no effect, and this not to be considered in the nature of a mortgage, but an express stipulation to pay on the partic- ular day, and if not then paid, the estate and title shall be absolute, without any further deed, transfer, or proceeding whatever." Rankin v. Mortimerc, 7 Watts, 372. In a bill to redeem, where the deed is a conditional sale, if the bill allege that it was given as security, it will on demurrer be considered a mortgage. Blakemorc v. Byrnside, 2 Eng. 505. en. VI.] PERSONAL LIABILITY, ETC. 97 CHAPTER VI. PERSONAL LIABILITY OF THE MORTGAGOR, ETC. 1. Personal liability of the mortgagor; •W'liethcr necessary to constitute a mort- gage ; wlietlicr the deed itself creates such liability, &c. 30. Mortgages for support and main- tenance, &c. 48. Covnnant or condition for payment of the del)t, how construed. Covenants for title in a mortgage. Mutual relation and effect of the covenants in tlie deed and the mortgage. Estoppel, Rebutter, &c. 1. In England, it Avould seem that a mortgage often, if not usually, contains, in addition to the conditional clause, a covenant to pay the sum which the conveyance is designed to secure to the grantee. In the United States, such cove- nant is, for the most part, omitted in the deed itself; but the proviso of the deed refers to a bond, note, or other personal security, made at the same time, upon the payment of which, both the mortgage and the personal security are to become void. Of course, either a covenant in the deed, or a separate obligation accompanying it, makes the mortgagor personally liable for the debt, at the election of the mortga- gee ; and it will be seen hereafter, (see ch. 31,) that the lat- ter may pursue his remedies upon the personal security and the mortgage, at the same time, though he can eventually have but one salisfaction of his claim. In the absence of any covenant in the deed, or personal obligation accompany- ing it, two questions have been raised and much discussed ; one relating to the nature, designation, and legal operation upon the property, of the conveyance ; that, is, whether it shall constitute a mortg-ag-e or a conditional sale ; (see ch. 5,) the other, whether such a conveyance will, of itself, give to the grantee a personal claim and remedy against the grantor, for the sUm of money therein referred to. In con- nection with the same subject, has also, at times, arisen the VOL. I. 9 98 THE LAW OF MORTGAGES. [CH. VI. question, whether, in order to constitute a mortgage, strictly so called, the condition must be for the payment of money ; and, where it is for the performance of other acts, in what precise mode and extent it is to be enforced by legal pro- ceedings. From the nature of the case, these questions have all necessarily been somewhat blended together, in the re- marks of judges and elementary writers, and, therefore, do not here require separate consideration. 2. Mr. Coote remarks,^ that there is the same right of re- demption, whether there be a covenant or not. Every loan implies a debt ; though the covenant may serve to explain the transaction in a doubtful case, and prove it to be a mort- gage. 3. The same author remarks : ^ — " A mortgage cannot be a mortgage on one side only ; it must be mutual ; that is, if it be a mortgage with one party, it must be a mortgage with both. The reverse of this was formerly attempted to be es- tablished ; namely, that it must be a mortgage with both or with neither ; so that it was argued none could come to re- deem, if the mortgagee could not compel the payment of the mortgage-money ; but the former is the true principle. The mutuality, however, need not run quatuor pedibus ; the rule only requires that it shall not be competent to one party alone to consider it a mortgage. In other respects the rights of the parties may be different, for it is every day's practice, that one party may not be able to foreclose at a time when the other may redeem." 4. In Ancaster v. Mayer,'^ Lord Chflncellor Thurlow says : — "A man mortgages his estate without covenant, yet, because the money was borrowed, the mortgagee be- comes a simple contract creditor, and, in that case, the mort- gage is a collateral security." The same doctrine is laid down by him in the case of Floyer v. Lavington.* 1 Cooti", 50. - Jl.id. 01. M r. Wins. 208; ace. Yates v. A«h- ■^ I IJio. 404. Sec Bacon v. JJrowii, ton, 4 (^11. B. 182 ; AUenhy v. Dalton, 19 Conn. 29; Lawrancc v. Boston, 8 5 L. J. K. B. .'312, (0. S.) lMl^^ La\v& Kq. 494; llansonc t;. I'ray- Bcr, 10 Lei;^!), 592. CH. VI.] PERSONAL LIABILITY, ETC. 99 5. In King v. King,i Lord Talbot said, the absence of a covenant or bond did not vary the transaction ; for that every mortgage impHed a loan, and every loan implied a debt, for which the mortgagor's personal estate was liable ; and although an action of covenant would not lie, still, it might be a mortgage. 6. In Mellor v. Lees,^ Lord Hardwicke says, the absence of a covenant is a strong circumstance to indicate the in- tention of the parties ; but if that were the only circum- stance, I should not rely upon it to defeat the plaintiff's right to redeem. 7. It has been held, that an acknowledgment by the mort- gagor, in a separate deed, that the debt is due, if made solely for a collateral purpose, will not raise an implied covenant to pay ; though, in general, this is the effect of an unequivocal acknowledgment.^ 8. In the case of Exton v. Greaves,^ certain mortgaged premises, or the equity of redemption thereof, being sub- jected to the payment of divers debts, the mortgagee brings a bill for foreclosure against the mortgagor and all the cred- itors. At the time fixed for foreclosure, the defendant, a creditor, by consent of the creditors, paid the money, and agreed with the creditors, that if they would pay his money at a further day, they should redeem ; otherwise, he should have the lands absolutely. They failed to do so, the defend- ant enjoyed the lands for twenty years, and laid out £800 in building ; and now the creditors exhibit their bill to redeem him. It was contended for the defendant, that the case was not like a mortgage, for a mortgagee has a covenant for pay- ment of his money, and most commonly, a bond ; but here, the defendant had no way to compel the creditors to pay him his money ; that a mortgage ought to be mutual ; as one may compel to receive, so the other may compel to pay ; and it would have been looked on as superfluous and fan- 1 3 r. Wms. 358. 3 Coiirtnev v. Taylor. 6 M. & G. 851. -2 Atk. 494. 4 1 Vein. "138. 100 THE LAW OP MORTGAGES. [CH. VI. tastical, for the defendant to have exhibited a bill to have %reclosed these creditors. But the Lord Keeper decreed a redemption, and directed an account to be taken, and the defendant to be allowed only necessary repairs and lasting improvements. 9. In the case of Goodman v. Grierson,^ the father of the plaintiff, owning lands subject to a charge of X1,000 to his sister, the wife of Higgins, in 1788 conveyed to trustees for Higgins and wife, in lieu and satisfaction of the sum of .£1,000; with a covenant for reconveyance, if the grantor, his heirs, &c., should, within ten years, pay the .£1,000. Higgins entered. In 1797, the father of the plaintiff died, leaving the plaintiff his heir. Soon after, Higgins and wife died, and the defendant became entitled to the lands under the will of Higgins. In 1803, a tender was made to him of .£1,000 on behalf of the plaintiff, which he refused; and in April, 1811, the bill was filed on behalf of the plaintiff, a mi- nor, for redemption. It was held that the bill should be dismissed. Lord Chancellor Manners remarked : ^ — " If the intention were that it should be a mortgage, the absence of a f ovenant and collateral bond would not make it the less so. The fair criterion by which the Court is to decide whether this deed be a mortgage or not, I apprehend to be this — are the remedies mutual and reciprocal? Has the defendant all the remedies a mortgagee is entitled to ? I conceive he has not. Suppose, for instance, the defendants to file a bill of foreclosure ; by the practice of this Court, the decree is for a sale of the mortgaged premises, if they be not redeemed within the time limited by the course of the Court. Suppose the sale to take place, and the produce to be in- Kiifli(aent to discharge the X 1,000 and costs, how is the de- ficiency to be raised? What remedy could the defendant then have ? If it were a mortgage, he, in that case, might proceed on his covenant or bond, or if no covenant or bond, upon the implied assumpsit; but how could any action be 1 2 liidl & B. 274. - Ibid. 278. CH. VI.] PERSONAL LIABILITY, ETC. 101 maintained in this case, where the defendants have taken the conveyance, not as security, but expressly in lien and satisfaction of the portion of £1,000. This appears to me decisive to show, that the transaction between these parties was not that of a mortgage, but a conditional sale ; for if the defendants have not all the remedies of a mortgagee, why am I, contrary to the express provisions of this deed, to hold it to be a mortgage, and to extend the condition be- yond the limit agreed upon by the parties to this deed ? There would be much hardship and inconvenience to the one party, and there appears to me to be no substantial ground to entitle the other to relief." 10. The doctrine upon this subject, in the United States, has been somewhat various and conflicting. 11. In Conway v. Alexander,^ the absence of a covenant was held to be strong but not conclusive evidence of a con- ditional sale. 12. In the case of Morris v. Nixon,^ it was held, that where there was a previous conversation between the par- ties about borrowing and lending, an offer to secure by mort- gage, and a bond given to the grantee ; these circumstances were sufficient to make the deed a mortgage, though in form absolute, unless a subsequent bargain were proved. 13. In the case of Flagg v. Mann,^ Judge Story remarked, as follows : — "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 conditional 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, capable of being enforced in 1 7 Cranch, 237. - 1 How. 119. =^2 Sumn. 534. 102 THE LAW OF MORTGAGES. [CH. VI. any way, in rem or in persona??!. Now, it seems to me clear, upon admitted principles of law, that, upon the payment of the money due to Bennett by Walker and Fisher, Richard- son 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." " 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 seciurity for reimbursement within five years." 14. It has been held in Pennsylvania, that a conditional conveyance, without any covenant, may constitute a mort- gage, upon which the sum due may be recovered by scire facias, or the premises by ejectment.^ 15. But in the case of Scott v. Fields,^ where the plain- tiff brought an action of debt upon a mortgage in common form, and was allowed to prove by parol evidence, that no such bond was actually given as the mortgage recited ; it was held, that the action could not be maintained. In giv- ing the opinion of the Court, reversing the judgment of the Court below, Sergeant, J., remarks : — "A mortgage, in its origin, was a conveyance of land, with a condition annexed, that, on payment of a sum of money by the grantor to the grantee, at a certain day, the conveyance should be void. In case of the non-payment, the remedy of the grantor (grantee) was by a proceeding in rem. It was never con- sidered as binding on the mortgagor personally for the pay- ment of the money. The authorities and the reason of the 1 Wharf y. IIowcll, 5 IJinn. 499. Sec 2 7 Watts, 360. Stocvcr V. StoevcT, 9 S. & ]{. 448; Hicks V. Hicks, 5 Gill & J. 85. CH. YI.] PERSONAL LIABILITY, ETC. 103 thing seem to show, that a mortgage is not, of itself, an in- strument by which a personal liability for the money is raised, and on which an action of debt or covenant can be maintained ; — yet, that if there be any prior or accompany- ing cause of action which, of itself, creates a personal lia- bility distinct from the mortgage, such as a loan, a bond, a note, or other claim, the mortgage is not to be considered as merging such claim or demand, but is merely a collateral security. It is contended in the present case, that there is, in this mortgage, an acknowledgment of a debt, which is a sufficient ground to maintain the action. If there were such an acknowledgment of a prior debt and no more, as for in- stance, if it recited money borrowed, it would rather seem, from the authorities, that the action in personam should be on the contract by which the debt arose, and that no implied contract inferred from the mortgage will be sufficient. But here the acknowledgment is of a bond, — and the mortgage is declared to be given to secure the payment of the bond. No contract can be implied from the mortgage, when the contract is express and formal. ' Expressum facit cessare tac- iturn.'' " It was further remarked, that even if the evidence showed that no bond was actually given, but the parties waived it ; this action could be sustained only on the lan- guage of the mortgage. 16. It has been held in North Carolina, that the mortga- gor has a right to redeem, though the mortgage contains no covenant.' So, in New York it has been held, that the mortgagee may maintain a personal action for the debt, upon the acknowledgment in the deed, of indebtedness, and that the conveyance is made for security.^ But not unless there is such an acknowledgment, or an agreement to pay.^ Under the Revised Statutes of New York, no covenant to pay the sum secured by a mortgage can be implied from the mortgage itself; and where a debt is discharged by a mortgage or an absolute deed, as security for repayment of 1 Wilcox V. MoiTis, 1 Mur. 117. =* Weed v. Covill, 14 Barb. 242. ' Elder v. Eouse, 15 Wend. 218. 104 THE LAW OF MORTGAGES. [CH. VI. the consideration, the only remedy for payment is upon the premises conveyed.^ 17. In New Hampshire, upon a construction of the statute relating to mortgages, it was held, that to constitute a mort- gage, the land must be put in pledge, on condition, for the payment of money or some other act. Otherwise, the con- veyance will be construed as a conditional sale.^ 18. In Maine, personal security is not necessary to con- stitute a mortgage.^ 19. A mortgage is not a note, bond, bill, or other instru- ment in writing, within the act of Illinois, concerning prom- issory notes, and want or failure of consideration is no plea to a scire facias for foreclosure.'^ (See ch. 19.) 20. In Missouri, one owing a note for $300 conveyed land to the holder, at the price of $1,000. The note not being at hand at the time, he gave another note for $260, for money advanced, and the creditor gave, at the same time, a note for $440. Held, this was not sufficient to show that the deed was a mortgage.^ 21. In Massachusetts, the rule has been thus stated : — " Where there is a bond or covenant in the deed to repay the money lent, it is, at law, a debt ; and the Court of Chan- cery considers it in good conscience due, although there is neither bond or covenant to enforce the repayment."^ And in another case, " the deed of mortgage creates a contract respecting a debt, as well as a conveyance of the estate." "^ 22. So, a deed of land, and a bond made at the same time to reconvey, on payment of a sum of money, without any personal security therefor, constitute a mortgage ; and the mortgagee's right under the same will pass by a devise of " all the obligations for money due to him." Parker, C. J., says : — " The grantee could no otherwise have acquired an indefeasible estate, than by entry to foreclose, or judgment 1 Ilonc V. Fisher, 2 Rarh. Cli. Tj-jO. ^ Edwards v. Fer) and in many respects until final foreclosure of (h) The mortgagor is owner, before foreclosure or enlr>/ by the mortgagee. Perkins v. Dibble, 10 Ohio, 438; Miami, &e. v. Bank, &e., Wright, 249; Ralston v. Hughes, 13 111.469. See Norwich r. Hubbard, 22 Conn. 587. In New Hampshire it has been said, that the mortgagee might be entitled to notice of the laying out of a highway, and damages, as oicner, ly formal entry and notice of his title ; and in any event might have his rights pro- tected in chancery. Parish v. Gilmanton, 11 X. H. 298. See Mass. Sts, 1855, ch. 247 ; Christophers v. Sparke, 2 Jac. & W. 235. The mortgagee of land taken for a railroad need not be made a party to proceedings by the mortgagor for the assessment of damages, provided he gives his assent thereto by a writing filed in the case. Meacham i\ Fitchbui-g, &c., 4 Cush. 291. The charter of a city provided, that the common council might order the proprietor or proprietors of laiid and buildings fronting side-walks or gutters, to level, raise, or form them at their own e.xpense, prescribins; a rea- sonable time therefor ; and, if they failed to do it, might themselves procure it to be done, and the expeftse thereof should then be a lien or real incum- brance on the property, and payment enforced, as upon a mortgage to the city. The council ordered certain works of this nature to be done opposite premises -which were mortgaged, notifying the mortgagor, but not the mort- gagee. Upon failure to do the work, the council caused it to be done, and the expense ^ras ordered to be paid by the mortgagor. Upon his neglect or refusal to pay it, the city files a bill in equity against moitgagor and mort- gagee to enforce the lien. Held, the latter was liable to be foreclosed. Norwich v. Hubbard, 22 Conn. 587. Bill to charge an estate with debts, and compel a conveyance of it. Held, mortgagees of the estate were neces- sary parties. Hoxic r. Carr, 1 Sumn. 173. In addition to the two successive stages of title which grow out of a mort- gage, arising from breach of condition and entry by the mortgagee ; there is, preliminary to either, the interest of the mortgagor, created by the mere making of the mortgage, j^rior to condition hrolen. This of course would seem to be a higher and more substantial title than cither of the others ; constituting, at law, what they constitute in equity. But, upon mere tech- nical principles, relating to conditions, a different doctrine has been some- times propounded ; although, in the present advanced state of the law of 136 THE LAW OP MORTGAGES. [CH. VIII. the mortgage, the mortgagor remains owner of the estate and seized of it, while the mortgagee is held to have a mere lien or secm'ity. In terms, the condition of a mortgage is subsequent, enabling the mortgagor to regain a title which has once passed from him, by doing a certain act ; but in effect it i?> precedent, enabling the mortgagee to turn into a legal title that which was before a mere claim or lien, upon the mortgagor's failure to do a certain act.^ 2. These general principles have been sanctioned in nu- merous American and English cases. They are thus stated by Shaw, Ch. J., in Ewer v. Hobbs.-(c) 1 See Att. Gen. v. Winstanlcy, 5 Bli.oli, - 5 Met. 3 ; Miami, &c. v. Bank, &c., (New,) 141; White t'. Whitney, 3 Met. Wright, 249; Davis v. Anderson, 1 84; Goodwin v. Richardson, 11 Mass. Kelly, (Georgia,) 176. 474, 475 ; 8 Ibid. 554, Heading of Judge Trowbridge ; Hooper v. Wilson, 12 Verm. G95. mortgages, it would not probably be now sanctioned by any court of law or equity. In Lord Mountjoy's case, Anders. 307 ; ace. Moore v. Plymouth, 3 B. & A. GO, it was lield, that a mortgagor cannot effectually make a reser- vation to himself, from a conveyance to a purchaser, of any privilege from the land, as, for instance, that of mining or hunting; because he is not the legal owner. So it is said: — " A mortgagor, before condition broken, has not any equity of redemption — nor — any estate, as distinguished from a mere tenancy, either at law or in equity ; clearly not at law, for by the mortgage deed he has conveyed away all his estate, &c., both at law and in equity to the mortgagee ; on a condition, it is true, but that a condition, the performance or breach of Avhich a court of etpiity cannot notice, except as it leads to consequences injurious to one or both of the parties ; nor in equity, for a court of equity does not interfere till after the breach of the condition." 1 Pow. 2G8, n. The same author remarks, that if a mortgagor before the condition broken devise it, the devise will be void ; for a con- dition is not devisable. But the cases of Moor & al. v. Hawkins, and Row V. Jones, whicli seem to have on solid grounds established the power of testamentary dispositions of possibilities, accompanied with an interest, and of such as would be descendible to the heir of the object of them, dying before the contingent event — appear to be equally applicable in principle to the case of a condition upon a mortgage. 1 Pow. 2G8. (r j '• AlllioMgli, as between mortgagor and mortgagee, it is a transmission of the ice, which gives the mortgagee a remedy in the form of a real action, CH. VIII.] ESTATE OF THE MORTGAGOR. 137 " The first great object of a mortgage is, in the form of a conveyance in fee, to give to the mortgagee an eHectual security, by the pledge or hypothecation of real estate, for the payment of a debt, or the performance of some other obliga- tion. The next is, to leave to the mortgagor, and to purcha- sers, creditors, and all others claiming derivatively through him, the full and entire control, disposition, and ownership of the estate, subject only to the first purpose, that of securing the mortgagee. Hence it is, that as between mortgagor and mortgagee, the mortgage is to be regarded as a conveyance in fee ; because that construction best secures him in his remedy, and his ultimate right to the estate, and to its inci- dents, the rents and profits. But in all other respects, until foreclosure, when the mortgagee becomes the absolute owner, the mortgage is deemed to be a lien or charge, subject to which the estate may be conveyed, attached, and in other respects dealt with, as the estate of the mortgagor. And all the statutes upon the subject are to be so construed ; and all rules of law, whether administered in law or in equity, are to be so applied, as to carry these objects into effect." 3. So it is said, " while the mortgagor, or any persons un- der him, are by the mortgagees permitted to remain in posses- sion, and the mortgagees omit to enter, the mortgagor and those who are in under him are, in contemplation of law, taking the rents and profits to his and their own account." ^ The mortgagee is not accountable to the mortgagor for rents, before taking possession, nor the mortgagor to the mortgagee.^ So the mortgagor in possession may make any improvements 1 Per Putnam, J., Mayo r. Fletcher, 2 chase v. Palmer, 25 Maine, 341. 14 Pick. 531 ; Clarke v. Curtis, 1 Gratt. See Davenport v. Bartlett, 9 Ala. 179. 289. See Cadwallader v. Mason, Wvtlie, 58 ; Graves v. Sayre, 5 B. iMonr. 390. and constitutes a legal seizin"; yet, to most other purposes, a mortgage before the entry of the mortgagee is but a pledge and real lien, leaving the mort- gagor to most purposes the owner." Per Shaw, C. J., Howard v. Robinson, 5 Cush. 123. 12* 138 THE LAW OF MORTGAGES. [CH. VIII. upon the estate, and the mortgagee's failing to object will not affect his rights.^ 4. Property in lease being mortgaged, and the mortgagor becoming bankrupt, the mortgagee notified the tenant to pay- rent to him, but it was paid to the assignees. The mort- gagee then filed a petition, that the assignees might be ordered to pay him the rent received. In dismissing the petition, Lord Eldon remarked, that admitting the case of Moss v. Gallimore to be sound law, he had often been surprised by the statement, that the mortgagor was receiving the rents for the mortgagee. A mortgagee never could in that court make the mortgagor account for the rent for the time past. There was no instance that a mortgagee per directum had called on the mortgagor to account for the rents. The consequence is, that the mortgagor does not receive the rent for the mort- gagee.2 5. So Chief Justice Kent remarks : ^ — " Mortgages have been principally the subject of equity jurisdiction. (fZ) They have been considered in those courts in their true nature and gen- uine meaning ; and the rules by which they are governed are settled upon clear and consistent principles. The case is far different in a court of law ; and we are constantly embar- rassed between the force of technical formalities, and the real sense of the contract. The language, however, of the modern cases is tendinor to the same conclusions which have been adopted in equity ; and, whenever the nature of the case would possibly admit of it, the courts of law have in- clined to look upon a mortgage, not as an estate in fee, but as a mere security for a debt.^^ 6. So, Lord Mansfield remarks in the King v. St. Mi- chael's : * — " The mortgagee, notwithstanding the form, has 1 Ileatli V. Williams, 25 Maine, 209. ^ Jackson v. Willard, 4 Johns. 42. 2 Ex parte Wilson, 2 Ves. & B. 252. * 1 Doug. G32. {(V) Courts of law arc said to be molc-hlind as to equities. Peters v. Good- rich, 3 Conn. 155. en. YIII.] ESTATE OF THE MORTGAGOR. 139 but a chattel, and the mortgage is only a security. It is an af&ont to common sense to say the mortgagor is not the real owner.". " A mortgagor has a right to the possession, till the mortgagee brings an ejectment." 7. Lord Hardwicke says : ^ — " The interest of the land must be somewhere, and cannot be in abeyance, but it is not in the mortgagee, and therefore must remain in the mortga- gor." 8. In Cholmondeley v. Clinton,^ Sir Thomas Plumer, M. H., says : — " The relation bet\v^een mortgagor and mortgagee is perfectly anomalous and sui generis. The latter acquires a distinct and independent beneficial interest in the estate ; he has always a qualified and limited right, and may eventually acqune an absolute and permanent one to take possession, and he is entitled to enforce his right by an adverse suit in invitum against the mortgagor." 9. So Lord Manners remarks r^ — " The person entitled to the equity of redemption is, in equity, considered as the owner of the estate ; it descends to his heir, may be the sub- ject of settlement or will, may be limited in the same man- ner, and those limitations barred in the same manner, as those of the legal estate ; the mortgagee being but a mere incumbrancer." 10. Such may be laid down as the existing, settled rule of law upon tliis subject. It should be stated, however, that a different language is not unfrequently held in the books, with respect to the title of mortgaged premises ; speaking of the mortgagee as the true owner, more especially, where he is in possession,* and of the mortgagor, as having a mere equity. It is truly said, " Unless the different purposes to be answered are adverted to, there would appear to be much confusion in the books relative to the rights of the mortga- gor and mortgagee ; and, with those purposes in view, an attempt to reconcile all the decisions would be made in 1 Casborne v. Scarfe, 1 Atk. 606. ^ 2 Ball & B. 402. 2 2 Jac. & W. 183. * Lowell v. Shaw, 3 Shepl. 242. 140 THE LAW OF MORTGAGES. [CH. VIII. vain." ^ So, Judge Story remarks, that the various language used upon this subject is to be accounted for by the different views which prevail in law and equity .^ 11. Thus, in Fay v. Brewer,^ it is said, " The mortgagee has the whole estate against all but the mortgagor," w^hile, as has been seen, the general language of the cases is, that the mortgagor " has the whole estate against all but " the mortgagee. So, in Root v. Bancroft,^ it is said, " As be- tween mortgagor and mortgagee, the execution and delivery of the mortgage deed transfer the legal estate and vest it in the mortgagee ; and the interest of the mortgagor is a right to redeem." So it is said by the Court in New Hampshire, that the mortgagor retains only a power to regain the fee, and that the condition as to him, (not the mortgagee) is a precedent one, he being a mere tenant at sufferance, and having no right of possession.^ Also, that a mortgagee not in possession is not entitled to be treated as owner, except in a suit or some other proceeding to enforce his rights as mort- gagee.^ 12. Mr. Powell remarks : — " The mortgagee is to be con- sidered, both at law and in equity, as the true owner as to all other persons than the mortgagor, or persons who can show a title to compel a redemption. And as to those per- sons, the mortgagee is to be considered as an indifferent stakeholder, the mortgage not vesting any actual ownership in him, and the estate being in his hands as a mere pledge."'' So, Mr. Coventry says,^ "the whole legal estate is in the mortgagee." 13. In the case of Brown v. Cram,^ the plaintiff claimed under a mortgage, and the defendant under a subsequent, absolute deed, from the same person ; and issue was joined 1 Per Parker, C. J., Smilli v. Moore, tees, &c. v. Dickson, 1 Freeni. Ch. 1 1 N. H. r)9. 474. '^ Ctray v. Jenks, 3 Mas. 521. " Great Falls Co. v. Worcester, 15 2 .'i Pick. 204. N. II. 412. ■* 10 Met. 471. " 1 Pow. 107, n., 3 Swan. 237. ^ Prown V. Cram, 1 N. II. 171. Sec ** 1 J'ow. 177, n. also Haven v. Low, 2 N. II. IG; Trus- '•* 1 M.II. 1G9. CH. VIII.] ESTATE OF THE MORTGAGOR. 141 upon the question of freehold title. The plaintiff was proved to have made a formal entry, and subsequently, to have had continued possession. The entry was made before one of the notes secured by the mortgage became due, and after the other became due. Held, the freehold title was in the plaintiff, as much as if he had received an absolute, in- stead of a conditional deed ; the mortgagor retaining merely a power to regain the fee upon performance of a condition precedent. 14. In the same case, it is held, that the purchaser of an equity of redemption has no title in the land before re- demption. ^ 15. So, in Connecticut, it is held, that the legal title vests in the mortgagee.^ 16. And in New Jersey,^ the mortgagee is said to be seized and take an estate in prcesenti. The condition is sub- sequent. 17. So, in Ohio, it is held that the title is in the mortgagee after breach of condition, until the mortgage be satisfied.^ 18. And in Maryland it is said, " Upon the execution of the mortgage, the legal estate becomes immediately vested in the mortgagee, and the right of possession follows as a consequence, subject only to the occupancy of the mortga- gor, which is only tacitly permitted until the will of the mortgagee is determined."^ 18 a. In Kentucky, it has been held, that the mortgagor cannot maintain an action on the covenants of warranty in the deed to him, while the mortgage debt remains unpaid ; the mortgagee being the legal owner.*^ 18 b. If the seller of land take back a mortgage for the price, which he forecloses, he is to be regarded as the con- tinuous owner in reference to a dedication of the land as a highway.''' 1 Brown v. Cram, I N. H. 172. '^ Jamieson v. Bruce, 6 Gill & J. 74. 2 Chamberlain y. Thompson, 10 Conn. ^ McGoodwin v. Stephenson, 11 B. 251. Mour. 21. 3 Montgomery i-. Brnere, 1 Soutli. 2G8. " Wright v. Tukey, 3 Cush. 290. * Heighway v. Pendleton, 1 5 Ohio, 733. 142 THE LAW OF MORTGAGES. [CH. VIII. 18 c. The words " mortgage, assign, and transfer," in a deed, pass the legal title.^ 18 d. Where land is devised, subject to the payment of an annuity, and mortgaged by the devisee, the mortgagee be- comes personally liable for the annuity after entering to fore- close. And his liability continues even after he has sold the land.2 19. Upon the ground that the mortgagor is the real owner of the land, a mortgage was early held not to be such an alienation as to change any previous, revocable disposition of the property ; but merely to prevent the owner or his alienee from recovering it, unless they discharged the demand there- by secured. 20. Thus, in Thorne v. Thorne,'^ an owner in fee settled his lands by voluntary conveyance to the use of himself for life, remainder to his daughter and heir apparent in tail, re- mainder to his three brothers in tail, remainder to himself in fee, with power of revocation. Seven years afterwards, he mortgaged in fee to one of the three brothers, who were re- mainder-men, conditioned that if he or his heirs paid the money at the day, he should have the land in his former estate. The mortgage became forfeited, and the mortgagee afterwards purchased of his elder brother, the heir at law. The third brother brings a bill for the third part, by virtue of the limitation of the remainder in tail to him and his two brothers.. The question was, whether the mortgage was a total revocation, or only pro tanto. Held, the revocation was only /TO tanto^ because the mortgagor was to have the lands, on payment, as in his former estate. 21. The same principle is adopted in regard to a devise, followed by a mortgage, of the land. Thus, in the case of Hall V. Dcnch,* lands were devised in tail male, remainder to the plaintill" in fee, and afterwards mortgaged in fee. The devisor having died, and the tenant in tail having also died 1 GrtDibril ?). Doc, 8 Blackr. 140. •* 1 Vorn. 321); Casbornc v. Scarfe, ^Felch V. Taylor, 1.'3 Tick. 133. 1 Atk. G()6 ; McTa^gart v. Thompson, » 1 Vcrn. 141, I8'.>. 2 llarr. (renn.) 141). CH. VIII.] ESTATE OF THE MORTGAGOR. 143 without issue, the plaintiff brought a bill, claiming under the devise to him. Held, though the mortgage was a total revo- cation of the will at law, it was not so in equity, but the devisee might redeem. 22. So, an agreement made upon the sale of land, that the vendee shall not sell it without first ofTering it to the vendor, does not preclude the vendee from mortgaging the land to secure a debt, without making such offer. And an absolute deed, with a subsequent defeasance, executed in conformity with an agreement made at the time of giving the deed, con- stitutes a mortgage, not a sale} The Court say ,2 " this could not be intended to restrain the defendant from all or any of the uses of his property, incident to the ownership, except on an offer to the plaintiff before a sale and alienation. It could not prevent him from mortgaging it to raise money. This being a security for money, and not a sale or alienation of the estate, we think the casus foederis had not occurred." 22 a. So, where there is a mere power to sell lands, a power to mortgage will not be implied.^ "Whether a trustee, appointed by will, with power to sell and dispose of lands in fee-simple or otherwise, may mortgage them, queered 22 b. So, the act of Congress of 1820, ch. 52, § 7, pro- viding that " no land shall be purchased on account of the United States, except under a law authorizing such pur- chase," does not prohibit the acquisition, by the United States, of the legal title to land, taken by way of security for a debt, either directly or through the intervention of a trus- tee.^ 22 c. So, where a statute provided, that notice of a sale to enforce a mechanic's, lien should be given to the owner of the land; it was held, that a mortgagee, whose title accrued after that of the mechanic, was not entitled to such notice.^ 1 Loverinfr v. FogfJi 18 Pick. 540. '"> Neilson v. Lagow, 12 How. U. S. - Ibid. p. .543. ' 98. ■^ Albany, &c. r. Bav, 4 Cotnst. 9. " Howard v. Robinson, 5 Cnsb. 119. •• Ibid. " 144 THE LAW OF MORTGAGES. [CH. VIII. 22 d. But a mortgagee is a purchaser^ to the extent of his interest in the land, within the Statute of Frauds.^ 23. So, a mortgage of property insured is not an alienation by sale or otherwise, within the meaning of the statute rela- ting to mutual insurance companies.^ [e) 23 a. Upon similar grounds, a right of way, appurtenant to land, over and upon adjoining land, is not extinguished by the vesting of both estates in the same person, as mort- gagee, under separate mortgages, till both are foreclosed.^ To effect such extinguishment, it is held, that the party must have a permanent and enduring title to both estates, an unlimited power of disposal, with or without the former incidents of servitude, or with new incidents of the same kind ; an estate not liable to be defeated by performance of a condition or an event beyond his control, and where the estates cannot again be disjoined by operation of law. " So long as she (the mortgagee) held them, they were both de- feasible, upon different conditions, — the payment of distinct debts, and, for aught that appears, to be performed by different persons, because the rfespective equities of redemp- tion might be held by different persons. So long as she held them, one might have been redeemed and the other foreclosed without any act of hex's, and a foreclosure or re- demption of either, would have entirely effected a separation of the two." The Court further remark, that a redemption reinstates the mortgagor in his original estate, subject to iLedyard v. Butter, 9 Paige, 132. Pick. 418; Rice v. Tower, 1 Gray, 2 Conover v. The Mutual, &c., 3 Denio, 426. 254'; Jackson v. Mas.sachusetts, &c., 23 ^ Ritgcr v. Parker, 8 Cusli. 145. (e) Insurance upon property mortgaged, the company agreeing by a memorandum upon the policy to pay the amount insured to the mortgagee ■with the consent of the mortgagor. The mortgage was afterwards lore- closed, without any act of the mortgagor, to whom the poUcy was issued. Ilehl, the foreclosure was not an ulienalion which defeated the policy, and that an action might be brought upon it in the mortgagor's name. Bragg v. N. E. &c., 5 Fost. 289. CH. VIII.] ESTATE OF THE MORTGAGOR. 145 all its former servitudes. So in case of foreclosure, the inci- dents of the estate remain attached to it, unaffected by any act of the mortgagor, as if the conveyance had been originally absolute, and, until foreclosure, the mere entry of the mort- gagee upon both mortgages, will not effect a merger.' 24. The rule, that a plaintiff in ejectment cannot recover premises, the title to which is in a third person, does not apply where the outstaijding title is a mortgage. A mort- gage constitutes a title when the mortgagee comes into a court to enforce it; but till then, the mortgagor is the owner.-(/) Upon the same principle, a mortgagor may main- 1 Kitger V. Parker, 8 Cush. 145-147. 166a, n.; Doe v. McLoskoy, 2 Ala. 708 ; '- Dcii V. Dimon, 5 H:\lst. 157; Elli- Olmsted v. Elder, 1 Seld. 144; Fon- son V. Daniels, 11 N. H. 274; 1 Pow. taine v. Beers, 19 Ala. 722. (/) After performance of the condition, the mortgagor cannot maintain an action for the land against a third person, in the name of the mortgagee, though the parties agreed by parol that such suit might be brought. Pres- cott V. EUingwood, 10 Shepl. 345. In Missouri, -where the legal title is in the mortTaoee, an outstandins mortgage is sufficient to prevent a recovery in ejectment, and there is no presumption of redemption after a lapse of time. Meyer r. Campbell, 12 Mis. G03. If in trespass the defendant plead, that he Avas possessed of an undivided moiety of certain land, which was flowed by the plaintiff's dam, and that therefore he entered and took it down ; a replication, that the plaintiffs Avere seized of the whole tract in fee and in mortgage, and had the right of possession, and therefore, by means of the dam, caused the water to overflow it, is insufficient. Great, &c. v. Worster, 15 N. H. 412. If the replication had alleged, that the plaintiffs had before that time entered into possession as mortgagees, qiicere ? lb. Where a de- fendant. In an action of trespass for cutting down a dam, alleged in his plea, that he was possessed of an undivided moiety of a certain tract of land, flowed by means of the dam, and the plaintifT's replied, that they were seized in fee and in mortgage, and had the right of possession, and Issue was taken upon the rejoinder that they had not the right of possession ; held, the issue was Immaterial, and a repleader was awarded. lb. The mortgagee and mortgagor of land may be joined in ejectment as defendants, even though the mortgagee never had been in actual possession. Marvin v. Dennlson, 20 Verm. C62. But he will only be answerable for rents and profits when he has received them ; and. If the defendants plead severally, as they may do, judgment may be recovered for the damages against the mortgagor alone. lb. VOL. I. 13 146 THE LAAV OF MORTGAGES. [CH. VIII. tain ejectment against one who claims by a conveyance in fee-simple absolute from the mortgagee. So a mortgagor or purchaser of the equity of redemption may maintain trespass against the mortgagee or one acting under his license ; where the defendant pleads liberum tenementum, and the plaintiff replies that the freehold was in himself.^ And upon this ground, a mortgagor in possession gains a settlemetit.^ 25. The following cases have been decided upon this point in England. St. 9 Geo. 1, ch. 7, provided, that no person should gain a settlement by purchasing any estate, whereof the consideration was less than X30, bond fide paid. Hence, if a pauper contract for the purchase of an estate for ^39, which is mortgaged for <£32, pay <£7, and take a deed subject to the mortgage, or if he contract to purchase for £52, and pay but X12, mortgaging to the vendor for the balance, he gains no settlement.^ 26. But where, after purchasing an estate for the full value, the purchaser obtained from a third person a loan of money, with which he discharged the existing incumbrances, and took an assignment of them, thus acquiring the legal estate, and then mortgaged to secure the loan, and remained in possession forty days thereafter ; held, he gained a settle- ment.* 27. The owner of an equity of redentption, having been ejected by the mortgagee, was permitted by him to occupy an untenanted house on the land, for the purpose of over- looking some repairs which he proposed to make, with the intention of selling the property and })aying the mortgage, but with no agreement as to rent. Having occupied three months, he was removed as a pauper, not having done any thing towards repairing or selling. Held, he gained no settle- 1 Jackson v. Broiison, I'J Jolins. 325 Tliinyaii v. Morscreaii, 1 1 .Johns. .'');34 Iluckins V. Straw, .34 Maine, IfJG. - The Kin<; v. St. Michael's, Doug 632. The mortijaijee, if in i)OSsessioii may gain a settlement. Tiie question turns on possession. Barkhanijjstead i Farminpton, 2 Conn. 600; Conway t>. Dceificid, 11 Mass. 327; Groton v.Box- horongli, G Mass. 50. » JJcx V. Mattingiy, 2 T. R. 12. ■* liox V. Chailcy, 6 T. R. 755 ; V. Oincy, 1 M. & S. 387 ; v. Ted- ford, IJurr. Set. Cas. 57. CH. VIII.] ESTATE OF THE MORTGAGOR. 147 ment, because, though he had an equitable title, he was not legally in possession, and had neither ^^5 in re nor ad rem? 28. Upon the same ground of ownership in the mortgagor, he is required or entitled to serve as a juror or member of the legislature, or may be received as h^\\.?{g) So the mortgagor in possession is liable for taxes ; and if the land is sold for taxes, he cannot acquire a title by purchasing it, this being only a mode of paying the taxes.^ In Massachusetts,'^ a mortgagee, taking possession, is liable for taxes then due. In Maine,^ land cannot be taxed to a mortgagee not in posses- sion, and a sale for non-payment of such tax passes no title.(A) 1 Rex V. CatherinKton, 3 T. R. 771. * St. 1849, 551. - Montgomerv v. Eriiere, 1 South. 267. ^ Coombs v. Warren, 34 Maine, 89. 3 Ralston i-. Hughes, 13 111. 4G9. See Mass. Rev. Sts. 1853, 942. {(j) By St. 7 W. & ]\I. c. 25, a mortgagee could not vote for members of Parliament in right of his mortgage, unless in possession or receipt of the rents. The mortgagor, on the other hand, had this privilege. 1 Pow. 170 a. See Beamish v. The Overseers, &c., 7 Eng. Law & Eq. 485 ; Moore v. Overseers, &c., 14, 295. Under the rjame laws, a mortgagor has been held an owner, or, in the words of the statute, to have real estate, etc., but the clear yearly value of the property must be over and above the interest of the mortgage. Witherell v. Hull, Caldecot, 230. Where the receipt of a clear yearly in- come from real estate gives the party a legal settlement ; if he mortgage it for a sum, the interest of which does not leave to the mortgagor a surplus of the sum required ; he gains no settlement. Otherwise, it seems, if the word clear were omitted. Groton v. Boxborougli, 6 Mass. 50. The Court remark : — "If we do not give the term this effect, the qualifi- cation by a freehold estate would be absolutely nugatory ; any man involved in debt might mortgage his estate to the full value, so that the interest of his debt should e.\.haust the whole annual income of his lands. If this was the fact, what reason can be assigned why, for a property so incumbered, he should be admitted to gain a settlement, when in fact the value of his real property is merely nominal. lb. 54. A mortgage, to indemnify a surety for the purchase-money of the land, has the same effect upon the question of settlement, as if made directly to the seller. Conway v. Deerfield, 11 Mass. 327. (h) See, as to the liability of mortgaged premises for a publioi charge in the nature of a tax, Norwich v. Hubbard, 22 Conn. 587. If mortgaged land is lost for non-payment of taxes, the mortgagee is not responsible for such loss. Harvie v. Banks, 1 Rand. 408. 148 THE LAW OF MORTGAGES. [CH. VIII. 29. In general, the possession of a mortgagor, or one claiming under him, is not regarded as adverse to the mort- gagee. Thus in the case of Hunt v. Hunt,i it was held, that a mortgagee cannot be disseized by the mortgagor. " Being tenant at will, his possession is not adverse, and any build- ings, improvements, or erections placed by the mortgagor upon the land, must be considered as improvements upon the estate mortgaged, made by the mortgagor as owner of the equity of redemption, and cannot be deemed a disseisin. The mortgagor in such case must be considered as making improvements upon his own estate, of which he has the full benefit in the enhanced value of the equity of redemption." ^ 30. So in a subsequent case it is said, " no mortgagor can oust his mortgagee by any entry or by possession of the land." 3(i) 31. The same principle, as to the ownership of the prop- erty by the mortgagor, has been applied to a question of title between third persons. 32. A mortgagor in possession authorized a third person to build a house upon the land, which was afterwards sold on an execution against the latter. TJie purchaser brings an action for the house against one claiming under a sale by the 1 14 Pick. 374. '^ Per Shaw, Ch. J., Root v. Bancroft, 2 Ibid. .385, 386, per Shaw, Ch. J. 10 Met. 48 ; Joyner ?;. Vincent, 4 Dev. Sec Nichols r. lleynolds, 1 An^'. (H. I.) & B. 512. 30 ; Smartle v. William.s, Salk. 245 ; Herbert v. Hanrick, 16 Ala. 581. (j) So the possession of tlio inorlrjagee under the mortgage before the law day, is not adverse to tlic mortgagor. McGuire v. Shelby, 20 Ala. 456. So the as.signee of the mortgagor cannot hold adversely, but is a mere tenant at will to the mortgagee, unless he purchased without notice of the mort- gage. Newman v. Chapman, 2 Rand. 93. The same principle is applied to the possession of the mortgagee as against a reversioner seeking to re- deem. A mortgagee remained in possession si.x years without acknowl- edgment dt the title of the mortgagor, bought out a tenant for life of the equity of redemption, and occupied twenty years more. Held, his occu- pancy was not adverse during the tenancy for life, and the reversioner might redeem. Hyde v. Dallaway, 2 Hare, 528. CH. VIII.] ESTATE OF THE MORTGAGOE. 149 mortgagor. Held, no defence, that the mortgagee did not authorize the erection, and forbade the removal, of the house, as he had a mere lien on the property, if any interest in it, and the result of this suit would not affect his title. A doubt was suggested, whether the mortgagee acquired even a lien upon the house, except for the purpose of securing the rents by taking possession ; and whether the building was not the personal property of the builder.^ 33. A mortgagee has the right of immediate possession, un- less agreed to the contrary, which he may enforce either by entry or action. In Lackey v. Holbrook^- Dewey, J., says : — " A mortgagee has a right to immediate possession of the mortgaged premises, when there is no agreement that the mortgagor shall retain the possession until a breach of the condition of the mortgage. This doctrine, so well settled by repeated decisions of this Court, has now become incorpo- rated into the statute law of the Commonwealth." (y) In an action on the deed, the mortgagee is not required to show a breach of the condition, unless his object be to foreclose by means of a conditional judgment.^ 1 Jewett V. Patridge, 3 Fairf. 243. ]\Iis. 229 ; Smith v. Taylor, 9 Ala. 633 ; " 11 Met. 460; Allen r. Parker, 27 Mclntyre v. Whitfield, 13 Sm. & M. 88; Maine, 531 ; Miner v. Stevens, 1 Cush. Stevens v. Brown, Walk. Ch.41 : Wales 485 ; Mansony r. United States, &c., 4 v. Mellen, 1 Gray, 512 ; Taylor v. Weld, Ala. N. S. 745, 746 ; Hobart v. Sanborn, 5 Mass. 120 ; Brown v. Leaeh, 35 Maine, 13 N. H. 226 ; Harmon v. Short, 8 Sm. 39 ; Brown v. Stewart, 1 Md. Ch. 87. & M. 433 ; Walcop v. McKinney, 10 « Darling v. Chapman, 14 Mass. 104. Q') In several of the States, this subject has been regulated by statute. In Massachusetts, the mortgagee's general right of possession is recognized. (Mass. Rev. Sts. 635.) So in Maine, (Me. Rev. Sts. 553 ; Ruby v. Abys- sinian, &c., 3 Shepl. 306.) In Vermont, it is provided, that the mortgagor may retain possession till breach of condition, unless the deed clearly show the contrary. So in Wisconsin. Rev. Sts. ch. 78, § 1210. In New York, a statutory provision limits the mortgagee's remedy for possession to a suit upon the special contract, if any, or to a process for foreclosure and sale, after default. 2 N. Y. Rev. Sts. 408. In Indiana, the statute of 1S43, de- priving a mortgagee of the right of possession, has no effect after foreclosure and sale. Jones v. Thomas, 8 Blackf. 428. See Morgan v. Woodward, 1 Cart. 446 ; Hanna v. Countryman, lb. 493 ; Smith v. Porter, 35 Maine, 287. 13* 150 THE LAW OF MORTGAGES. [CH. VIII. 34. Where the mortgagee has entered before breach of condition without notice, a tenant at will under him may- maintain an action of trespass against the mortgagor for entering upon the premises, and expelling him therefrom.^ (A;) So the mortgagor cannot maintain an action of trespass for such entry, against the mortgagee and an officer who entered with him, by opening an outer door in the absence of the mortgagor and his family, without previous notice to quit ; although the officer attached the plaintiff's goods upon such writ.^ So the mortgagor cannot maintain trespass against the mortgagee for entering and carrying away a fixture.^ 35. Mortgage of a term, conditioned for the payment of a certain svim with interest, at certain periods, with a power to sell after three months' notice, in case of non-payment, and a covenant by the mortgagor to pay, and that the mortgagee, at any time after default, might enter and take the rents and profits for the residue of the term. Held, the mortgagee might enter before default, and before any day named for payment.^ 36. But if the mortgagee enters under a claim adverse to the mortgage title, the mortgagor may maintain an action of trespass against him.-5(/) 1 Reed V. Davis, 4 Piek. 217. * Rogers v. Grazebrook, 8 Ad. & El. 2 Lackey v. Holbrook, 11 Met. 460. (N. S.) 895. 3 ChcUis V. Stearns, 2 Fost. 312. ^ Merithcw v. Sisson, 3 Kerr, 373. (i) In the case of Reed v. Davis, where this pomt was decided, the coun- sel for the defendant began to argue, that such notice was required by law ; but the Court refused to hear an argument upon the question, saying it was one of the settled points of law that notice was not necessary. In the same . case, brought for breaking and entering the plaintifl's dwelling-house, put- ting out his furniture, and forcibly expelling the plaintiff and his family; the Court lefused to set aside a verdict for $500 damages. A mortgagee of slaves, after breach of condition, may lawfully seize them, after night, for the purpose of foreclosure, without violence to the mortgagor, his family or houses. Satterthwaitc v. Kennedy, (Ct. of Err. S. C.) Law Rep. Aug. 1849, p. 206. (/) As to the title of the hrir and executor of a mortgagee who dies after having entered before breach of condition; see Smith v. Uyer, IG Mass. 18. CH, YIII.] ESTATE OF THE MORTGAGOR. 151 36 a. An entry by a mortgagee to survey the premises, merely for the purpose of obtaining information respecting the boundaries, or to exercise a power not warranted by the mortgage, as to flow the land by a dam erected on other land belonging to him, is not a possession under the mortgage.^ 37. An agreement, that the mortgagor may retain posses- sion, must appear by the deed itself, or some other writing ; parol evidence of it is insufficient. (7?i) And this doctrine has been applied, even in a case where the mortgage was con- ditioned to support the mortgagee and his wife, and the facts indicated, that the mortgagor's only resource for furnishing such support was in the use of the estate mortgaged. In that case,2 the Court remark : — " There can be no doubt that the parties intended that the mortgagor should remain in pos- session, until there was a breach of the condition of the deed. But by the principles of the common law, as well as our own statutes relating to the conveyance of real estate, agreements to that effect must be in waiting to be obligatory. It is time it was known that contracts like this, where one party con- veys his estate to another, in consideration of a support to be furnished by the purchaser, and the latter mortgages the "estate for security, will not answer the intended purposes, without a covenant that the mortgagor shall remain in pos- session. How the parties in this case will adjust the claims of the mortgagee for the stipulated support, when he has obtained possession of the estate out of which it was probably to be afforded, it is difficult to tell. We however cannot make law to suit particular contracts." 38. In a later case,^ Wilde, J., remarks: — "Such an 1 Great Falls. &c. v. Worster, 1 5 N. H. ^ pj^gg v, Flagjr, 1 1 Pick. 477. See 412. ' George's &c. v. Detwold, 1 Md. 225; - Colman v. Packard, 16 Mass. 39, 40. Chcllis v. Stearns, 2 Fost. 312. (m) Wliether the same courts, Miiich allow a mortgage to be itself created by parol evidence, might not also receive parol proof of an agreement for the mortgagor's continued possession, is a point perhaps deserving of con- sideration. 152 THE LAW OF MORTGAGES. [CH. VIII. agreement is usually inserted in English mortgages, and may operate by way of estoppel, covenant, condition, or reservation. Such a clause, inserted in the mortgage deed, or other deed made at the same time, and being part of the same transaction, is undoubtedly binding on the mortgagee, and is to receive a liberal construction, as it generally has an operation beneficial to both parties." Professor Greenleaf says : ^ " Whether, in the absence of any express contract, such agreement (for the possession of the mortgagor) may be im- plied from the fact alone of the mortgagor being suffered to remain in possession of the premises, or from that fact, and a corresponding usage in the country, is not perfectly clear upon the authorities. As an inference of law, perhaps the Court might not presume it ; but would leave the jury to find an agreement or license, if properly pleaded." (w) It has been held, that such agreement may be implied from a note, made at the same time with, though not referred to in, the mortgage.2 So it is said,^ there must be a necessary im- plication, to give the mortgagor an implied right of pos- session. 39. Mortgage, with a proviso for redemption, on payment of principal and interest, June 5, 1834 ; but with an agree- 1 2 Greenl. Cruise, 102, n. Sec Sliute 3 Hobart v. Sanborn, 13 N. H. 226 ; V. Grimes, 7 Blackf. 1. Wales v. Mcllen, 1 Gray, 513. - Clay V. Wren, 34 Maine, 187. (?t) In the case of Jamieson v. Bruce, (G Gill & J. 72,) a mortgage was made on the 19th of August, 1831, of certain slaves, with a condition to be void, if the debt were paid on or before- September 1, 1832. There was no stipulation for the mortgagor's remaining in possession ; but he was allowed thus to remain till November, 1831, when the mortgagee took possession of the property in the night, in the absence of the mortgagor, who brings this action of trespass against him. The Court were requested to instruct th6 jury, that if they found from the evidence, that the plaintiff retained posses- sion with the defendant's consent, and that the property was taken by the defendant, without the plaintiff's knowledge or consent, and without a pre- vious demand, the action was maintainable : but the instruction was refused ; and the judgment of the Court below was affirmed. CH. VIII.] ESTATE OF THE MORTGAGOR. 153 ment that the principal should not be called in before De- cember 5, 1840, if the interest were regularly paid in the mean time ; and that the mortgagor should occupy and take the profits until default. Held, the fee vested in the mort- gagee, but the premises were redemised to the mortgagor till December 5, 1840, if the interest were regularly paid.^ 40. Mortgage, conditioned to deliver so much of the pro- duce of the land annually, or support the mortgagees during their lives. Held, tiU breach of condition, the mortgagor was entitled to possession, and therefore, the actual tenant of the freehold.2 So, where the mortgagee of a mill gave back to the mortgagor a bond, reciting the privileges which ^e latter was to have in using the water, dam, &c., cove- nanting to build machinery in the mill, and that neither he nor others, by his permission, would follow the business while the mortgagor followed it ; and reserving the use of a room in the mill for a specified time ; it was held that the mortgagor had a right of possession till breach of condition, and that a writ of entry would not lie against him.'^ So, where a farm was mortgaged, upon the condition that the mortgagor should carry it on during the mortgagee's life, and deliver him half the produce ; it was held, that the mortga- gee might enter to take this part of the produce ; but not otherwise, except for waste or breach of condition.* 40 a. INIortgage, conditioned that the mortgagor should support the mortgagees during their lives. The equity of redemption having been transferred, one of the mortgagees, the other being dead, brings an action upon the mortgage for breach of condition. The plea alleges, that the assignee had always offered to support the demandant at his (the assignee's) own house, in a different town from that where the land lay. Upon demurrer to the plea, it was argued for the demandant, that the mortgagees reposed a personal trust and confidence in the mortgagor and his representatives, 1 "Wilkinson v. Hall. 4 Scott, 301. * Plartshora v. Hubbard, 2 N. H. 453. 2 Limb r. Foss, 8 Shepl. 240. Sec ch. 6, \ 23. 2 Bv'an V. Mayo, 5 Greenl. 89. 154 THE LAW OF MORTGAGES. [CH. VIII. which was violated by assigning the former to the care of sti-angers, and that it was to be fulfilled upon the land mort- craged. The tenant contended, that the mortgagee could not claim possession, and thus take the very fund from which her support was to be derived. Held, the mortgagees had a right to be supported wherever they chose to live ; not creating needless expense. The demandant, therefore, has a right to possession, unless the mortgagor pray for conditional judgment ; in which case an estimate may be made of the time for which the demandant has been left without sup- port.i 40 b. Mortgage, conditioned to support the mortgagee during his life, on the estate, and keep it in repair. Hel the mortgagee had no right of immediate possession.^ 41. A mortgage was made upon condition to furnish sup- port for the mortgagee and his wife, and the use of one third part of the house upon the land, during their lives. In an action of the mortgagee to recover possession, it was held that the plaintiff could not maintain the action without first proving a breach of condition. To show this, evidence was introduced, that the defendant pushed his mother (the wife of the plaintiff) out of the house, and kicked her after she was out. Held, the action could not be maintained. The Court say : — "A refusal to permit the husband or wife to occupy their third would be a breach of the condition, if the third had been set off; and a forcible ejectment from it, under any pretence of claim, or upon a controversy about the right, would be quite as clear a breach. And if no di- vision had been made, but the parties were living together as tenants in common of the house, it could make no difference. The mortgagor would be no better entitled, in such case, to hold the other parties out, or forcibly turn them or either of them out. If he did either, upon any controversy about the right, or any claim of title, he could not be said to furnish 1 Wilder V. Whittemorc. 15 Mass. 2G2. ^ Brown v. Lcacb, 35 Maine, a9 ; ace. Norton v. Webb, lb. 218. CH. YIII.] ESTATE OF THE MORTGAGOR. 155 them one third part of the house." But in the absence of any such claim or controversy, the transaction was a mere assault, though an aggravated one, and not a breach of con- dition. " The condition of the mortgage is not an obligation to keep the peace — even within the house. The obligation to fmrnish support does not include within it a stipulation to treat with reverence or affection." ^ 42. Conveyance of a farm by a father to his son, with a mortgage back to the grantor and his wife, conditioned that the mortgagor, his heirs, &c., should provide for the main- tenance of the mortgagees during their lives. Held, it was a necessary implication, nothing appearing to the contrary, that the parties did not contemplate that the mortgagees should take possession and retain it until their decease, while the mortgagor was duly performing, from time to time, those acts, to secure the due performance of which the mortgage was executed ; and that they could not maintain an action for possession till breach of condition or the com- mission of waste.2 ^Q^ 1 Deaftjorn v. Deail)orn, 9 N. H. 117. 2 Flanders v. Laraphcar, 9 N. H. 201 ; ace. Ehoades v. Parker, 10 N. H. 83. (o) In the same case it -was further held, that the place of performance of the condition was not necessarily the farm itself; but some suitable and con- venient place for the mortgagee, and at the same time one -which did not im- pose hardship upon the mortgagor. It should be a reasonable place for both parties. It was further held, that by the transaction between the parties, a personal trust was reposed in the mortgagor, and a personal obligation assumed by him, which he could not assign over to third persons, substituting them in his place ; and that if be had attempted such transfer, and no longer superintended, at least, the due fulfilment of the condition, the action might be maintained. lb. In the subsequent case of Holmes v. Fisher, 13 N. H. 9, it was held, that where a mortgage is made to the husband, conditioned to support him and his wife, his administrator, after his death, must sue upon the mortgage. The wife has no right to enter. If she marry again, and live with her second husband without claiming support under the mortgage, the right is waived, and does not revive till a demand is made. A demand need not be made upon the land, unless by the terms of the deed the sup- 156 THE LAW OF MORTGAGES. [CH. VIII. 42 a. Condition of a mortgage, as follows: — " Whereas, the above-named Hannah Wales (plaintiff) has this day, by- deed, conveyed to the said Nathaniel K., (defendant) the above-mentioned premises, for her future maintenance and support, and, whereas, the said Nathaniel K. has, at the same time, reconveyed the same premises to said Hannah, as security for such maintenance and support. Now, if the said Nathaniel K., his heirs, &c., shall, &c., maintain the said Hannah in sickness and in health, &c., and, at her decease, give her a decent burial, then the above, &c., shall be void," &c. Held, no action could be maintained by the mortgagee for possession before condition broken. By taking the prem- ises from the defendant, the demandant would probably pre- vent him from carrying into effect the purpose for which alone the mortgage is expressed to be made.^ 43. A mortgage, made to secure an annuity, conveyed the land in trust, among other things, to permit the mortgagor to receive the rents till a default, for sixty days, in payment of the annuity. Held, the conveyance amounted to a re- demise to the mortgagor till such default, and that a notice to quit, given by him in his own name to a tenant whom he let into possession before the mortgage, was sufficient to sus- tain ejectment against the tenant on his own demise.^ 1 Wales V. JlcUcn, 1 Gray, 512. this case: — "It may be questionable - ])ne r. Goldwin, 2 Ad. & El. (N. S.) whether sutlieient attention was paid in 143. in Doe v. Day, 2 Ad. & El. (N. S.) that case to the i)oint as to tlie certainty 155, Lord Denman says, in regard to of the time." port is to be there furnished. She may demand it, notwithstanding her marriage; and she may make the demand upon the administrator of the mortgagor. Her husband cannot participate in the support. If no place is fi.xcd, slie must be ready to receive tlie support at a convenient place. Bond and mortgage, conditioned to support tlie obligee for life. A bill for foreclosure alleged a breach for the past year ; and there were no supple- mentary pleadings. Held, the plaintiff could not l)ave a decree for breaches sub.se(iuent to tiie commencement of suit ; the ])rovisions of the Revised Statutes (2, 102, 193,) relating to foreclosure and sale for such instalmen.s, being applicable only to mortgages for the payment of money. Ferguson v. Ferguson, 2 Comst. 3G0. (Three Judges dissented.) CH. VIII.] ESTATE OF THE MORTGAGOR. 157 44. So where the mortgage provides that the mortgagor may enjoy the land, until default in payment by a certain day ; although the land is occupied by tenants, the proviso will operate as a redemise for this period.^ 45. But it is said, where the proviso is, that the mortga- gee may enter and take possession on default of payment at the day ; or that he shall not take the profits till default in payment ; or, it seems, that th^ mortgagor shall take the profits until default in payment (no definite time being, in the last case, fixed for payment) ; the proviso only amounts to a covenant, and the mortgagee may, at any time, bring ejectment without notice, though by the proviso he be re- quired to give notice before entry, or though there be a cov- enant for further assurance by the mortgagor in case of default in payment.^ 46. In Wheeler v. Montefiore,3 the plaintijEF brought an action of trespass against an officer, for breaking and enter- ing his house, and seizing fixtures and goods therein. The plea denied the plaintiff''s possession. The defendant also justified under a fi. fa. against one Franks, who was a ten- ant for years, and had demised to the plaintiff", by way of mortgage, for the residue of the term, wanting one day. The plaintiff" had not entered. The deed demised to the plaintiff" to hold henceforth, (as above stated) subject to the following proviso. It also conveyed the fixtures, &c., to hold for his own use, &c., with the same condition. The deed also contained provisos for reconveyance upon pay- ment of the debt on the 24th of June, and also, that, upon non-payment at that time, the plaintiff might enter and take the profits, and sell or underlet. There was no covenant that Franks should remain in possession till the 24th of June. Held, the plaintiff" had no right of possession till that time, and that the action could not be maintained. 47. If the mortgagee of a term, where the mortgage pro- 1 Wilkinson V. Hall, 3 Bin- (X. C.) 147 ; Doe v. Li«rhtfoot, 8 M. & W. 553; 508; Powsclvr.Blackman.Cio. Jac.Col). Eo^^crs v. Grazdirook, 8 Q. B. 895. 2 Coote, 376 : Doe v. Day, 2 Q. B. » 2 Ad. & Ell. (X. S.) 137. VOL. I. 14 158 THE LAW OF MORTGAGES. [CH. VIII. vides that the mortgagor may retain possession, assigns the term without the mortgagor's joining or being a party ; the latter, from being in the natm-e of a tenant at will, becomes in the nature of a tenant at sufferance.^ 48. In Smartle v. William s,^ it was held, that the mortga- gor's continuing in possession would never make a disseisin, for a tenant at sufferance has but a bare possession, and no freehold ; that the covenant for the mortgagor's possession governs all assignments of the mortgagee ; and, therefore, that an assignee of the mortgage of a term might validly reassign it, notwithstanding such possession, without any reentry, and without the mortgagor's joining. And the as- signee's bringing an ejectment is not to be construed as an election to consider the mortgagor as a disseizor, because the action is brought, not to recover the term, but only the pos- session, being the only remedy for this purpose except a for- cible entry, which the law forbids. 49. It will be seen, hereafter, that the law has generally provided certain specific modes and forms of taking posses- sion, for the purpose of effecting the foreclosure of a mortgage. 50. It has been held, however, that if a mortgagee had a legal right to enter for breach of condition, the entry is law- ful, though he entered without executing his purpose, or even for other purposes. Though the entry cannot operate as an entry to foreclose, unless made in the manner pre- scribed by law ; still it is a lawful act.^ /51. When the mortgagee of land, with a mill thereon, makes an entry under his mortgage title upon the premises, and demands of the tenant, holding by parol lease from the mortgagor, to attorn to him, and the tenant assents to such demand ; such entry and attornment make the mortgagee an occupant of the mill, within the provisions of the Rev. Sts. of Massachusetts, ch. 116, § 24, and liable to an action for annual or gross damages for flowage ; although the mortga- gee; did not enter for the purpose of foreclosure.'^ 1 I ]V)W. 162/;; Skin. 42.'J. '■' IJlaiicy r. Ik'arce, 2 Grccnl. 1.18. - S;ilk. 245. •* Abbott v. Uiiliani, 13 Met. 172.- CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 159 CHAPTER IX. NATURE OF THE MORTGAGOR'S INTEREST, WHILE LEFT IN POSSES- SION. 1. Whether the mortgagor is a tenant, receiver, agent, &c. 13. Remedies of the mortgagee for rent, and for obtaining possession. No- tice to quit, whetlier necessary. 20. Doctrine in the United States. 26. Lease by the mortgagor ; respect- ive titles of mortgagee, mortgagor, and lessee : case of Kecch v. Ilitll. 63. Distinction between leases made after, and before, the mortgage. 69. Joint lease by mortgagor and mortgagee ; covenants in the lease of a mortgagor, whether assignable. &c. 79. Liability of a mortgagee of lease- hold upon the covenants ; case of Eaton V. Jacques. 1. The precise nature of the mortgagor's interest or tenure, while he retains possession, has been the subject of much speculation and various opinions. He has been called tenant at ivill, quasi tenant at ivill, tenant at sufferance, agent, servant, and receiver (a) of the mortgagee ; but objections have been made to each of these titles, upon the ground that in some one or more particulars, the rights and duties of a mortgagor differ from those of either of the persons above named. Thus he is said to want the chief characteristic of a tenant, which («) In Moss I'. Gallimore, (Doug. 283,) Ashurst, J., remarked, that where there is no agreement amounting to a redemise to the mortgagor, and ten- ants are in possession, and the mortgagor left in receipt of rents ; he is not a tenant, because a tenant at will cannot have an under-tenant, but he is in the nature of a receiver. " Whoever wishes to wade through all the old books on this subject," (the nature of the title of the mortgagor) " will find a great collection of cases in Comyns's Digest, title Estate 1, H. But it is an Herculean labor." Per Buller, J., Birch v. Wright, 1 T. R. 383. As to the equivocal relation of mortgagor and mortgagee, a learned Judge ex- claims, " Quo teneam vultus mutantem Protea nodo." Cholmondeley v. Clinton, 2 Jac. & W. 183. See McKim v. Mason, 3 Md. Ch. 180. A mort- gagee, taking possession, has been sometimes held subject to the liabilities of a tenant. Morrison v. McLeod, 2 Ired. Ch. 1U8. 160 THE LAW OF MORTGAGES. [CH. IX. is the payment of rent ; of an agent, in not being liable to account ; and of a servant, inasmuch as the mortgagee has never had possession. 2. Hence, it has been remarked by a distinguished Judge, " it is very difficult to say what the mortgagor's estate is ; " ^ (b) and in another case, " one is much at a loss as to the proper terms in which to describe the relation of mortgagor in pos- session and mortgagee." ^ So Lord Denman says : ^ — " It is very dangerous to attempt to define the precise relation in which the mortgagor and mortgagee stand to each other in any other terms than those very words ; but thus much is 1 Per Patteson, J., Doe v. Barton, 11 ^ ih_ Doer.Williams,5 Afl.&E11.297. Ad. & Ell. 311. " Doe v. Barton, 11 Ad. & Ell. 314. (&) The following passage, from a work of high authority, presents a sum- mary view of the technical embarrassments connected with the title of the mortgagor : — " It is the common course, if a man make a feoffment in fee, or other estate upon condition, that if such a thing be or be not done at such a time, that the feoffor, &c., shall reenter, to the end that in this case the feoffor, &c., may have the land, and continue in pos- session until that time, to make a covenant that he shall hold and take the profits of the land until that time ; and this covenant in this case will make a good lease for that time, if the uncertainty of the time, whcreunto care must be had, do not make it void. Mr. Preston adds : " The limitation of a certain term, with a collateral determination on the event, would meet the difliculties of the case." And, therefore, if A. bargain and sell his land to B., on condition to reenter if he pay him $100, and B. doth covenant with A., that he will not take the profits until default of payment; in this case, howbeit this may be a good covenant, yet it is no good lease, " for want," says Mr. Preston, " of a more formal conti'act, and also for want of certainty of time." And if the mortgagee covenant with the mortgagor, that he will not take the profits of the land until the day of payment of the money ; in this case, albeit the time be certain, yet this is no good lease, but a covenant only, "since," says Mr. Preston, "tlie words are negative only, and not affirmative." It may perhaps be concluded, that, in order to make a re-de- mise, there must Ijc an ajjimuilire covenant, that tlie mortgagor shall hold for a determinate time, and that when either of those elements is wanting, there is no re-demise. 1 Smith's Leading Cases, 5C.S, n., citing Slu'i). Touch. 8th ed. 272. See Jennot v. Cooly, 1 Lev. 170. en. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 161 established by the cases of Partridge v. Bere, and Hitchman V. Walton, that the mortgagee may treat the mortgagor as being rightfully in possession, and himself as reversioner ; so that, as long as he be not treated as a trespasser, his pos- session is not hostile to nor inconsistent with the mortgagee's right." 3. The following remarks upon this subject are made by Mr. Coventry : 1 — "A mortgagor differs from a tenant at will in many respects. He is to pay interest, not rent. He is not entitled to notice to quit, nor to emblements ; the crop, as well as the land, being held as security for the debt, (c) 1 1 Pow. 157, n.; See Tucker r. Kccler, 4 Vern. 161 ; Butler y. Pixige, 7 Met. 40. (c) " A mortgagor resembles a person who has executed a statute or recognizance. Whatever these persons do to give value to the property under pledge, is done for the benefit of the creditor." Doe v. Giles, 5 Bing. 427. One is bound in a statute to another, and sows the land. The conu- see extends the lands, which are delivered to him in execution. The conu- see shall have the corn sown. So in case of a recognizance. Btirden's case, 2 Leon. 54. On the other hand it is said, the improvements made by a mortgagor in possession, in contemplation of law he makes for himself, and to enhance the general value of the estate, not like a tenant for its tempo- rary enjoyment. Winslow v. Merchants', &c. 4 Met. 310. The issue of a mortgaged sl&ve, born after the mortgagee's title has become absolute at law, and during the possession of the mortgagor, is liable for the debt. Such issue is compared by the Court, in this respect, to the growing crop upon land mortgaged. Also to the case of the pledge of a flock of sheep, where the young afterwards born become also subject to the pledge. Evans v. Merrlken, 8 Gill & J.- 99 ; Hughes v. Graves, Litt. 317 ; Story's Bailm. 200. Mr. Coventry remarks, (1 Tow. 161, n.) " when it is said that as between mortgagee and mortijaKor, the mort^asree is entitled to emblements, the meaning is, that when the mortgagor has personally occupied the premises, and the actual possession is afterwards delivered to the mortgagee by the sheriff or otherwise, the growing crops which are found upon the premises become part of the security, and may be applied by the mortgagee to his own use ; but the principle does not apply to the case where the growing crops have been carried off by the mortgagor before the mortgagee obtains possession, and between the time of his demand and recovery of the posses- sion. Let it be supposed that a mortgagee recovers the possession by eject- 14* 162 THE LAW OF MORTGAGES. [CH. IX. He may have a tenant under him, which a lessee at will can- not ; a demise by the latter being in itself a desertion, which ment, from a mortgagor who had personally occupied the property, after the crops are severed and sold. Such a mortgagee might probably, if he thought it worth his while, bring an action for the mesne profits from the time of the demise laid, but he could not recover from the mortgagor any thing more than the same occupation rent which he could have recovered against a ten- ant of the mortgagor, whose tenancy had commenced subsequently to the mortgage, and without the privity of the mortgagee." In Hodgson v. Gas- coignc, 5 B. & A. 88, it was held, that after judgment in tyectment at the suit of the landlord, the value of the growing crops, though sold or seized in execution, might be recovered in an action for mesne profits, if the sale or execution were subsequent to the day of the demise laid in the declaration. (See Toby v. Heed, 9 Conn. 225.) Where a mortgagor leases the land, the lessee has no right to crops growing thereon at the time of foreclosure and sale under the mortgage ; and if the mortgagee himself jiurchase under such sale, he may maintain trespass against the lessee for taking and carrying them away. Lane v. King, 8 Wend. 584. So the purchaser of mortgaged prem- ises, sold under a statute foreclosure, is entitled to crops sown by the mort- gagor, and growing on the land at the time of sale. Hence, he is not liable in trover to a purchaser of such crop at an execution sale against the mort- gagor ; such purchaser acquiring only the title of the mortgagor himself, and the crop as well as the land being a security for the mortgage debt. Sliep- ard V. Philbrick, 2 Dcnio, 174. A mortgage binds not only the land, but the crops while growing, and until severed ; and a person purchasing the premises under a statute foreclosure is entitled to the crops, in preference to one bidding the same off at a sale subsequently made, under a decree in bankruptcy against the mortgagor, by the assignee in bankruptcy. Gillett V. Balcom, G Barb. 370. So if land mortgaged be sold under a decree of foreclosure, the purchaser will be entitled to the crops growing at the time of the sale, in preference to a person claiming under the mortgagor, and •whose claims originated subsequently to the mortgage. Jones v. Thomas, 8 Blackf 428. In May, 1822, a decree of foreclosure was rendered upon a mortgage, and the marshal ordered, unless payment were made in six months, to sell the property in satisfaction of the debt. The mortgagor was left in possession till June, 1823, when the marshal sold the property, and the mortgagee became the purchaser. In the spring of that year, the mort- gagor sowed the land, and the, mortgagee after purchasing completes the crop. Before the marslial's sale Is reported and confirmed, an execution is levied upon the crop, then gathered, by crciiitors of the mortgagor; and the mortgagee files a bill for an injunction against a sale under tlie execution. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 163 in law amounts to a determination of the will. He may- assign or convey his estate, subject to the mortgage ; while a tenant at will has no assignable interest. A mortgagor has in different cases been called tenant at will, tenant by suffer- ance,' receiver, agent, and servant of the mortgagee ; and Lord Mansfield's remark in Moss v. Gallimorej^ (d) that he is only like a tenant at will, and that nothing is more apt to confound than a simile, seems equally applicable to all the other proximate relations above referred to ; neither of which iBrowni'. Cram, 1 N.H. 171 ; Powsc- ^ Dougl. 2S2 ; Miner v. Stevens, 1 ly V. Blixckmun, Cro. Jac. 659 ; Cam- Cush. 485. cron V. Irwin, 5 Hill, 281 ; quasi tenant at sutFeranee, 1 Tow. 174, n. E. Held, the bill should be sustained ; that the general doctrine of emblements had no application, but the case turned solely upon the contract between the parties, by which the whole property is made subject to sale for payment of the debt, whenever a decree is obtained. The Court remark : " If the mort- gagor goes on and makes preparations for a crop, he does it with a full knowledge that the land with the crop is subject to be sold, if the decree be obtained before he severs it. Nor does he lose any thing by this ; for the crop on the land enhances the price. If, by this increase, the debt be over- paid, he gets the overplus ; if not, still the full value of his labor goes, as he had agreed it should go, to the payment of the debt." Crews c. Pendleton, 1 Leigh, 297, 305. In the case of Keech v. Hall, it was intimated, but not expressly decided, that the lessee of a mortgitgor, evicted by the mortgagee, would be entitled to emblements. But it is said, (Coote, 393, 394, Co. Lit. 55 6; Liford's case, 11 Co. 51,) that both upon legal and equitable princi- ples he is not so entitled, being evicted by paramount title ; and although the law will not quoad actionem make a lessee who comes in by title punish- able as a trespasser, yet quoad proprielatem the regress of the disseizBe revests the property as well for the emblements as for the freehold itself, and equally against the feoffee or lessee of the disseizor, as against the disseizor himself. The rule and reason of the law is, that after the regress of the disseizee, the law adjudges that the freehold has continued in him ; which rule and reason extends as well to the emblements as to the freehold ; and although the act of the disseizor may alter a man's action, yet his act cannot take away his action, property, or right. See Cassldy v. Rhodes, 12 Ohio, 88. (f/) In the same case, Buller, J., says, with reference to a remark upon the same subject in Keech v. Hall : — " Expressions used In particular cases are to be understood with relation to the subject-matter then before the Court." 164 THE LAW OP MORTGAGES. [CH. IX. in all respects expresses the rights and duties of the mort- gagor as occupant of the estate. For example, he is not a receiver, because, as stated by the Lord Chancellor, in Wilson ex parted the mortgagee cannot call him to account for past rents. It has been well said, however, by Judge Buller, in Birch V. Wright,^ that a mortgagor and mortgagee are char- acters as well known, and their rights, powers, and interests,' as well settled, as any in the law. The possession of the mortgagor is the possession of the mortgagee, and as to the inheritance, they have but one title between them." 4. "With regard to the points suggested by Judge Buller, Mr. Coote remarks : ^ — " This view of the question does not meet the difficulty, for the rights, powers, and interests of mortgagor and mortgagee, are in many instances grounded on their respective estates in the land ; and, therefore, we are still driven back to the original question, what are those estates ? The common law recognizes no such estate as that of mortgagor or mortgagee, independently of some other known estate or interest in the land ; for the estates both of the mortgagor and mortgagee are of a compound nature, partaking partly of legal and partly of equitable rights ; and it is difficult to perceive in what manner these compound estates can as such be regarded in a court of law, although possession of the mortgagor may confer on him certain privi- leges under the statute law and poor laws. In addition to which it may, under circumstances, become essential to ascertain, whether at common law there is any, and what ^ivity of estate between the parties ; for if the mortgagor in possession may be considered as tenant at will, or, under the agreement for possession, as tenant for years, to the mort- gagee, there will be sufficient privity of estate between them to admit of an enlargement by release alone, which will not be the case if he is to be considered as tenant at sufferance, or an agent, or receiver. So long as the mortgagor is in pos- session of the land, and the legal ownership is in the mort- 1 2 Vcs. & B. 253. - 1 T. li. 383. ^ Coote, 374. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSlnX. 165 gagee, there must subsist a tenancy of some sort between the parties ; or otherwise the mortgagor must be a trespasser, for the law of England recognizes no possession independent of a tenancy, either to the lord paramount or a mesne lord. The mortgagor in possession must hold of some one, and to say that his possession is that of a mortgagor, is in fact leav- ing the question undecided." 5. Li Doe V. Maisey,' Lord Tenterden denied that the mortgagor is a tenant, or, if a tenant, any thing more than a tenant at sufferance ; but held, that he holds by a peculiar tenure, and may be treated as a tenant or trespasser at the election of the mortgagee. 6. It has been said, however, that at law the mortgagor may properly be described as tenant of the mortgagee. He is in possession of premises, whereof the legal title and interest is in another, and by the permission and sufferance of the latter. Therefore a declaration, describing him as tenant, will be sustained by producing a mortgage deed. A court of law knows nothing about mortgagor or mortgagee. It looks at the legal tenant. The mortgagor has actual pos- session, and the mortgagee the legal estate, and at law the tenancy cannot be disputed. More especially is the mort- gagor to be regarded as a tenant, so far as is necessary to sustain an action by the mortgagee against a trespasser.^ 7. In Partridge v. Bere,-^ the declaration alleged, that the premises were in the possession and occupation of Turner, as tenant to the plaintiff, the reversion belonging to him. It appeared that Turner, being tenant for life, mortgaged to the plaintiff for years, if he should live so long, and that Turner had since occupied and paid the interest. It was contended that the relation of landlord and tenant did not exist, and therefore the declaration was not sustained. Per Curiam : — " Here the mortgagor was in actual possession of the mort- gaged premises, by sufferance of the mortgagee, who has the 1 8 B. & Cress. 767. 2 -p^r Sir Thomas riumer, M. E., Chol- 3 5 B. A. 604. mondelcy r. Cliuton, 2 Jac. & W. 183. 166 THE LAW OF MORTGAGES. [CH. IX. lethal title vested in him. The former, therefore, is a tenant, with hi the strictest definition of that word." (e) 8. Lord Abinger says : ^ — " If a mortgagor be not tenant to the mortgagee, in what relation does he stand ? He is not a trespasser ; he is not a servant, because the mortgagee is not in possession ; the ordinary terms known to the law are a mortgagee in possession and out of possession. If there be a stipulation that he shall be allowed to remain in possession for a time, by the very terms of the deed he is a tenant for that time, and is in possession for a term; if he continues in possession, and holds over, he continues on the same terms as during that time." 9. In the case of Groton v. Boxborough, Parsons, C. J., says : — "As between the mortgagee and mortgagor, and those claiming under them respectively, it must be admitted that the legal freehold passed by the mortgage ; the mortgagor being a tenant at will to the mortgagee, who might enter and take possession at his pleasure, without being obliged bylaw to give the mortgagor notice to quit." ^ 10. So in a later case in the same State, it is said, " a mortgagor, as against the mortgagee, stands as tenant at will." 3 11. In Wilder v. Houghton,* which was an action by a mortgagee to recover from an assignee of the mortgagor the mesne profits received by him since the commencement of a suit to foreclose, Parker, C. J., remarked : — " The defendant 1 Ilitihman v. Walton, 4 Uqcs. & W. * 1 Pick. 88-89. Sne Morey v. Mc- 41.3. Guirc, 4 Verm. 327 ; Liilli-. Matthews, ^ G Mas.s. .52-.53. 19, 322 ; riercc v. Brown, 24, 1G5. ■' Per Shaw, C. J., Van Deusen v. Friiik, l.'j Pick. 457. (e) In Doe v. Giles, 5 Bing. 426, Best, C J., remarks upon the above case : " This was not a case between the mortgagee and the mortgagor, in which the courts were called upon to decide what are the rights of tlie one against the other. Tlu; defendant in tliat case was a wrongdoer, and liad, therefore, no right to object to the plaintilf calling himself a reversioner as long as he permitted the mortgagor to be in possession." CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 167 stands in the place of the mortgagor, so that the%iestion submitted is the same as if the present action were between the mortgagee and mortgagor ; and in this view it must be considered an experiment, no such action having been hitherto brought, either in this country or in England, as far as we can discover from the books." The mortgagor " is, it is true, considered as a mere tenant at ivi/I, and according to our practice, and to the decision of the Court of King's Bench, reported in Douglas, 21, he may be ejected without any notice to quit. Yet he is in many respects the owner of the land, and when left in possession, there must be an implied understanding that he is to occupy and improve in the same manner as before the execution of his mortgage. It is true, that when the estate mortgaged is not full security for the debt, the profits would be useful to the mortgagee, as a means of payment ; but to obtain them he should enter early, or bring his writ of entry, which he may do immediately upon the execution of the deed ; if he chooses to lie by, and suffer the mortgagor to keep possession, he consents that the inter- mediate profits may be received by him, and held without account." 11 a. It has been held, however, in a late case, in Massa- chusetts, that a mortgagee who has entered for foreclosure cannot maintain the landlord and tenant process against the mortgagor. The Court remark : — "Although, in a loose sense, a mortgagor in possession is said to be tenant at will of the mortgagee, yet he is not within the reason or the letter of the Rev. Stats, ch. 104, § 2. He is not a lessee, or holding under a lessee, or holding demised premises without right, after the determination of the lease. The remedies of a mortgagee are altogether of a different character, clearly marked out by law." 1 11 b. So where a mortgagee recovered a conditional judg- ment, and took possession under an execution, but did not eject the mortgagor, who agreed to quit peaceably whenever 1 Ilastinirs v. Pratt, S Cusli. 121-123. 168 THE LAW OF MOKTGAGES. [CH. IX. the md'^agee should lease the premises ; held, a thh'd person, receiving a written lease from the mortgagee, could not, upon the mortgagor's refusal to quit, maintain this process against him.' 12. An agreement in the mortgage, that the mortgagor shall be tenant at will, constitutes a strict tenancy at will, though an annual rent be reserved. And the relation of landlord and tenant may be created by a clause to that effect, though the mortgagor alone execute the deed ; and the sub- sequent occupation of the mortgagor will be held to be under the tenancy, though the receipts for half-yearly payments of rent are given in the name of interest.^ 12 a. A mortgage contained a power of sale, and then a proviso and covenant, by the mortgagee, that no sale should take place, nor any means of obtaining possession of the premises be taken, until the expiration of tw^elve calendar months after written notice of such intention. The mort- gagee also covenanted for the mortgagor's quiet enjoyment as his tenant at will, on payment of a .yearly rent in lieu of, and as interest upon the mortgage-money. The mortgagee remained in possession, but no livery of seizin was made to the mortgagor. Before suit commenced, there was a demand of possession, but no notice to quit. Held, the deed created a tenancy at will, and the mortgagee or his assignee might maintain ejectment.'^ 12 b. In Doe v. Cox,^ the mortgagor agreed to become tenant " henceforth at the will and pleasure of the mortgagee, at the yearly rent of, &c., payable quarterly." Held, a ten- ancy at will, not converted into a tenancy from year to year by occupation for two years, and payment of rent.^ 13. The question, as to the precise nature of the relation between a mortgagor in possession and his mortgagee, has generally been raised, either in connection with a claim for 1 J>nnic(l r. Clark, 8 Cusli. 20. ■• 17 L. J. 3. - Cootc, 'Ml. •' See Freeman r. Edwards, Exch. 17, ■^ Dixie V. Davics, 8 Knj,'. Law & Eq. L. J. 2r)8 ; Ciuipman v. Bccciiani. 3 Q. .■jlO. 13. 373. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 169 rent, or a resort to legal process for the purpose of ejecting the mortgagor from the premises ; and more especially with the inquiry, whether, like ordinary tenants at will, he is en- titled to notice to quit, before bringing ejectment against him. 14. Mr. Coote says, where there is an agreement for the mortgagor's possession till default, and such default occurs, and he remains in possession without any new agreement ; or if the mortgage contains no such agreement, he may be treated as a tenant at sufferance or a trespasser, though the mortgagee have received interest ; and wherever there is no agreement for his occupation till a certain period, his contin- uance in possession, if with the mortgagee's consent, must be considered as a species of tenancy at will, though without two of its chief incidents ; namely, emblements, and the right to a determination of the will before bringing eject- ment. It must be admitted, however, to be doubtful, from the cases, whether any tenancy exists between the parties ; though their relative rights are well ascertained, and the mortgagee may, as against strangers, treat the mortgagor as his tenant.^ 15. To enable a mortgagee to distrain on the mortgagor in possession, the mortgage should contain an agreement to that effect, and state a certain sum by way of rent.- 16. It has been held in recent cases, that the mortgagee may evict the mortgagor, though the mortgage provides that the latter shall be tenant at a certain rent ; if there is also the usual power of entry on default of payment.^ 17. In Doe v. Tom,'* it was held, that where the mortgagor becomes tenant to the mortgagee at a rent, with the right of immediate entry upon default; the latter may eject him, upon default, without demand of payment or notice to quit. 1 Coote, 377-378. Seellitchman r. 3 j)oe y, Tom, 4 Q. B. Eep. 615; Walton, 4 Mees. & W. 414 ; Ing v. v. Olley. 12 Ad. & Ell. 481. Cromwell, 4 Md. 31. * 4 Q. B. 615. '^ Coote, 403. VOL. I. 15 170 THE LAW OF MORTGAGES. [CH. IX. 18. By an indenture of mortgage, the mortgagor released in fee upon certain trusts ; and demised other lands for ninety-nine years upon certain trusts ; to be void, on pay- ment of a certain sum upon such a day. If not paid, the mortgagee, after a month's notice, might take possession, and, whether in or out of possession, lease and sell the lands ; and should hold the rents and profits and the proceeds of sale in trust to pay the debt and interest, and then in trust for the mortgagor. The mortgagee covenanted not to sell or lease till after the expiration of a month's written notice, demanding payment ; and that he would at any time before sale reconvey and reassign, upon payment of the debt and costs. The mortgagor covenanted to pay principal and in- terest. The freehold lands to be the fund primarily liable, without prejudice to the right of resorting to the others. The mortgagor remaining in possession, held, ejectment would lie against him for all the lands, without notice, after the expiration of the time mentioned.^ 19. In the case of Doe v. Giles,^ it was provided in a mort- gage deed, that if the debt remained unpaid for a certain time, the mortgagee might enter, and if not paid within thirty days from the day fixed for payment, he might proceed to a sale of the estate without the concurrence of the mortgagor. Two days after that on which the mortgagee had a right to enter for non-payment, and before payment of any interest, the mortgagee brings ejectment, without any previous de- mand of possession. Held, the action was maintainable. Best, C. J., says,^ (after the day fixed for payment,) " the possession belongs to the mortgagee. And there is no more occasion for his requiring that the estate should be delivered up to him before he brings an ejectment, than for a lessor to demand possession on the determination of a term. If this situation exposes mortgagors to any hardship^ they must guard against it by an alteration in the terms of the mort- 1 Doc V. Day, 2 Ad. & Ell. (N. S.) , 2 5 ujng. 421. 147. ' 8 5 Bin-r. 427-428. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 171 gage deeds. Mortgagees, however, do not find it to their advantage to enter upon the estates, if they can get their interest regularly paid ; for, from the time that they get pos- session, their situation is far from desirable, from the con- stant state of preparation that they must be in to account to the mortgagor, whenever he shall be ready to discharge the mortgage debt." 20. The doctrine upon this subject in the United States has been somewhat various. 21. In the case of Rockwell v. Bradley,^ in Connecticut, it was held, that a mortgagee may maintain ejectment against the mortgagor, without a demand or notice to quit. Three judges out of eight, however, dissented ; and some of the others admitted, that if by the pleadings, the defendant had relied upon a license from the plaintiff, such license might well have been inferred from the fact of his being left in possession, and other circumstances of the case. The dis- senting judges founded their opinion upon the facts, that the leading cases cited in favor of the action, were suits against an assignee or lessee of the mortgagor ; that by the dictum of Lord Mansfield in Keech v. Hall, as to the mort- gagor's possessing the premises at will "in the strictest sense," nothing more is meant than a tenancy at will in the original sense, as distinguished from a tenancy from year to year, requiring six months' notice, and that a tenant at will cannot be treated as a disseizor without some notice to quit. It was further remarked, that a mortgagor left in possession, is a strict tenant at will or at sufferance, by an implied agree- ment or license, unless the contrary appears ; that possession of the mortgagor for fifteen years does not bar the mort- gagee's entry under the statute of limitations, and that the mortgagee may transfer or devise his interest during such possession ; all showing it not to be adverse. 22. In the subsequent case of Wakeman v. Banks,^ the same decision was made by the Court, with a similar dissent 1 2 Conn. 1. 20 Conn. 445. 172 THE LAAV OF MORTGAGES. [CH. IX. on the part of several judges. It was further distinctly held, that the execution of a mortgage, and the subsequent pos- session of the mortgagor, are not facts from which it is com- petent for a jury to infer a license to remain in possession. Swift, C. J., points out the following characteristics of a mortgagor, which do not apply to a tenant at will. He is not liable to an action of waste ; he may dispose of the whole or a part of the estate ; it descends to his heirs ; he is considered the owner, in all respects, except for payment of the debt. The right to bring ejectment without notice to quit, is compatible with the nature of the estate ; for it is only a security for a debt ; and it is a well-known principle that a suit may be brought against a debtor, without notice. 23. In Vermont, (/) the mortgagee may enter after breach of condition.^ In North Carolina, he may maintain eject- 1 Wilson V. Hooper, 13 Verm. 653. (/) In Vermont, the following points have been recently settled : Where the mortgagee suffers the mortgagor to remain in possession after conditioa broken, the latter is tenant by sufferance merely, and may be evicted by the mortgagee, without notice to quit. Stedmanv. Gasset, 18 Vt. 346. And though the mortgagee has given him a lease for years, yet, at the expiration of the term, his former liabilities revive and continue, and he will be held tenant by sufferance merely. lb. And if, after the expiration of the term, he lease by parol to a third per- son, such third jjerson can stand in no better condition than the mort- gagor, as respects the mortgagee. Jb. Though there may have been actual eviction, by the mortgagee, of the tenant of the mortgagor, where the tenancy was created subsequent to the mortgage ; yet, if the mortgagee has given notice to the tenant of his mortgage, and demanded the rent, and the tenant has continued in posses- sion, not objecting to or repudiating the demand, he is not liable to the mortgagor for the rent. ]b. -If the mortgagor, having, after condition broken, taken from the mort- gagee a lease for years, convey to a third person during such tenancy, the mortgagee may still consider him, at the end of his term, to be in possession as mortgagor, and not as tenant from year to year, and evict him at any time without notice. lb. CH. IX.] ESTATE OP THE MORTGAGOR, IN POSSESSION. 173 merit without demand or notice.' In New Hampshire, the mortgagee may treat any one found in possession, whose title is not good against him, as a wrong-doer and disseizor, at his election.^ 24. In New York it has been held, that the mortgagee cannot maintain ejectment against the mortgagor, without a previous notice to quit. So it has been held in a later case in the same State, that where a mortgage is made to secure a debt, and the mortgagor left in possession, there is an implied agreement that he shall continue to hold posses- sion. His possession being lawful, he cannot be treated as a trespasser, and sued in ejectment without notice. But it is otherwise with a purchaser from the mortgagor, because the sale itself is an act of disloyalty, and the mortgagor a disseizor. Notice is not requisite, without privity of con- tract or estate. But such privity exists between an assignee of the mortgage and the mortgagor.'^ 25. The Court remark upon this subject as follows : — " I do not think it necessary to go through the English cases, which are not sufficiently uniform to be of much service, to ascertain whether a mortgagor be a tenant at sufferance, or at will, or from year to year. It is sufficient for my pur- pose, that he occupies with the mortgagee's consent, and that by a perfect understanding between them he uses the premises as his own. JMost commonly his interest is much greater than that of the mortgagee, and in practice, we know that no tenant at will, for years, or even for life, exercises such unlimited dominion over land, as the mortgagor. It comports then neither with reason nor feeling, to permit him to be put to the expense and vexation of an ejectment, with- out a previous notice to quit. This is no hardship on the 1 Fuller V. Wadsworth, 2 Ired. 263. Polk v. Henderson, 9 Yerg. 318 ; Bee- - Wheeler v. Bates, 1 i'ost. 460. ley v. Wallace, 16 S. & R. 24.5 ; Knaub 3 Jackson (-■. Hopkins, 18 Johns. 488; v. Essick, 2 Watts, 282: Dexter v. Lane v. King, 8 Wend. 584; Thunder Phillips, 1 Sumn. 116; Bower f. Crane, V. Belcher, 3 E. 449. Sec "Welch v. 1 N. H. 169 ; Chapman v. Armistead, Adams, 1 Met. 494; Estcs v. Cook, 4 Munf. 382; Jackson v. Myers, 11 22 Pick. 295 ; l^rench v. i'uUer, 23, Wend. 537. 304 ; Emerson v. Thompson, 2, 473 ; 15* 174 THE LAW OF MORTGAGES. [CH. IX. mortgagee, while a contrary practice may be much abused, in a country where so many thousand estates are held in this way. Without any nice disquisition of the rights and duties of particular tenants, (which may perplex, but cannot elucidate the question,) I am ready to say, that no person who holds land by another's consent, for an indefinite period, ought ever to be evicted by ejectment, at the suit of such party, without a previous notice to quit. This should especially be required in all cases of mortgages, because the mortgagor may not only surrender the possession of the land, but may protect himself against an action by payment of the money due. The case of Keech v. Hall, in Douglas, 21, is not an authority here, and it is enough to say, that we may be permitted to regulate a mere matter of practice, even in opposition to what may, under other circumstances, be deemed a better course in Westminster Hall. If a notice be requisite, to be reasonable, it should be delivered six calendar months previous to the service of a declaration." ^ 26. The question above considered, as to the mortgagee's right of possession, and the exact nature of his title, has often arisen, in consequence of the mortgagor's making a lease of the premises to some third person, or allowing such person to occupy them as his tenant. The general rule upon this subject is, that a mortgagor in possession cannot make a lease, binding upon the mortgagee. This principle seems to be well established in England, and is a fortiori to be considered in force in the United States, where mort- gages, as well as other conveyances of the freehold, are uni- formly registered or recorded, and therefore a subsequent lessee is always chargeable with express or implied notice of the mortgagee's title. Without registration, a mortgage would be invalid, as well against a lease, as any other sub- sequent transfer, (g-) 1 Per Livingston, J., Jackson v. Lauglihead, 2 Johns. 75. Tlirce other justices conmrrcfl. One dissented. ((/) The lease of a mortgagor is held to be good as to all but the mort- gagee ; and he only can avoid it. McC;dl v. Lenox, 9 S. & R. 308 ; Hutch- CH. IX.] ESTATE OF THE MORTGAGOE, IN POSSESSION. 175 27. The leading case upon this subject is that of Keech I'. Hall,^ in which Lord Mansfield gave the following opinion: — " This is an ejectment brought for s^varehouse 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 mortgagor, who had continued in possession. The lease was at a rack-rent. The mortgagee had no notice of the lease, nor the lessee any notice of the mortgage. The question 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 authority to the mortgagor to let from year to year, at a rack-rent ; or whether he may not treat the defendant as a trespasser, disseizor, and WTongdoer. No 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 upon the home circuit (Belchier v. Col- lins) ; but there, the mortgagee was privy to the lease, and afterwards, by a knavish trick, wanted to turn the tenant out. The idea, that the question may be more proper for a court of equity, goes upon a mistake. It emphatically belongs to a court of law, in opposition to a court of equity ; for a les- see at a rack-rent is a purchaser for a valuable consideration, and in every case between purchasers for a valuable consid- eration, a court of equity must follow, not lead, the law. On fuU consideration, we are all clearly of opinion, that 1 Dougl. 21 ; Fitchburg, &c. v. Melven, 15 Mass. 270. inson v. Dearing, 20 Ala. 798. If the mortgagor lease with the mortgagee's consent, and the lessee enter, claiming under no other title ; he is not a dis- seizor, but, on payment and acceptance of rent, a tenant at will. So also is the mortgagor, if he reenter after the lease expires. Powsely r. Blackman, Cro. Jac. 659. In Bacon v. Bowdoin, (22 Pick. 401,) it was held, that if a mortgagor lease for years, the lessee may redeem ; more especially since the provision of the Revised Statutes, ch. 107, s. 13, that any person lawfully claimins; or holding under the mortgagor mav redeem. 176 THE LAW OP MORTGAGES. [CH. IX. there is no inference of fraud or consent against the mort- gagee, to prevent him from considering the lessee as a \\Tongdoer. If the mcjj^gagee had encouraged the tenant to lay out money, he could not maintain this action ; but here the question turns upon the agreement between the mort- gagor and mortgagee ; when the mortgagor is left in pos- session, the true inference to be drawn is an agreement that he shall possess the premises at will in the strictest sense, and therefore no notice is ever given him to quit, and he is not even entitled to reap the crop, as other tenants at will are, because all is liable to the debt ; on payment of which the mortgagee's title ceases. The mortgagor has no power, express or implied, to let leases, not subject to every circum- stance of the mortgage. Whoever wants to be secure, when he takes a lease, should inquire after and examine the title- deeds. It was said at the bar, that if the plaintiff can re- cover, he wiU also be entitled to the mesne profits from the tenant, in an action of trespass, which would be a manifest hardship and injustice, as the tenant would then pay the rent twice. I give no opinion on that point ; but there may be a distinction, for the mortgagor may be considered as receiving the rents in order to pay the interest, by an implied authority from the mortgagee, till he determine his will." 28. This case is cited by Lord EUenborough in Thunder V. Belcher,^ as " decisive against the claim of the tenant to notice to quit." It might be otherwise, if the mortgagee had received rent. In such case, although the lease would be invalid, the occupant would become tenant from year to year. " But a mortgagor is no more than a tenant at suf- ferance, not entitled to notice to quit ; and one tenant at sufferance cannot make another. The defendant never had any possession under the mortgagee from whence any ten- ancy could be inferred, and therefore was not entitled, to any notice. He could not be said to have any possession under the mortgagee, if the mortgagor had no authority to let." 1 3 E. 450. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 177 29. In Evans v. Elliot,^ Lord Denman remarked upon this case : — " The well-known case of Keech, lessee of Warne v. Hall, 1 Doug. 21, is generally considered as an authority the other way ; but Lord Mansfield was not there laying down the law upon the subject, so much as explaining his own view of. the manner in which mortgagor and mortgagee commonly regard one another in fact. I must add that some misconception may have arisen on this subject, from the care the courts have employed in correcting an acknowl- edged error of the same great Judge, the error of supposing that the right to recover in ejectment could depend on any thing but the legal right of possession. This most frequently follows the legal estate ; though Lord Mansfield was dis- posed in some cases to transfer it to him in whom no more than an equitable title was vested. A strong assertion of the right of the mortgagee in such a case against the mort- gagor may have led to the notion that, as against the for- mer, not only the latter, but all claiming under him, must be wrongdoers, without adverting to the possibility of the right of possession being recognized in another by the per- son enjoying the legal estate." 30. In conformity with the doctrine of Keech v. Hall, it is said, " all those who come in under the mortgagor are, strictly speaking, trespassers." ^ So, in another case,-^ " if a person who has an estate, borrows money on it upon mort- gage, and becomes the mortgagor of it, and this mortgagor afterwards grants a lease of the property to a tenant, we will suppose for twenty-one years, that lease, being made after the mortgage, cannot be set up by the tenant to prevent the person who has lent the money (whom we call mortgagee) from recovering the possession of the property, and the mort- gagee may put the tenant out of possession by an ejectment, and the only remedy the tenant has for being thus put out of possession is against the mortgagor." 1 9 Ad. & El. 342. 3 pg^ Patteson, J., Doe v. Bucknell, 2 Per Littledale, J., Pope v. Biggs, 8 Carr. & P. 567. 9 B. & C. 254. 178 THE LAW OF MORTGAGES. [CH. IX. 80 a. So the tenant at will of a mortgagor, who, on the mortgagee's entry, refuses to pay him rent or quit, is liable to the mortgagee in trespass for the rents subsequently ac- cruing.^ 31. So it has been held, that where a mortgagee enters under a judgment, the land being in possession of a tenant under a lease subsequent to the mortgage, there is no privity between them, and the mortgagee may treat the occupant as a disseizor or a tenant, at his election.^ 32. In Jackson v. Fuller,^ the rule established in the case of Jackson v. Laughhead (p. 174) was held not applicable to a suit brought by the mortgagee against a purchaser from the mortgagor. The Court say, — all privity between the parties is now gone. The pm'chaser is a stranger to the contract by which the mortgage was created. He cannot be considered in the light of a tenant. He knows nothing of the original debt, and is under no personal obligation to pay it. He holds possession of the pledge, but not, as in the other case, "by a perfect understanding between him and the mort- gagee." He claims exclusively by a title from the mortgagor. " If notice be required in this case, it must be so in every case of ejectment upon mortgage, even though the land has been conveyed in fee from hand to hand, until all knowledge of any existing incumbrance is totally lost." 33. Where one in possession under the mortgagor refuses possession to the mortgagee upon his entry for breach of condition ; the latter may maintain an action against him for mesne profits, though the entry be insufficient for fore- closure.* Wilde, J., says,^ — the plaintiffs might elect to consider the defendants as trespassers, after their refusal to quit, as they might consider them as disseizors, and in a writ of entry evict them. And if the defendants refuse to quit, and their continued occupation against the will of the 1 Hill c. Jordan, 30 Maine, 367. '"^ 4 Johns. 21.'3. Sec Jaekson v. Stack.- - Miissachusctts, &c. v. Wilson, 10 house, 1 Cow. 12G. Met. 127. ■* Northampton, &c. v. Ames, 8 Met 1. 5 Ibid. 7. en. IX,] ESTATE OF THE MORTGAGOR, IX POSSESSION. 179 plaintiffs would amount to an actual disseisin ; still the plain- tiffs by their subsequent entry became lawfully reseized, and had a right to maintain trespass for the mesne profits, with- out resorting to a writ of entry. 34. So, where the mortgagee himself purchases under a sale for foreclosure, after the decree, he may treat an occu- pant under the mortgagor as a tenant or trespasser. He is entitled to the rents, from a demand of possession, or the making of a conveyance.^ 35. But in the case of Dickenson v. Jackson,^ where eject- ment was brought by a mortgagee against a purchaser from the mortgagor, without notice to quit, and the demise was laid in the declaration prior to any default of payment ; it was held, that the action could not be maintained. Although the defendant, having taken an absolute conveyance, not acknowledging the mortgage, was not entitled to notice, the sale itself being an act of disloyalty; the right of entry of the mortgagee did not accrue till a default in payment and a termination of the tenancy, neither of which had happened at the time of the demise as laid in the declaration. 36. Upon the question, how far the mortgagee may be de- barred by his own conduct in reference to a lessee of the mortgagor, from treating him as a trespasser or occupant without right, there is no little confusion in the cases. The general principle is, that although a lease made by the mort- gagor is invalid against the mortgagee, if he chooses so to consider it ; yet he may, at his election, ratify such lease, and adopt the lessee as his tenant ; thereby substituting a liability on the part of the lessee to himself for rent, in place . of the former one to the mortgagor. 37. It is perfectly well settled, that the mortgage, of itself, and independent of some specific action of the mortgagee, directed to that end, will not authorize him to claim the rents and profits. Thus it is held, that where the mortgagee has not taken a specific pledge of the rents and profits, he has no 1 Castleman v. Belt, 2 B. Monr. 158. - G Cow. 147. 180 THE LAW OP MORTGAGES. [CH. IX. equitable claim to them, as against the assignee of a chattel morfo-ao-e from the tenant to the mortgagor, to secure the rent. If the mortgagee obtains an order upon the tenant, to attorn to a receiver appointed in a foreclosure suit, he can claim only immediate possession of the premises, as secinrity. If the tenant has gone into possession pendente lite, the order may be, that he yield possession or pay rent from that time to a receiver. But he has no right, in any event, to an order, especially as against the equitable rights of others, which wiU in effect vest him with the possession nunc pro tunc, as of a time anterior to the application.^ 38. Mr. Greenleaf remarks,^ that if the mortgagee does not choose to enter and receive the rents, the tenant may pay rent to the mortgagor ; but after notice by the mortgagee of his title, and a claim of rent, the rent must be paid to him. So it has been held, that where a mortgage is duly recorded, a tenant cannot lawfully pay a year's rent in advance to the mortgagor ; and, if he does so, upon a bill for foreclosure by the mortgagee, the Court may compel him to pay it again to a receiver."^ After notice, the mortgagee has been held enti- tled to claim the rents and profits due at the time of such notice, as well as those which accrue subsequently.* 89. In Doe v. Hales,^ it was held, that after demand of, or distress for, rent in arrear, eo nomine, by the mortgagee, the mortgagor's tenant could not be treated as a trespasser. 40. So in Evans v. Elliot,'^ Lord Denman maintained, that by his own acts the mortgagee might be estopped from treat- ing a lessee of the mortgagor as a trespasser ; and suggested, • that a jury might infer recognition of the lessee's title by the mortgagee, from his knowingly allowing the mortgagor to remain the apparent owner, and deal with the property as 1 Zcitcr V. BowiTi£in, 6 Barb. 133; ^ 7 Biii}^. 322. See Doc ?'. Lewis, 13 Weulncr v. Foster. 2 renn. 23; Myers M. & W. 241 ; v. Kensington, V. Wiiite, 1 Uawlc. 3."jr). 8 Q. B. 42!) ; Jacob v. Milforii, 1 Jac. & 2 2 Groenl. Cruise, 107,n.; ace. Smitli W. G29 ; VaiUincc v. Savage, 7 Bing. V. Taylor, 9 Ala. 033 ; Babcock v. Ken- T^Q.^ ; Megginson v. Harper, 4 Tynvli. nc(lv,"l Verm. 4.57. 100 ; Kogers v. Humphreys, 4 Ad. & El. "'I'icnsbaw v. Wells, 9 Ilumiih. .508. 313 ; Carris v. MeClary, 5 N. II. 530. ■» Hutchinson I'. Deaning, 20 Ala. 798. « 9 Ad. & Ell. 342. en. IX.] ESTATE OP THE MORTGAGOR, IN POSSESSION. 181 his own. His language is as follows.^ It has been argued, "that the mortgagee may always treat the mortgagor and all who claim under him as trespassers ; and that, for that reason, the mortgagor's lessee cannot become the tenant of the mortgagee. My learned brothers are, I believe, disposed to assent to this proposition, which, generally speaking, is certainly not to be questioned. But, for my own part, I wish to guard myself against being understood to adopt it as universal. The contrary must, I think, be admitted, — that a mortgagee may so bind himself by his own conduct as to be precluded from treating the mortgagor's lessee as a tres- passer ; what conduct might amount to a recognition, seems to me to be rather matter of evidence than of law. I am by no means prepared to admit, that a jury would not be war- ranted in inferring a recognition of the tenant's right to hold, from the mere circumstance of the mortgagee's knowingly permitting the mortgagor to continue the apparent owner of the premises, as before the mortgage, and to lease them out, exactly as if his property in them continued." 41. In Brown v. Story ,^ a mortgagor leased for years, and an assignee of the mortgage (having notice of such lease) gave notice to the tenant of the mortgage, and required him to pay to the assignee all rent due and to become due for the premises. Held, from these facts a jury might infer a contract of tenancy for a year between the assignee and the tenant. 42. In the case of Pope v. Biggs,^ the assignees of a bank- rupt mortgagor brought an action for use and occupation against his lessee, under a lease made after the mortgage. It was held, that the defendant might show in defence a payment made to the mortgagee after notice and demand. 43. So as to an avowry for rent, the tenant may plead payment of it to a mortgagee, under a mortgage prior to the 1 9 Ad. & Ell. 354, 355. 3 9 g^ C_ 245 : Doe v. Simpson, 3 2 1 Scott, (New) 9. Kerr, 194. VOL. I. 16 182 THE LAW OF MORTGAGES. [CH. IX. lease, who had demanded payment from the tenant, and threatened to put "the law in force" in case of refusal. Such plea is in substance a plea of payment, not a nil habuit, or eviction. The defect of the lessor's title is shown, only as a medium of proof, that the payment was for his benefit, and by reason of his default. The plea, far from denying the mortgagor's title to grant the lease, recognizes his title throughout, and admits the money to have been rent due and in arrear to him, and proceeds to show how it has been satisfied.^ 44. A mortgagor having leased the land by parol, a second mortgagee entered and notified the tenant, that he should thenceforth claim rent of him, to which the tenant did not object. The mortgagee subsequently recovered the' land from the tenant by a writ of entry. Held, the mortgagee might maintain assumpsit for the rent, from his entry to the time of suing out the writ of entry, by which act he elected to consider the defendant as a disseizor ; and that the prior mortgage was no bar to the suit, the prior mortgagee having never entered or claimed rent.^ 45. Morton, being an owner in fee, mortgaged to Marriott, hut remained in possession, and afterwards demised part for a term to Barton, who also entered ; after which Morton mortgaged to Higginbotham ; who subsequently received rent from Barton, and demised the other part to Bullock. Afterwards Barton and Bullock, upon notice from Marriott, paid rent to him. Higginbotham then brings ejectment, after notice to quit, against Barton and Bullock. Held, the defendants might both set up in defence the first mortgage to Marriott, his notice to them, and their ])ayment of rent to him ; and that Morton, being only a mortgagor in posses- sion, at the time of the demise to Bullock, did not affect Morton's right to confer upon him by demise a legal title to possession, but Bullock might show, that Morton had since been treated as a trespasser by the mortgagee, so as to de- 1 Johnson v. Jones, 9 Ad. & Ell. 800. ^ Q.^^r^g y. McClary, T) N. II. 529. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 183 termine the right of Morton ; and that the mortgagee's no- tice to the tenant to pay him the rent, might, if received in evidence, tend to show, that the mortgagee treated the mort- gagor as a trespasser.^ Lord Denman says,^ the mortgagee " was entitled to the profits of the land, and the defendants were right in paying him those profits, whether strictly called rent or not. He might have ejected them, and afterwards let to them ; and it seems absm*d to require him to go through the form of an ejectment, in order to put them into the very position in which they now stand." 46. In the same case,^ the same Judge remarks : — " It is c(mceded on all hands, that where a lease is made by the mortgagor subsequently to the mortgage, and the mortgagee afterwards requires the rent to be paid to him, and it is paid accordingly, the relation of landlord and tenant may arise between the parties. Or, at all events, the mortgagee may be entitled to sue the tenant for use and occupation." 47. Bayley, J., says,^ in case of a lease made after the mortgage, " the tenant may consider the mortgagor his landlord so long as the mortgagee allows the mortgagor to continue in possession and receive the rents ; and payment of the rents by the tenant to the mortgagor, without any notice of the mortgage, is a valid payment. But the mort- gagee, by giving notice of the mortgage to the tenant, may thereby make him his tenant, and entitle himself to receive the rents. It is undoubtedly a well-established rule, that a lessee cannot dispute the title of his lessor at the time of the lease, but he is at full liberty to show that the lessor's title has been put an end to.' There is another rule of law, namely, that the mortgagor cannot dispute the title of the mortgagee." 48. So it is held, that if a mortgagee, in case of a lease for years by the mortgagor, instead of turning the tenant out of possession, consents to take him as his tenant, the mort- # 1 Doe V. Warburton, 11 Ad. & Ell. 3 ib. p. 315. 307. * Pope I'. Biggs, 9 B. & C. 251. -lb. pp. 315, 31G. 184 THE LAW OF MORTGAGES. [CH. IX. gagee will not thereby set up the lease, but will make the tenant hi^^ tenant from year to year only.^ 49. On the other hand, in Partington v. Woodcock,^ Pat- teson, J., says : — " I never could see how notice could make the mortgagor's tenant tenant to the mortgagee at the former rent. There might indeed be a new tenancy created at the old rent, where such notice was given, and the rent paid accordingly." Littledale, J., says, " if the lease was made subsequently to the mortgage, I see no remedy the mort- gagee could have against the tenant, on non-payment of the rent, but to bring ejectment." 50. So it is held, that to an ejectment upon a mortgage against a tenant of the m.ortgagor, it is no defence, that the plaintiff had received interest thereupon, to a time subsequent to the demise laid in the declaration ; such receipt not amounting to a recognition that the mortgagor or his tenant was up to that time in lawful possession.'^ Lord Tenter- den, C. J., distinguishes this case from Doe v. Hales, (7 Bing. 322,) where the defendant proved, that subsequently to the day laid in the declaration, he was in possession, as a tenant of the mortgagor, and the plaintiff called on him, demanded interest on the mortgage, and received it eo nomine as in- terest, requiring the defendant to pay it instead of rent to the mortgagor. Littledale, J., Questions the correctness of that decision. Parke, J., says " Doe v. Hales only shows, that where the mortgagee recognizes a party as being in lawful possession of the premises at a given time, it is not compe- tent to him to say afterwards that at that time he was a tres- passer. Here the lessor of the plaintiff never recognized the defendant as being in lawful possession." ^ 51. In Doe v. Olley,'' it was held, that notwithstanding a distress for rent by the mortgagee, he might treat the mort- gagor as a trespasser, upon a subsequent default. 1 Doc V. BiK-knclI, 8 Carr. & V. 5GG. * Doc v. CadwallaJer, 2 B. & Al. 2 6 Ad. & Ell. 69.''}, 6'JG. 47G, 477. ♦ •'Doc V. Cadwalhuler, 2 B. & Ad. & 12 Ad. & Ell. 481. 473; V. Goodier, IG L. J. i^ B. 436, N. S. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 185 52. In Doe v. Goodier/ it was held, that the reservation of a power of distress, in case the interest should be in arrear, in like manner as for rent reserved on the lease, or even a distress under such power, is not of itself sufficient to create a tenancy, or prevent an ejectment without notice, but is a mere collateral power, and the demise in ejectment may still be laid on a day prior to the distress. 53. In the case of Evans v. Elliot,^ already referred to, it was held, that by notifying the lessee of the mortgage, and that principal and interest are due, and requiring payment of rent, the mortgagee does not make the lessee his tenant, nor gain the right of distraining for subsequent rent under the lease, although the tenant actually pay him rent at times and in sums corresponding to those in the lease, and by letter recognize him as his landlord. o4. Li a recent case it has been held, that the tenancy under the mortgagor is not affected by an authority from the mortgagor to the mortgagee -to receive the rents, though perhaps such authority may be irrevocable, and justify all payments made under it while the debt continues.^ 54 a. A mortgagor having made a lease, and rent being due, the mortgagee gave notice of the .mortgage to the ten- ant, and claimed the rent. Held, in an action for use and occupation by the mortgagor, such claim and notice, with- out payment, furnished no defence to the suit.'* 54 b. The defendants, a railway company, laid their rails upon certain lands mortgaged to the plaintiff, and, being called upon by him for compensation, negotiated with him on the subject. The plaintiff" had never been in possession, but gave notice of the mortgage to the defendants, and then brought an action for use and occupation. Held, " there was evidence for the jury of the defendants' having held the land 1 16 L. J. Q. B. 435, N. S. 3 Wheeler v. Branscomb, 5 Q. B. 373. 2 9 Ad. & Ell. 342. * Milton v. Duun, 7 Eiig. Law & Eq. 406. 16* 186 THE LAW OF MORTGAGES. [CH. IX. on the terms of paying for it, and that the plaintiff, being a mortgagee out of possession, and never having entered pre- viously to the trespass, nor having a judgment by default or a verdict in ejectment, could not maintain an action of tres- pass against the defendants." ^ 55. It is said by the Court in Massachusetts,^ " whether mere notice to tenants by a mortgagee to pay rent to him, or any other act short of an actual or constructive entry, will defeat the right of the mortgagor to take the rents and profits to his own use, may be a question." 55 a. In Welch v. Adams,^ the holder of a mortgage upon leased premises made open and peaceable entry for the purpose of foreclosing and receiving the rents and profits. The defendant, the tenant, consented to the entry, but the plaintiff, an assignee of the mortgagor, was not present. The holder of the mortgage required the de- fendant to pay him rent from the time of entry, and he agreed to do so, and actually paid it, taking a bond of in- demnity. The plaintiff required the defendant to pay him, forbade him to pay the holder of the mortgage, and also notified the latter, that he would not consent to his having possession and taking the rent. Held, the action, being for use and occupation after such entry, would not lie. (h) 55 b. Annual mortgage and subsequent lease by indent- ure, for five years, reserving rent, and an assignment of the lease to the mortgagee. Between five and six months after the lease, the mortgagee entered to foreclose, and the lessee attorned to him, and afterwards accounted with him for the first year's rent. The tenant brought an action against the 1 Turner v. Camcrons, &c., 2 Eng. 10 Met. 114. Sec Smith v. Shepard, Law & Kq. .342. l.'j Tifk. 147. '^ Per Sliaw, C. J., ImcIcI v. Swan, " 1 Met. 494. (/i) A mortgagor may recover the rents from one who has wrongfully re- ceived them, the mortgagee having made no claim to them, although the law-day be past. Branch, &c. v. Fry, 23 Ala. 770. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 187 assignee, on a quantum meruit count, for a portion of the first year's rent. Held, the action could not be maintained.^ 56. In Maine it is held, that a notice from a mortgagee to an ag^t of the mortgagor, employed to collect rents from tenants of the estate, to pay the rents, when collected, only to himself, is a termination of the mortgagor's tenancy at will, and makes the agent a trustee for the mortgagee, as to all rents subsequently accruing.? 57. In New York it has been held, that where a mort- gagor leases the mortgaged premises, a foreclosure and sale extinguishes the lessee's title. And though he be not evicted, if he attorn to the purchaser, the right of the lessor to the future rents is extinguished. So, if the tenant, on being re- quested to attorn, yield up possession, this is equivalent to an eviction, and will be a good defence to an action by the lessor for subsequent rent. And though the lessor assign the lease to the purchaser, and consent that the rent be paid him for the rest of the term, the tenant may still quit, and refuse to pay the subsequent rents.^ 58. It has been held in Kentucky, that a mortgagee of a reversion may sue the tenant of the mortgagor for use and occupation, unless he has paid his rent before notice of the mortgage. But where a mortgagor in possession makes a lease, and the lessee is suffered to remain in possession, the mortgagee cannot maintain an action for rent. And the purchaser of" an equity of redemption does not acquire, as incident thereto, any legal right to rent reserved by the ven- dor, and accruing after the purchase ; the doctrine that rent goes with the reversion being a technical one, and applicable only to the legal title. But a mortgagee, purchasing under a decree of foreclosure, may, after the date of the decree, treat one in possession under the mortgagor as tenant or trespasser, and-Jrom the time of demanding possession or 1 Knowles v. Mavnard. 13 Met. 352. See .Tones r.' Clarke, 20 -Johns. 121 ; 2 Cioshy V. Harlow, 8 Sliepl. 499. Magill v. Hinsdale, 6 Conn. 4G9. 3 Simcrs v. Saltus, 3 Denio, 214. 188 THE LAW OF MORTGAGES. fcH. IX. obtaining conveyance, is entitled to the accruing rents.' So, it is held in New York, that where a mortgage is made by one who has previously leased the land, the mortgagee may distrain for rent. But where a lease is made by th#mort- gagor after the mortgage, the mortgagee can neither distrain nor sue for rent, there being no privity of contract or estate between him and the tenant. Spencer, Ch. J,, remarks,^ there is no adjudged case wjiich countenances the contrary doctrine. The mere legal ownership of the land cannot authorize either an action or a distress for the rent. The mortgagor holds, it is true, upon an implied consent and agreement, existing between him and the mortgagee ; and is therefore entitled to notice to quit, before he can be proceeded against as a trespasser ; but it would be going too far to say that he might make leases, which the mortgagee might or might not affirm, at his election. The relation between them does not imply a right on the part of the mortgagor to lease. In Alabama, the mortgagee, upon condition broken, is enti- tled to rent in arrear, after notice.^ 59. The plaintiffs, having a mortgage of a farm occupied by the defendant under a lease from Robinson, subsequent to the mortgage ; recovered judgment on the mortgage, and on the first day of January, 1843, took possession under an execution thereupon. The defendant remained in posses- sion, without any new contract, and on the 30th of March, 1843, the plaintiffs first demanded rent. The plaintiffs bring assumpsit to recover the rent from October 1, 1842, to April 1, 1843, the defendant having, after the 1st of April, paid it to the order of Robinson, drawn January 21, 1843. It did not appear at what periods the rent was payable. Held, the plaintiffs should recover the rent that accrued after, but not what accrued before, their entry.* 60. A mortgagor in possession having coiyeyed the land, the grantee admitted a third person as his tenant. After- 1 Castloman v. Belt, 2 B. Monr. 157. ■* Cokcr v. Pcarsall, 6 Ala. .542. - iMcKirciicr r. llawlcv, 16 Johns. ■'Massachusetts, &c. v. Wilson, 10 2'J2; Watts v. CoOin, 11 .Johns. 4115. Met. 12G. CH. IX.] ESTATE OF THE MOETGAGOR, IN POSSESSION. 189 wards, the grantee's interest was sold on execution. Imme- diately upon the sale and before any deed was given, the tenant attorned to the execution purchaser, and agi-eed to occupy at a certain rent. The mortgagee afterwards noti- fied the tenant to pay rent to him, and the tenant, receiving an indemnity, did so. The execution purchaser then brings this action against the tenant for the rent. Held, the facts above stated furnished no defence to the suit. Where the mortgage is subsequent to the lease, the rent passes as inci- dent to the reversion which is mortgaged, and the mortgagor is estopped by his own deed to claim it afterwards. But, in this case, the mortgage being made first, the defendant was never tenant to the mortgagee, nor even to the mortgagor. The Court further remarked, that by a statutory provision of the State, a tenant shall not attorn to a stranger. Therefore the tenant could lawfully attorn only to the grantee or a pur- chaser from him, and the execution purchaser stood in the same position as one taking a direct conveyance ; while the mortgagee was to be regarded as a stranger. And although mortgagees are excepted from the general statutory provision against attornment, the effect of this exception is merely to render attornment to a mortgagee valid or invalid, according to the circumstances of each case, but not to authorize at- tornment to any one but the landlord's grantee.' 61. Upon the subject above^onsidered, Mr. Coote remarks as follows ; — "A purchaser of the equity of redemption from the mortgagor, or a lessee who defends for the mortgagor's benefit, cannot set up a legal title in a third person, para- mount to that of the mortgagor, or a prior legal mortgage from the mortgagor to a third person, in order to defend his own possession. But the rule does not apply, when a sub- sequent purchaser or mortgagee, for valuable consideration, without notice of the prior mortgage, obtains a valid legal conveyance from the mortgagor, who has, in the mean time, become clothed with the legal estate, or gets in an outstand- 1 Souders v. Vansickle, 3 IIalst.314. 190 THE LAW OF MORTGAGES. [CH. IX. ing legal estate ; though it would seem that such party- might be bound by estoppel, if the mortgage contained a positive recital of the mortgagor's seizin. Of course, a les- see, claiming under the mortgagor subsequently to the mort- gage, may show an eviction by paramount title in defence to an ejectment by the mortgagee ; or if the lease be prior to the mortgage, it would seem that he may either make this defence, or, without proving eviction, show that, by reason of the paramount title, nothing passed by the mortgage ; and notice from the legal owner to the tenant to pay the rent to him is, it seems, evidence of eviction." ' 62. The same writer further remarks : ^ — "A new tenancy may be created between the mortgagee and the tenant by payment and acceptance of rent, as rent, or even by the acquiescence of the tenant in the notice to pay the mortga- gee ; which will, it seems, be a tenancy from year to year upon the terms of the lease ; although mere notice by the mortgagee, to pay the rents to him without attornment or assent on the part of the tenant, is insufficient to create a new tenancy. It seems, such notice may be treated as an eviction." 63. The cases above referred to relate to tenancies created by the mortgagor after the mortgage. Different considera- tions apply, and different rules have been adopted, where the owner of land, which has bee» already leased, gives a mort- gage of it. Such mortgage is of course a mortgage merely of the reversion, and, in general, rent is incident to, and passes with, the reversion.^ (i) The rule upon this subject has been thus stated. 1 Cootc, 390; Doc v. Clifton, 4 Ad. .307; hut sec Gouldswortli r. Knights, & Kll. 81.3 ; Doe v. Stone, 3 C. B. Rep. 11 Mecs. & W. 337. 176; l?if,'lit V. Ikicluu'll, 2 B. & Ad. - Cootc, 402. 278 ; Goodtitle v. Morf,'an. 1 T. K. ^ Sec Mnnsony v. U. S , &c., 4 Ala. 755; Doc v. Barton, 11 Ad. & Ell. N. 8. 746-748; Kawson v. Eicke, 7 Ad. & Ell. 451. ((') If a lease is made before llie mortgajxe, tlie mortgagee is assignee of the reversion, and, in that character, entitled to all the rents payable by the CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 191 64. When an estate previously leased is mortga^i, the rents and profits pass as incident to the reversion ; and if, at the time possession is taken, there is rent accruing upon a quarter not expired, the rent passes as incident, and the mortgagee may sue for it. But the rent which has accrued prior to the entry does not thus pass, being a mere chose in agilion.i 65. Mr. Greenleaf says,^ rent in arrear at the time of a mortgage made by the lessor does not pass to the mort- gagee. 66. ]Vlr. Coote says,^ if the lease is prior to the mortgage, or made under a power in the mortgage, the notice of the mortgagee to the tenant operates as an attornment, relating back to the time of the grant ; and all rents due at the time of such notice belong to the mortgagee, who may distrain for them, or, if the tenant holds from year to year or under an agreement, may recover them in an action for use and occupation ; even though the mortgagor has, after the mort- gage, altered the property and raised the rent. But a mort- gagee taking possession, or a receiver appointed on his be- half, is not entitled to the crops previously severed and con- signed by the mortgagor, though not actually received by the consignee. 67. In Pope v. Biggs,* Littledale, J., says: — "The mort- gagee cannot indeed distrain or maintain any action for the by-gone rents which accrued due before he gave notice to the tenants, because before that time there was no privity between him and the tenants. But the notice by force of 'Massachusetts, &c. v. Wilson, 10 ^ Coote, 402. Met. 127. * 9 B. & C. 254, 255. 2 2 Grecnl. Cruise, 108. lease ; except those paid by the lessee before notice of the assignment. But when the lease is subsequent to the mortgage, the mortgagee is not bound by it. There is no privity between, him and the lessee ; and, as he could not recover rent of the mortgagor, it has been doubted whether he could recover it of the lessee, who stands in the* mortgagor's place. Fitch- burg, &c. V. Melven, 15 Mass. 209, 270. 192 THE LAW OF MORTGAGES. [CH. IX. StatWAnne, ch. 16, operates as an attornment of the ten- ants, and when they attorn they become tenants to the mort- gagee, and, at common law, that attornment would have related back to the grant, so as to entitle the mortgagee to all the rents from the time when the deed was executed. A new tenancy is then created ; as between mortgagor and mortgagee, the latter becomes entitled to all the by-ggpe rents. All those who come in under the mortgagor are strictly speaking trespassers. In ejectment, the plaintiff might declare on the demise of the mortgagee, and the ac- cruing rents, being in the nature of mesne profits, might be recovered by the mortgagee from the day when he gave no- tice of the mortgage to the tenants. And if the mortgagee might, after bringing an ejectment, recover those rents in an action for mesne profits, it is perfectly clear that he is enti- tled, at law, to receive them without bringing any ejectment. As to the accruing rents, there has been that which is equiv- alent to an eviction by title paramount before those rents became due, and that will be an answer to any action for rent by the mortgagor." 67 a. In Moss v. Gallimore,^ (said to be the leading case upon this subject,^) certain leased premises were conveyed by mortgage. The lessee remained in possession some years, paying rent to the mortgagor, when the mortgagor became bankrupt, owing upon the mortgage more than the sum then due as rent. The assignee demanded the rent, and then the mortgagee ; and the latter distrained for it. Held, the distress was valid. Lord Mansfield remarks upon the danger of the lessee's colluding with the mortgagor, in such case, against the mortgagee, who has no right to eject the former, he having the prior title. " Of late years, the courts have gone so far as to permit the mortgagee to pro- ceed by ejectment, if he has given notice to the tenant that he does not intend to disturb his possession, but only re- quires the rent to be paid to him, and not the mortgagor. 1 Dou-1. 279. 2 1 Smith's L. C. 314, n. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 193 This, however, is entangled with difficulties." Attornment is unnecessary, no rent having been paid before notice. "But, having notice from the assignees and also from the mortgagee, he dares to prefer the former, or keeps both par- ties at arm's length. The mortgagor receives the rent by ti tacit agreement with the mortgagee, but the mortgagee may put an end to this agreement when he pleases." Ashurst, J., says : — "Where the mortgagor is himself the occupier — he may be considered as tenant at will ; but he cannot be so considered if there is an under-tenant ; for there can be no such thing as an under-tenant to a tenant at will. The mortgagor is only a receiver of rent for the mortgagee ; who may, at any time, countermand the implied authority." 68. The execution purchaser of an equity of redemption has been held entitled to the same privileges, in regard to tenancy and rent, previous to any actual or constructive dis- possession by the mortgagee, as the mortgagor or his lessee. Thus, a mortgagor leased for a certain term, and verbally agreed with the mortgagee, that the mortgagor should have possession and control, and receive the rent of the estate. The mortgagee afterwards brought an action for foreclosure against the mortgagor, recovered judgment, and took out an execution, but J;he latter was never delivered to an officer, the tenant still remaining in possession under the lease. The plaintiff, a creditor of the mortgagor, levies an execution upon the equity of redemption, himself purchases it, and verbally lets the estate to the defendant, who enters at the expiration of the former lease, and occupies till dispossessed by an execution in favor of the mortgagee against the plain- tiff, in a writ of entry. The plaintifi" brings an action to re- cover rent of the defendant from the time he took possession, till dispossessed by the mortgagee.' Shaw, C. J., remarked,^ that the plaintiff, having purchased the equity, stood in place of the mortgagor, with the right of taking the rents and profits to his own use, till the entry or some equivalent act 1 Field I'. Swan, 10 Met. 112. 2 jj. pp. n4, 115. VOL. I. 17 194 THE LAW OF MORTGAGES. [CH. IX. of the mortgagee ; which did not exist in this case, but, on the contrary, were expressly waived by the action of the mortgagee brought for the purpose of foreclosing, and aver- ring him to be disseized and out of possession. 69. From the preceding remarks, relative to the legal rights and obligations connected with the leasing of a mortgaged estate, it may be inferred that great caution is desirable, in the mode of creating a tenancy, in order to avoid any conflict as to the title or the payment of rent. Mr. Coventry says,' " both the mortgagor and mortgagee should join in the de- mise. The mortgagee should ' demise, lease, and to farm let,' and the mortgagor ' grant, demise, lease, ratify, and con- firm ; ' and the rent should be reserved to the mortgagee so long as the premises shall remain in mortgage ; and to the mortgagor for the residue (if any) of the term. The whole legal estate is in the mortgagee, he therefore should be the leasing party. The simple assent of the mortgagee to the mortgagor's granting leases would be wholly inoperative for the purpose of transferring an interest to the lessee. Nor will a lease, even made by a mortgagee (without the mort- gagor) and before foreclosure, although he be in possession under the mortgage, be good in equity against the mortgagor, unless it be of necessity and to avoid an apparent loss." 70. So Professor Greenleaf says, that " to the creation of a valid lease of an estate in mortgage, the concurrence of the mortgagee and mortgagor is essential. The mortgagee, having the legal estate, should demise, and the mortgagor also should demise and confirm. The rent may be reserved generally, and the covenants from the lessee should be made with the mortgagee, and also with the mortgagor, severally. Sometimes a power is reserved in the mortgage for the mort- gagor to appoint by way of demise, in which case the lease takes effect as an appointment of the use to the lessee for the term : in this instance, the reservation may be general, and the covenants should be entered into with the mortgagee and 1 1 row. 177, n. Sec Barney v. Adams, 2 Tynvh. 289 ; Doe v. Goldsmith, lb. 710. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 195 also with the mortgagor severally, as where the lease oper- ates as a common law demise. If the mortgage is of lease- holds, of course the mortgagor cannot, under a power to lease in the mortgage deed, make an under-lease of the legal estate without the concurrence of the mortgagee.' 70 a. Where mortgagor and mortgagee join in a lease, containing an express covenant by the former for quiet enjoy- ment, no covenant from both can be implied.^ 70 b. Lease from mortgagor and mortgagee, reciting the mortgage ; the reddendum to the mortgagee, his executors, &c., during the mortgage, afterwards to the mortgagor or his executors, &c. The lessee covenants to and with the mort- gagee, and also to and with the mortgagor, to pay the rent " on the several days and times, and in manner as the same was reserved and made payable." Held, a several covenant.^ 71. A mortgagee of leaseholds joined with the mortgagor in leasing a part of the property for the residue of the term at a cer- tain rent, payable to the mortgagor, his executors, administra- tors, and assigns. The lease contained a provision for reentry, in case of non-payment of rent, to the mortgagor, his executors, &c. ; also a declaration that nothing therein contained should defeat, impeach, or determine the estate of the mortgagee under his mortgage, so far as the same affected the entirety of the premises. After execution of the deed, the mortgagor became bankrupt. Held, the lessee was entitled to the premises, free of the mortgage ; but the mortgagee, and not the mortgagor's assignee, was entitled to the rent.* 72. K the mortgagor and mortgagee join in a lease, and the lessee covenants with the mortgagor and his assigns ; the covenants, being collateral to the land, will neither descend at common law to the heir of the mortgagor, nor pass to an assignee of the mortgagee, under St. 32 Hen. 8, but will be covenants in gross, on which actions may be brought by the mortgagor or his personal representatives.^ 1 2 Greenl. Cruise, 112. n. * Edwards v. Jones, 1 Coll. Cha. 247. 2 Smith r. Pilkington, 1 Tyrwh. 313. ^ -Webb v. Russell, 3 T. R. 393; 3 Harold v. Whitaker, Q. B. 29, May, Stokes i'. Russell, lb. 678. 1846; 15 L.J. 345. 196 THE LAW OF MORTGAGES. [cH. IX. 73. In Pargeter v. Harris,^ the mortgagor made a lease, reciting the mortgage ; and after assignment brought an action for rent, upon the covenant. Held, the covenants were in gross, and it might well be alleged in the declaration, that the plaintiff had no reversion at the time of the demise, and a plea, that " the reversion was in the plaintiffs at the time of the demise, and before breach the plaintiffs had assigned it to a third person," was bad ; there being no recital in the lease, which constituted an estoppel. 74. Where the mortgagee leases, with the concurrence of the mortgagor, the lessee covenanting with both, to pay rent to the former till payment of the mortgage, and then to the latter ; the covenant runs with the land till the mortgage is discharged, and then becomes a covenant in gross. While the mortgage continues, the mortgagee is the proper party to bring a suit ; and if payment of the mortgage is relied upon in defence, it must be pleaded as a defeasance of the covenant with the plaintiff.^ 75. Where it appears on the face of a lease, that the legal estate is in the mortgagee or a trustee for him ; a right of entry reserved to the mortgagor is void, he being a stranger.*^ 76. The mortgagee may sometimes himself become a lessee. Thus it is held, that if the mortgagee and the mort- gagor join in leasing, and the former takes an underlease from the lessee, the mortgagee holds as tenant, not as mort- gagee, and the mortgage is postponed to the lease.* 77. So in the case of Newall v. Wright,^ the mortgagee was himself also a lessee of the estate. Some of the follow- ing observations of course relate to this peculiar state of facts ; but mo^t of them are of a general character, and throw light upon the several topics discussed in the preceding pages ; the estate of the mortgagor and of those claiming under him. In that case, Chief Justice Parsons remarks as 17 Q. B. Rep. 708. "Doc v. Lnwrcncc, 4 Taunt. 23. •^ Wliitukcr V. Ilarrold, 17 L. J. Q. B. * P.igc v. Broom, 4 Kuss. 6. 343, N. S. ^3 Mass. 138. CH. IX.] ESTATE OF THE MORTGAGOK, IN POSSESSION. 197 follows : ^ — " When a man, seized of lands in fee, shall mort- gage them in fee, if there be no agreement that the mortgagor shall retain possession, the mortgagee may enter immedi- ately, put the mortgagor out of possession, and receive the profits ; and if the mortgagor refuses to quit the possession, the mortgagee may consider him as a trespasser, and may maintain an action of trespass against him, or he rflay in a writ of entry recover against him as a disseizor. But there may be an agreement, that the mortgagor shall retain the possession until the condition be broken, which shall bind the mortgagee ; in which case, the mortgagor may demise the estate to a stranger, and receive the rents to his own use. And upon the same principle, we are satisfied that the mort- gagee, if he consent to take a lease from the mortgagor, and covenant to pay him rent until the condition be broken, shall be bound by his covenant, and shall not be admitted to set up his mortgage against the lease. The demise is in law an agreement that the mortgagor shall retain the possession, and receive the profits to his own use. As the lease is for five years, (the case finding that the lease and mortgage were made at the same time,) and as the money secured by the mortgage was to be paid in the same time, it is apparent that the lease and the mortgage were intended to execute one contract ; and to give complete operation to both those deeds, it is reasonable to suppose the mortgage first executed. For if the lease had been first executed, and the mortgage intended to control the lease, no reason can be given why the lease was not in fact surrendered, as of no effect between the par- ties. It is therefore our opinion, that the execution of the first mortgage is no bar to the recovery of the rent due on the lease. Suppose the question to arise on a lease made by a man seized in fee, who afterwards conveys the premises to the lessee in fee, on condition that the conveyance be void, upon his paying a sum of money to the lessee at a future day. If the lessor, having the reversion in fee, make an abso- 13 Mass. 152-154. 17* 198 THE LAW OF MORTGAGES. [CH. IX. lute conveyance of the estate in fee to the lessee, without doubt the term is extinguished. If he convey the estate in fee to a third person, the rent shall pass, as incident to the reversion. But if he mortgage in fee the estate to a third person, the mortgagee may receive the rent as incident to the reversion, or permit the mortgagor to receive it at his election. If he do no act to show his election to receive the rent, the mortgagor shall recover it of the lessee, who cannot plead the mortgage in bar. But as the mortgagee cannot put the tenant out of possession, if he demand the rent of him, the tenant must pay it to him ; and if, after demand, the tenant shaU pay it to the mortgagor, he will pay it in his own wVong. In the case at bar, the mortgagee is the tenant, and he can- not demand the rent of himself. If he refuse to pay it to the mortgagor, he must be considered as claiming the rent, if by law he may be entitled to it ; and this refusal is a sufficient notice to the mortgagor. The legal effect of this reasoning is, that when the mortgagee shall refuse to pay the rent, the rent is suspended until the condition of the mortgage be per- formed or the estate be redeemed ; and upon either event the rent will again become payable, if the term has not in the mean time expired. And during the suspension, the lessee will, as mortgagee, be accountable for the profits to the mort- gagor to\vards the payment of the debt, first keeping down the interest ; and of the value of the profits the reserved rent will prinid facie be evidence. If, however, the lessee shall voluntarily pay the rent to the mortgagor, he shall not after- wards be accountable, as mortgagee, for the profits received for the same time." 78. The following summary of the relations between mort- gagor and mortgagee is given by IVIr. Coote.^ 1. If the mortgage provides, that the mortgagor may re- tain possession till breach of condition ; he may be regarded as a tenant for years till such breach ; and, upon his death, his interest may vest in his executors, who shall hold in trust for the heirs. 1 Coote, 327-330. Sec Smith's Leading Cases, (Am. ed.) 570, n. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 199 2. After breach of condition, until payment of interest or other recognition of tenancy, he is tenant at sufferance, hav- ing rightfully entered, but holding over wrongfully. 3. If there is no agreement for possession, and the mort- gagor remains in possession with the mortgagee's consent ; he is strictly tenant at will. 4. If, in the latter case, the mortgage is assigned without concurrence of the mortgagor, this terminates the estate at will, and makes the mortgagor tenant at sufferance till pay- ment of interest or other recognition of tenancy ; and when- ever the mortgagor is a tenant at will, the death of either party terminates such tenancy. Upon the death of the mort- gagor, if his heir or devisee enter and occupy without recog- nition of the mortgagee's title by payment of interest or otherwise, this may be treated as an adverse possession. Upon the death of the mortgagee, the mortgagor becomes tenant at sufferance to his representative, till some recogni- tion of tenancy, and then tenant at wiU. 5. Wherever a tenancy at sufferance exists, and even where an adverse possession commences, as by the entry of the heir or devisee of the mortgagor without the mortgagee's consent ; payment of interest is a recognition of the mort- gagee's title, and evidence of an agreement that the mort- gagor, or person claiming under him, shall hold at will, and a strict tenancy at will commences. 6. If the estate is occupied by tenants, and the mortgagor allowed to receive the rents, he has been treated as a receiver, but not subject to account. The correctness of this view, however, has been strongly questioned, particularly by Lord Eldon in ex parte Wilson.^ 79. In connection with the subject now under considera- tion, it is proper to give an account of a judicial controversy, which perhaps is of little practical importance in the United States, where leasehold mortgages are of rare occurrence ; but which is found carried on with much earnestness in 1 2 Ves. & Beam. 252. 200 THE LAW OP MORTGAGES. [CH. IX. many English cases. The mortgagor being in general treated as owner of the estate, the question arose, whether the mortgagee of a leasehold^ like an absolute assignee, be- came liable upon the covenants in the lease. The following abstracts of the decisions will be sufficient to explain the nature of this discussion. 80. " In Eaton v. Jaques, Doug. 454, decided in 1780, the question arose whether a mortgagee of the lessee of a term, never having taken possession under the mortgage, was lia- ble as assignee for rent in arrear, and it was held by Lord Mansfield, and all the other judges of the King's Bench, that he was not. {j) It was put upon the ground, that as mort- gagee out of possession, he was not assignee, because he had not all the estate, right, title, interest, &c. of the mort- gagor ; that the mortgage was but a security to the mort- gagee, the legal estate still remaining in the mortgagor. This decision does not appear to have been satisfactory to the profession in England. Lord Kenyon doubted its cor- rectness in Westerdell v. Dale, 7 T. R. 311 ; and in Stone v. Evans, Woodfall, 113, said he would overrule it without the least hesitation ; and in Williams v. Bosanquet and others, 1 Brod. & Bing. 5 Com. Law R.. 72, it was formally over- ruled upon a consideration of all the previous cases. It was there held, that when a party takes an assignment of a lease (7) " In point of fact, this case must have existed for a century past, in a thousand instances ; in this great town, particularly, building leases have been and are perpetually mortgaged ; and yet no instance has been found ■where the ground landlord has attempted to charge the mortgagee, not in possession, with the rent or covenants. This is a strong argument against the plaintiff, especially where the case is so hard, so unjust, and unconscionable. Numberless inconveniences would arise, if such a demand could be sup- ported. The mortgagee never asks whether the rent is paid ; he only looks to his security ; and, when the principal and interest are paid, he re-assigns. But if the plaintiff is right, a mortgagee might be called upon, years after such re-assignment, for arrears or breaches of covenant during the assign- ment ; the consequences would be terrible." Doug. 459. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 201 by way of mortgage, as a security for money lent, the whole interest passes to him, and he becomes liable on the covenant for payment of rent, though he has never occupied or become possessed of the premises in fact. Vide Woodfall, 111, 112, 113; Powell on Mortgages, 233 to 243. The doctrine of Eaton V. Jaques is, that when a lessee mortgages his term, his whole interest does not pass to the mortgagee ; that until he takes possession, the legal ownership is in the mortgagor, subject to the lien of the mortgagee ; that the mortgagee of course is not assignee, as an assignee must take the whole interest of the lessee. Williams v. Bosanquet on the con- trary held, that the whole interest passes by the mortgage, and that the mortgagee consequently becomes assignee, and is liable as such. This precise question arose in the case of Astor V. Hoyt and others, 5 Wendell, 603, where the doctrine of Eaton v. Jaques was considered as the well-settled and established law of this State. It was there held, that a mort- gagor is the owner of the property mortgaged against all the world, subject only to the lien of the mortgagee ; and that a mortgagee of a term, not in possession, cannot be considered as an assignee ; but if he takes possession of the mortgaged premises, he has the estate cu7n onere, and is liable as assignee upon the covenants contained in the lease. When the mortgagee takes possession, he then has all the right, title, and interest of the mortgagor. Then he acquires, and the mortgagor loses an estate liable to be sold on execution ; he is then substituted in the place of the mortgagor who was lessee, and therefore is assignee, and liable as such." ^ 81. Mr. Coote^ gives the following somewhat fuller ac- count of the decisions upon this point. In the case of Eaton V. Jaques,3 tried before Mr. Justice Buller in 1780, and the first case in which the point arose at laiv ; it was held that the mortgagee is not liable, unless he takes possession. The question was reserved for the Court of King's Bench. It 1 Opinion of the Court in Astor v. - Cootc, p. 165. Miller, 2 Paij:e, 68. 3 Dong. 438. 202 THE LAW OF MORTGAGES. [CH. IX. had been considered to be clear law by Lord Chief Justice Holt,^ that an absolute assignment vested the estate in the assignee before entry ; and in equity the same doctrine had been undoubtedly applied to a mortgage. Thus in a case ^ where a lease had been granted with covenants to repair, the lease assigned by way of mortgage, and the mortgagee had never entered ; the houses being greatly out of repair, the lessor filed his bill against the assignee for discovery and specific performance. The Court said, it was the mort- gagee's folly to take an assignment of the whole term, and thereby subject himself to the covenants ; but, being only a mortgagee not in possession, the Court would not assist the plaintiff, but leave him to his remedy at law. In another case in equity,^ where a lease had been assigned by way of mortgage, but the mortgagee had not entered ; the lessor recovered at law for rent. Whereupon the mortgagee filed her bill for relief, but it was dismissed, she being- ill advised to take an assignment of the whole term. The Court of King's Bench, however, seemed to consider these cases of little weight, and decided that the mortgagee was not liable before taking possession. Lord Mansfield said : — "To do justice between men, it is necessary to understand things as they really are, and to construe instruments according to the intention of the parties. Can we shut our eyes and say it was an absolute conveyance ? It was a mere security ; it was not an assignment of a/l the mortgagor's estate," &c. In this Willes and Ashhurst, Justices, coincided. But Mr. Justice Buller went further, saying, he did not agree that, even if the assignment ivas absolute^ the action would lie without possession, and added, " there is no instance." In "Walker v. Reeves,'* which was a case of absolute assign- ment. Lord Mansfield said : — "By the assignment, the title and possessory right passed, and the assignee became pos- sessed in law, and this case is by no means like Eaton v. 1 Cook );. Harris, 1 Ld. Raym. 367. " IMlkin^ton v. Sliallcr, 2 Vern. ;574. '^ Hparkcs v. Smith, 2 Vcrn. 277. ■* Doug. 461, n. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 203 Jaques, which, being a mortgage, was not an assignment for this purpose ; it was a mere security. In the case of Chinnery v. Blackburne,^ it was held that the mortgagee of a ship, not in possession, could not main- tain an action for freight. In Jackson v. Vernon,^ that such mortgagee was not liable for goods furnished for the ship. In these cases the doctrine of Eaton v. Jaques was recog- nized. In Westerdell v. Dale,'^ Lord Kenyon said : — "As to the cases respecting a mortgagee, whether in or out of possession, he is the legal owner, and must be so considered in a court of law, notwithstanding his title is subject to equitable inter- ests. It is said in one of the cases, that a mortgagee is only liable when in possession, and that what proves this point is, that in charging the mortgagee it is necessary to state in pleading, that he entered and was possessed. But with great deference to the learned Judge who gave the reason, I doubt it ; I consider those as formal words." In Stone v. Evans,'^ an action against the assignee of a lease by way of a mortgage. Lord Kenyon ruled that the defendant was liable ; and " as to the case of Eaton v. m Jaques, he would overrule it without the least reluctance. *• In the case of Mayor, &c. v. Blamire,^ the point was dis- cussed, but held unnecessary to decide, for the purposes of that action. In the case of Lucas v. Comerford,^ a lease, with covenants for rebuilding, &c., was deposited by the lessee with a cred- itor for security. The executors of the lessor filed a bill against the creditor for specific performance of the covenants. The defendant in his answer admitted his liability upon tlie other covenants, but denied that he was bound to rebuild. Lord Chancellor Thurlow said : — " It was no matter whether the defendant took the lease as a pledge or as a purchase ; he could not take the estate and refuse the burden ; it was MH. Bl. 117, n. -Id. s 7 t. E. 302. * Woodf. 113. 5 8 E. 487. <^ 1 Ves. Jun. 235. 204 THE LAW OF MORTGA(^S. [CH. IX. nothing to the lessor." The prayer for specific performance was refused, but the defendant decreed to execute an assign- ment, in order that the plaintiff might sue at law. In the case of Williams v. Bosanquet,' the question was again argued in Serjeants' Inn HaU before ten of the judges, and the authority of Eaton v. Jaques expressly overruled. 82. Mr. Greenleaf says : ^ — " It is well settled, as a general doctrine, that a mere legal ownership does not make the party liable in cases like those supposed in the text " (the mortgage of a leasehold interest, containing covenants by the lessee) " without some evidence of his possession also, or of his actual agency. This principle is clearly recognized in the law of shipping ; the rule being settled that the mort- gagee of a ship does not incur the liabilities of an owner, until he takes possession, or actively interferes in the employ- ment of the vessel." " The assignee in mortgage of a chattel real, not in actual possession, is considered as possessed only as against the assignor, and this by way of estoppel. He is not compelled to take possession ; he may intend to acquire nothing more than an equitable lien, or a title by estoppel, and against purchasers with notice. His legal title in that case depends on a legal fiction ; and fictions of law serve to effectuate the actual intent of the parties, but never to defeat it. Moreover, it is conceded, that if the mortgagee were to take an assignment of all the term except one day, he would not be liable on the covenants of the mortgagor in the original lease ; which shows that even the claim of his liability stands on ground purely technical. But it is clear that before entry the assignee cannot bring trespass ; nor can the assignee of a -lessee take by release, before entry, to enlarge his estate. Neither has a mortgagee out of possession any interest which can be sold on execution ; but the equity of redemption remaining in the mortgagor is real estate, which may be extended or sold for his debts. Nor does the mortgagee derive any profit from the land until actual entry or other 1 1 IJiod. & 15. 2.38. - 2 Grccnl. Cruise, 110, n. CH. IX.] ESTATE OF THE MORTGAGOR, IN POSSESSION. 205 assertion of exclusive ownership ; previous to which the mort- gagor takes the rents and profits, without liability to account. On these grounds, it has been held here, as the better opinion, that the mortgagee of a term of years, who has not taken possession, has not all the legal right, title, and interest of the mortgagor, and therefore is not to be treated as a com- plete assignee, so as to be chargeable on the real covenants of the assignor. In New Hampshire, it has been held other- wise ; and in Virginia, also." VOL. I. 18 206 THE LAW OF MORTGAGES. [CH. X. CHAPTER X. ■'5 WASTE BY THE MORTGAGOR OR MORTGAGEE, AND REMEDIES THEREFOR. 1. The mortgagor cannot commit waste. 2. Remedy by injunction. 6. By action at law. 22. Injuries done by third persons. 26. Waste liy the mortgagee. 1. Although a mortgagor in possession is regarded for most purposes as the owner of the land, and as such entitled to the temporary annual rents and profits ; yet, inasmuch as the very purpose of the mortgage would be defeated, by any acts affecting the permanent value of the property, the law will in some form interpose, either to prevent the commission of waste by the mortgagor, especially if the debt is thereby endangered, or to compensate the mortgagee for the value thus taken from the land.^ 2. The usual process against a mortgagor in relation to the commission of waste, is a preventive one ; being an in- junction from a court of equity. It has been sometimes questioned, whether Chancery would thus interfere. Thus in Usborne v. Usborne,^ doubts were expressed by the Court whether a mortgagor should be restrained from cutting tim- ber, the mortgagee being in fault for leaving him in posses- sion ; but the injunction was granted. In King v. Smith,^ it was held that the Court will not interfere, unless first satis- fied that the security is defective. And if the interest of the estate requires that the wood be cut, the Court may make provision for the cutting of it upon the mortgagor's giving security. Thus, where a large proportion in value of pine 1 Grav V. Baldwin, 8 Blackf. JGt. 2 1 l)i.-k. 7.'). Sec Van Wycl^ r. Alli- ger, <; IJai-l). :>{)!. « 2 Ilarc, W^- CH. X.J ESTATE OF THE MORTGAGOR. — WASTE. 207 woodland was burnt over, and it was proper, in order to save the burnt wood from rotting, and for the permanent benefit of the estate in reference to the new growth, that the burnt wood should be cut off, the land without the wood being of small value, and the mortgagor was proceeding to cut it, when the mortgagee obtained an injunction ; held, a reference should be ordered to ascertain the value of the wood, in order that the mortgagor might give security.^ 2 a. A party, collaterally liable for the mortgage debt, may have an injunction against waste by an assignee of the mort- gagor in possession. Thus a purchaser of part of the estate mortgaged may have such injunction, against an assignee for benefit of creditors of another part. The former stands in the light of a surety for the mortgage debt.^ 2 b. So a mortgagor in possession, after a sale under decree and execution, will be restrained from committing waste.^ 3. Mr. Powell says,'* an injunction will always be granted, where the land is scanty security for the debt. So it will be granted against the destruction of underwood, if contrary to the usual course of husbandry, but not of underwood gener- ally, even though the mortgagor is insolvent or a bankrupt. 4. And it seems to be now well settled, that the mortgagee may have an injunction, even where the debt is not due, if the mortgagor in possession commits waste, or in any way attempts to diminish the value of the property ; or, if it con- sists of personalty, where he is about to remove it beyond the reach of his creditor. Otherwise, a fraudulent mortgagor might, at his pleasure, deprive the creditor of all benefit from his mortgage.'' 4 a. But a mortgagor will not be compelled to repair, where the estate has been injured without his fault.^ 1 Brick V. Getsinger, 1 Halst. Clia. Ilodtjcs, 8 Vcz. 105; Brown v. Stewart, 391. 1 M(l. Ch. 87. 2 Johnson v. White. 11 Barb. 194. ^ yulmon v. Clamtt, .3 Bland, 180; 5 3 rh(enix v. Clark, 2 Ilalst. Ch. 447. G. &Johns. 314 ; ^iiirdock, 2 Bhuid,4Gl. * 1 Bow. 1G5; Humphreys v. Ilarri- ''Campbell i'. Macomb, 4 Johns. Ch. son, 1 Jac. & W. 581 ; Hampton v, 534. 208 THE LAW OF MORTGAGES. [cH. X. 5. If a bill for an injunction to stay waste, brought by a mortgagee against the mortgagor, before the debt is due, con- tain a prayer for a sale of the premises ; such prayer, being repugnant to the other allegations, will be rejected as sur- plusage, and will be no bar, while pending, to another bill for sale or foreclosm*eJ 6. In addition to the remedy by injunction, it has been held in many cases, that the mortgagee may also maintain an action at law against the mortgagor for waste. (a) 7. Thus in Maine, if a mortgagor in possession cut down and carry away timber trees growing on the land, the mort- gagee may maintain an action of trespass against him. Though if a lot of wild land be purchased, and mortgaged for the price, it has been made a question, whether the mort- gagor might not set up a general usage and custom in the country for purchasers in such cases to fell the trees and clear the land, as amounting to a license from the mortgagee.^ 8. So the mortgagee of timber lands may bring trespass or trover against one who cuts and carries away timber, or afterwards converts it to his own use, though under a license from the mortgagor, subsequent to the mortgage.^ • 9. So, although after such wrongful taking the plaintiff took from the mortgagor an assignment of his rights under the contract with the defendant ; the plaintiff not waiving his rights as mortgagee, and never having derived any benefit from the contract.^ 9 a. So if, after a decree of foreclosure, and before the time limited for redemption, the mortgagor cut and carry away timber, the mortgagee may recover its value in an action on the case in the nature of waste, or in trover.^ 1 Murdock, 2 Blund, 401. « Ihi.l. - Stowcll V. Pike, 2 Grcenl. 387. ^ Lungdon v. Taul, 22 Venn. 205. ^ Frothingham v. McCusick, 1 1 Shcpl. 403. ('/) III Pcniisylvaiiia, a .statute so provlilcs. Pfiui. Stat. 1851, (!13. .See riiggon t;. Mortimer, (J Carr. & i'. IIG; Farraut v. Thompson, 2 D. & K. 3. en. X.] ESTATE OF THE MORTGAGOR. — WASTE. 209 10. Where there are t\vo mortgages, and the mortgagor, without consent of either mortgagee, cuts timber from the land, and the first mortgage is afterwards discharged, the second mortgagee may maintain an action of trespass.^ 11. A mortgagor conveyed the land, taking back a mort- gage to secure the price, which mortgage he afterwards assigned to the plaintiff. The purchaser being in possession, the defendant cut timber under a license from him, without consent of either mortgagee, and the first mortgage debt was afterwards paid. Held, the plaintijS" might maintain trespass against the defendant.^ 12. In Hitchman v. Walton,-^ an action on the case was maintained, in favor of a mortgagee as reversioner against the mortgagor's assignees, for injiiry to the land by removal of fixtures. 13. So, if the assignee of the mortgagor remove fixtures from the land, though erected after execution of the mort- gage by the mortgagor ; the assignee of the mortgagee, who held the mortgage at the time of such removal, may recover their value in an action of trespass.^ 14. But it has been held in Connecticut, that a purcliaser from the mortgagor, of a fixture severed from the land, has a better title to it than the mortgagee. 15. Mortgage of land, upon which was erected a grist-mill. After a decree of foreclosure by the mortgagee, and a judg- ment in ejectment for possession, but during the time limited for redemption, and before possession taken by the mort- gagee, the mortgagor severed the stones from the mill, and sold them. The mortgagee takes possession of the stones as his property, and the purchaser brings trover against him. Held, the plaintiff should recover.'^ 16. In New York it has been held that a mortgagee, be- fore forfeiture, cannot bring an action for waste against the 1 Saiiilers v. Reed, 12 N. II. 558. * Smith v. Goodwin. 2 Grecnl. 17.3. '■^ Ibid. 5 Cooper r. Davis, 15 Conn. 556. 3 4 Mecs. & W. 409. 18* 210 THE LAW OF MORTGAGES. [CH. X. mortgagor. His interest in the lands is contingent, and may- be defeated by payment of the mortgage debt. In this respect, he is like a tenant for life, who cannot sue for waste, because his interest may never come into possession. The remedy is an injunction in equity.^ But a more recent case decides, that an action on the case will lie by the holder of a mortgage, against the mortgagor or a purchaser from him, for waste committed with a knowledge that the value of the security will be injured thereby. As where the premises were a scanty security for the debt, and a purchaser from the mort- gagor took away the fences, and cut down and carried away valuable timber, with a knowledge of the existence of the mortgage and of the insolvency of the mortgagor. So, although the primary motive of the defendant was not to injure the plaintiff's security, but a view to his own emol- ument.2 17. It is held in New Hampshire, that if the cutting of timber has been expressly or impliedly authorized by the mortgagee, when cut, it belongs to the mortgagor ; other- wise, the mortgagee may either have an injunction in equity or an action at law, or claim the timber itself, unless the rights of third persons have intervened."^ 18. A similar rule has been adopted in Maine. Thus the plaintiff conveyed a portion of a tract of timber land, of which he was the owner, taking back a mortgage for the price, and gave a bond to convey the remainder, on payment of a certain sum ; but nothing had been paid for the land. The defendant's intestate became assignee of the claim to the land under the mortgage and bond, and being, with the knowledge of the plaintiff, in quiet and peaceable possession of the premises, cut timber and wood therefrom ; one third being upon the land described in the bond, the rest on that described in the mortgage. The defendant having inven- toried the lumber cut, and sold a part of it ; and the plaintiff 1 Peterson v. Clark, 15 Johns 205, » Smith v. Moore, 11 N. II. 55. See 207 ; see Cooperw. Diivis, 15 Coun.55('). Saunders v. Reid, 12, 458. - Van Pelt v. McGraw, 4 Coinst. 110. CH. X.] ESTATE OF THE MORTGAGOR. — WASTE. 211 having before the sale demanded the property of him ; held, the plaintiff might maintain trover for the value.^ 19. In Gore v. Jenness,^ the plaintiff having received a mortgage of timber land, and the condition having been broken, certain timber was cut from it under permits from the mortgagors, but without the knowledge or consent of the mortgagee. The defendant purchased the timber without notice of the mortgage, and the plaintiffs afterwards seized it. By agreement, it was subsequently manufactured into boards, and sold ; the proceeds to be subject to the decision of the Court as to the legal right of either party to the same. The plaintiff brings assumpsit; and it was agreed that judg- ment should be rendered for the plaintiff, if the seizure of the timber was legal, or if he had the right of possession against the defendants. Judgment was rendered for the plaintiff. The Court say : — "According to the decisions in Massachusetts the plaintiH' is clearly entitled to judgment. The principles established by these decisions are necessary for the security of the mortgagee. It often happens, that the timber upon wild or unimproved land constitutes its principal value. The timber is as much a part of the realty as the land itself. A third person purchasing the timber, which is a part of the security, takes it subject to the para- mount rights of the mortgagee, as much as if he had pur- chased the land." '^ 20. A mortgagor, who cuts wood upon the land after a decree of foreclosure, is a trespasser. Hence, where wood so cut was attached by his creditors, and sold by the sheriff, but remained on the land till after the right of redemption had expired, and the mortgagee then entered and forbade its removal, and sold and used part of it himself; held, the pur- chaser had gained no title to the wood, and was not bound to pay for it.'* 21. In case of waste, committed after such decree, 1 Busscv V. Page, 2 Shcpl. 132. 8 ib. 55. - 1 Apple. 53. - * Lull v. Matthews, 19 Verm. 322. 212 THE LAW OF MORTGAGES. [CII. X. an injunction will be ordered, though not asked by the bill.J 22. It has been held, that a mortgagee has not a sufficiently vested, immediate, and direct title to the property, to main- tain an action for injuries done to it by a third person, unless they are committed with the express intent to wrong and defraud him, and the mortgagor is insolvent or unable to pay the mortgage debt. 23. In Lane v. Hitchcock,^ an action was brought by the assignee of a mortgage, for prostrating and destroying certain buildings on the land, by which the value was reduced and the plaintiff greatly damnified. It was held to be a fatal obstacle to a recovery, that the plaintiff had not alleged in the declaration the insolvency of the mortgagor, or his in- ability to pay the mortgage debt. 24. In the Bank, &c. v. Mott,^ the Bank of Utica had a judgment against Mc Bride, which bound his lands. The plaintiffs held junior mortgages against McBride, which bound the same lands. The plaintiffs bring an action against the defendant, alleging that he, as sheriff, in executing a fi. fa. issued at the suit of the Bank of Utica, so negligently managed the personal property of McBride, that it did not bring its full value by $1,000, so that this sum came in upon the mortgaged land and other lands, and took so much out of the plaintilfs' pockets. It was held, that the action could not be maintained, although the Bank of Utica or McBride himself might bring a suit, they being the parties immediately wronged. 25. In Gardner v. Heartt,'* the plaintiff, as holder of a mortgage, brought an action against the defendant for neg' licence in removing earth from a hill adjacent to the mort- gaged premises, whereby portions of the hill were made to slide down upon those premises, and thereby greatly injured them. It was held, that the action could not be maintained, 1 fioodman ?'. ICinc, 8 Beav. 379. ■'' 17 Wi'iid. r)54. '^ 14 Joliiis. 21 a. ■* 3 Deuio, 2.32. CH. X.] ESTATE OF THE MORTGAGOR. — WASTE. 213 although it might lie, if the act charged had been done with intent to defraud the plaintiff, and if the plaintiff proved that the mortgagor was insolvent or unable to pay the mort- gage debt. 26. At law, a mortgagee may commit waste, unless he has expressly covenanted against it.^ But equity will enjoin against it, unless the security is defective, and decree an account of timber already cut. And a mortgagee will be required to apply the value of timber cut, first to the interest, then to the principal, of his debt.^ A mortgagee must ac- count for the proceeds of timber cut by a third person, which are received by him.^ But a mortgagee of land, containing a mine previously wi'ought, may work such mine.^ So, a mortgagor cannot charge the mortgagee in possession for waste by clearing and cultivating the land, and also with the improved rent arising from such clearing; though it seems he may claim either at his election.'^ So, an assignee of the mortgagor, seeking relief as such, cannot hold the mortgagee accountable for waste committed before the as- signment.'' 27. In Hanson v. Derby,'' the bill being to redeem a mort- gage, on the hearing, an account was decreed, and X240 reported due; to which report the defendant had excepted. The cause thus standing in court, the Lord Keeper, on a motion and reading affidavits that the defendant had burnt some of the wainscot and committed waste, ordered the defendant to deliver up possession to the plaintiff, who was a pauper, giving security to abide the event of the account. 28. So, if the mortgagee unnecessarily pulls down build- ings, and erects new ones, without the mortgagor's consent, he is liable for any consequent loss of rent, and will not be 1 Evans v. Thomas, Cro. Jac. 172; ^ Gore i\ Jcnness, 1 Apple. 53. but see McCormick v. Dighy, 8 Blackf. * Invin v. Davidson, 3 Ircd. Cli. 311. 99. ^ Morrison v. McLeod, 2 Ired. CIi. - Wetherin^'ton v. Banks, Scl. Cas. 108. Cha. 30 ; Hanson v. Derby, 2 Yern. « Gordon r. Ilobart, 2 Story, 243. 392; Farrant v. Lovel, 3 Atk. 723. " 2 Vern. 392. 214 THE LAW OF MORTGAGES. [CH. X. allowed for lasting improvements and repairs, unless the re- sult of the whole is to increase the value of the property.^ 28 a. On a bill to redeem, the mortgagor claimed that a master, to whom the case had been referred, should havfe allowed treble damages for waste committed by the mort- gagee, pending the bill. Held, such claim could be enforced only by the statutory remedy .^(6) 1 Coote, 429 ; Sandon v. Hooper, 6 ^ Boston, &c. v. King, 2 Cush. 401. Beav. 246. (&) Lord Hai'dwicke thus sums up the law relating to waste committed by mortgagee or mortgagoi'. Where a mortgagee in fee in possession commits waste by cutting down timber, and the money arising by the sale of the timber is not applied in sinking the interest and principal of his mortgage, the Court, on a bill brought by the mortgagor to stay waste, and a certificate thereof, will grant an injunction. So, likewise, where there is only a mort- gage for a term of years, and the mortgagor commits waste, the Court, on a bill by the mortgagee to stay waste, will grant an injunction, for they will not suffer a mortgagor to prejudice the incumbrance. Farrant v. Lovel, 3 Atk. 723. CH. XI.] ESTATE OF THE MORTGAGEE. 215 CHAPTER XL ESTATE OF THE MORTGAGEE. NATURE^ OF HIS TITLE. CONNEC- TION BETWEEN THE MORTGAGE AND THE PERSONAL SECURITY. 1 . A mortgage is personal estate. The mortgagee has a mere lien or pledge. 5. Transfer of mortgage witliout the debt. 10. Assignment of the debt : whether it passes the mortgage ; doctrine upon tliis subject in the several States ; mort- gage to secure several debts, some of which are transfeired ; assignment of ditlbrent debts to different persons. 41. The mortgagee cannot make a lease. 43. He has an insurable interest. the assignment of an estate, not a mere security. 52. Case of Martin v. Mowlin, and criticisms thereupon. 56. Joint mortgagees ; their interest in the mortgage and the personal secu- rity. 63. A mortgage is not suliject to legal process. 68. Passes as personal property, upon the death of the mortgagee. 70. By what words devised. 76. Eespective titles of heir and ex- Rights and duties of parties in case of ec!(/or ; nature of the interest in the the insurance of mortgaged property. executor's hands ; sale for payment of 50. The assignment of a mortgage is debts, &c. 1. The proposition having been fully explained in preced- ing chapters, that the mortgagor, notwithstanding the mort- gage, still continues to own, instead of having a mere right to the land ; it follows, as a matter of course, that the mort- gagee has an interest in the property mortgaged, quite distinct from an ordinary title to land. Accordingly the doctrine is equally well established, that a mortgage, though purporting to convey an estate in fee-simple, yet being merely security for a debt, {a) follows the nature of the debt itself, and, so long as the right of redemption continues, is personal estate. Both in law and equity the mortgagee has only a chattel (a) Upon this ground, where separate mortgages are made of distinct estates, but to secure one debt ; it is held, that the unity of the mortgage is to be determined by the debt. Franklin v. Gorham, 2 Day, 143. 216 THE LAW OF MORTGAGES. [CH. XI. interest.^ In common sense, he has only a pledge? He is not the substantial owner.-'^ 2. In Martin v. Mowlin/ Lord Mansfield is reported to have said, that " a mortgage is a charge upon the land ; and whatever would give the money, will carry the estate in the land along wath 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 executors ; it will pass by a will not made and executed with the solemnities required by the statute of frauds. The assignment of the debt, [b) or for- giving it, will draw the land after it, as a consequence — nay, it would do it, though the debt were forgiven only by parol ; for the right to the land would follow, notwithstand- ing the statute of frauds." 3. " In natural justice and equity, the principal right of the mortgagee is to the money, and his right to the land is only as security for the money." ^ 4. Lord Loughborough says : — " The real transaction is an assignment of a debt from A. to B. ; but that debt is col- laterally secured upon a real estate. The debt, therefore, is the principal thing." ^ 5. Kent, C. J., says : — " Until foreclosure, or at least until possession taken, the mortgage remains in the light of a chose in action. It is but an incident attached to the debt, and in reason and propriety it cannot and ought not to be detached from its principal. The mortgage interest, as dis- tinct from the debt, is not a fit subject of assignment, (c) 1 Itunyan v. Mcrscreaii, 1 1 Johns. r)34 ; " Dougherty v. McColgan, 6 Gill & J. 1 Tow. 252, n.; Kavland r. The Justices, 275. &(.:, 10 (k>o. 05; Calkins v. Calkins, 3 * 2 Burr. 978. Barb. '505; Fleet v. Yoiin-rs, 11 Wend. ° Per Fincli, L. K., Tliornbronj^h v. 525 ; Warin;,' v. Smith, 2 Barl). Cli. 1.35 ; Baker, Cas. in Cha. 1, 285. Kinna v. Smith, 2 Green, Ch. 14 ; Whit- '^ J\Iatthc\vs v. Walhwn, 4 Vcs. 128 ; ncy V. French, 25 Verm. f)G3. Dudley v. Cadwell, 19 Conn. 218. - Silvester v. Jarman, 10 Price, 84. (Jj) Ev^n a qualified imlorscment of a note. Stewart v. Preston, 1 Branch, 10. (c) The assignment of a mortgage, witliout the debt, creates at most a naked trust. 2 Story's Eq. 1023, n. CH. XI.] ESTATE OF THE MORTGAGEE. 217 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. " Accessorium 7ion ducit, sed sequitur principaleJ^ ^ [d) So it is held, that if a mort- 1 Jackson v. Willard, 4 Johns. 43; man, 2 Halst. Ch. 219; Edwards v. Wilson V. Troup, 2 Cow. 195 ; McGan Varick, 5 Denio, 664 ; Bailey v. Gould, V. Marshall, 7 Humph. 121; Thayer v. Walk. Ch. 478. Campbell, 9 Mis. 280 ; Garroch v. Sher- ((7) The generality of the language found in the text may profitably be limited and controlled by the following remarks, -which in their connection are equally true. " A nftrtgagee, especially after entry for foreclosure, is considered as having a legal estate, which may be alienated and transferred by any of the established modes of conveyance, subject only, until fore- closure, to be redeemed by the mortgagor." Per Shaw, C. J., Hunt v. Hunt, 14 Pick. 379-380. "By force of the mortgage deed, the mortgagee be- comes seized of the estate, and the mortgagor, until discharge or foreclosure of the mortgage, is quasi tenant at will of the mortgagee, and so the posses- sion of the mortgagor is that of the mortgagee." Ibid. 382. So in regard to the possession of the mortgagee, it is said : — " Although a mortgagee may enter at any time, yet, until he enters, the land must be considered as be- longing to the mortgagor." Per Parker, C. J., Hatch v. Dwight, 17 Mass. 299. And it was accordingly held, that a mortgagee, as soon as he takes possession, but not before, may maintain an action against one who erects a dam, whereby an ancient mill-site on the premises is rendered useless ; and the measure of damages will be the interest on the value of the site or priv- ilege, from the time when the plaintiffs right of action accrued. Hatch v. Dwight, 17 ]VIass. 289. " If any new act or ceremony is required, in order to change the nature of the estate in the mortgagees, or to give them a new title, their entry for the condition broken may be considered as such act. They do in fact acquire by it a new and different estate. No lapse of time, without such entry, would ever give them an absolute estate. Even if the mortgagee enters before condition broken, no length of possession under such an entry will make his title absolute. The mortgage then may be considered as conveying to the mortgagee the rents and profits of the land, to be received, if there be no agreement to the contrary, towards the discharge of his debt, whether the condition is broken or not ; and also as transferring to him a right of entry for the condition broken. On the happening of that event, if he thinks proper to make such an entry, he acquires a new right to the land, which can be defeated only by payment of the debt, within the three years limited by the statute." Per Jackson, J., Goodwin v. Rich- VOL. I. 19 218 THE LAW OF MORTGAGES. [CH. XI. gage given to secure a bond is assigned, the assignee can maintain no action upon it, unless he has also an interest in the bond ; because he can have no conditional judgment.^ 6. In a bill for foreclosure, it appeared that the defendants, Bill and Crane, on the 26th of August, 1818, mortgaged to the plaintiff two distinct house lots, to secure the purchase- money of one of them, which Avas at that time conveyed to the mortgagors. The mortgage was duly recorded, April 9, 1817. Bill had made a mortgage, duly recorded, of one of the lots, to Crane, to secure $1,000. September 22, 1818, this mortgage was assigned to Fare, of whom one of the defendants is administratrix, and claims by her answer a priority over the plaintiff, as to the lot contained in the first mortffase. Held, such claim should not be sustained. The Court say : — " The interest of Crane, as mortgagee, was not at the time of the execution of the mortgage to the plain- tiff, an interest in the land, capable of being the subject of sale, either absolutely or by way of mortgage, distinct from the debt it was intended to secm-e. It does not appear that the debt to Crane was even due, when the mortgage to the plaintiff was executed ; and it is clearly to be inferred that the mortgage had not been foreclosed, or possession taken under it. Though such a mortgage interest may be, by way of extinguishment, absolutely released to the party having the equity of redemption, yet it cannot be conveyed as a still subsisting interest, by way of mortgage, because that would separate the debt and the pledge, the latter to reside in one person, while the debt resided in another. No such absolute release was intended in this case ; and the act of Crane, in uniting in the mortgage with Bill, is rather to be referred to the legal estate which he derived from the plaintiff, than to 1 Webl) V. Flanders, 32 Maine, 175. ardson, 11 Mass. 474. ^o it is said, the mortgagor has the legal title till foreclosure or entry. Van Duyne v. Thayer, 14 Wend. 235-236 ; ace. Felch V. Taylor, 13 Tick. 139. But sec Ritger v. Tarker, 8 Cush. 149. CII. XI.] ESTATE OF THE MORTGAGEE. 219 his interest as such a mortgagee. He had an interest, which he was capable of mortgaging, and which he no doubt in- tended to mortgage, and the mortgage deed can have full operation by being applied to that interest. It cannot be applied to his interest as a mortgagee in the other lot, because he had no interest, in that character, capable of alienation, so long as he retained the debt." Decreed, that all the premises be sold, with a reservation of the junior right of the administratrix, to the proceeds of the lot, the mortgage of which was assigned to her intestate.^ 7. In Jackson v. Bronson,^ which was an action of eject- ment, the plaintiff, to prove his title, offered in evidence a deed to him from Earl, and showed that the defendant was in possession of a part of the land thus conveyed. The defend- ant proved a mortgage from the plaintiff to Earl of the whole lot, to secure a certain sum to the estate and to indemnify Earl, and a deed from Earl to the defendant of the premises in question. It was held, that the action should be main- tained, upon the ground that the mortgage was a mere incident to the debt which it was meant to secure, and an absolute deed of the land by the mortgagee was a mere nullity. 8. In another case, Mr. Justice Kent remarks, that the estate in the land is the same thing as the money due on the note ; is liable to debts ; goes to executors ; passes by a wiU not conformable to the statute of frauds ; {e) is trans- ferred or extinguished by an assignment, or even a parol 1 Aymar v. Bill, 5 Johns. Ch. 570, 571, 572. See Jackson v. Mvers, 11 Wend. 533; Olmsted y. Elder, 1 Seld. 144; Raymond v. Raymond, 7 Cush. 605. 2 19 Johns. 325. ( 5 Pick. 115. See Field's, &c. 7 Eng. 3 Crookcr v. Tcmell, 31 Maine. 306. Law & Etj. 260. VOL. I. 22 254 THE LAW OF MORTGAGES. [CH. XI. held, that a devise by a trustee of all the rest of his real estate will pass the trust estate, and in the note of Butler to Cd". Lit. 203, (note 96,) it seems to be considered by that learned editor, that a mortgage will pass under such a de- vise, and the cases of Marlow v. Smith, 2 P. Wms. 198, and Attorney- General v. Philips, are cited. It would be a fruit- less task to go over all the cases of the English books on this subject, with a view to reconcile them. It is enough for us, that under the terms of the residuary clause in this will, it being expressly a devise of both real and personal estate, we are satisfied that this estate would have passed, had it remained unchanged until the death of the testator." 71. So Chancellor Kent remarks,^ that a mortgagee being, till foreclosure, a trustee for the mortgagor, the mortgage will pass under general words in the will of the former relat- ing to real estate, unless a contrary intent is to be gathered from the language of the will, or the testator's purposes and objects, [p) 72. Devise of all the rest and residue of the testator's free- hold, leasehold, and copyhold estates in possession or rever- sion, with all his goods, chattels, &c., mortgages and debts, subject to the payment of his debts, &c., and apj^ointing the legatee to be his executor. Held, the legal estate in the mortgaged premises descended to the heir, because the de- 1 Jackson v. Dc Lancy, 13 Johns. 537. (p) Upon tbc same subject, the same learned Judge further remarks : — " On reading these latter cases, we are almost involuntarily led to pause, and wonder at the extraordinary and very unaccountable perplexity, doubt, and alternation of opinion, which they discover on this point. The learned men referred to in these cases do not appear to me, with all proper humility be it sjjoken, to have examined this question with the diligence or the talent worthy of the eminent reputation they bear. If indeed they did, the re- ports have done them great injustice. Lord Eldon had studied the question with profound attention, and he showed it to be perfectly clear and settled ; but in the other modern chancery cases on this point, we find nothing but wliat tends to expose the inefTiciency of legal learning, and the weakness of human reason." Jackson v. DeLancy, 13 Johns, bb'd. CH. XI.] ESTATE OF THE MORTGAGEE. 255 vise was made subject to payment of debts, and to this pur- pose the money secured, and not the land, was alone appli- cable.i 73. Devise of all the rest, residue, and remainder of and in all and singular the property, estate, and effects which the testator should be possessed of or entitled to, or over which he should have a disposing power, at his decease, of what- soever nature or kind the same might be. Held, the legal estate in mortgaged premises did not pass by this devise, but descended to the heir.^ 74. The legal estate in property, vested in a testator by way of mortgage, does not pass under the terms, " securities for money," or " money invested on any security." ^ But a bequest of personal estate passes mortgages.* 74 a. A testator sold the land devised, taking back a bond and mortgage for part of the price. Held, the devise was revoked, and the bond and mortgage did not pass by the wiU.5 75. The rule, of treating a mortgage as personal property, in a devise, has been held not applicable to lands originally held under old mortgages. These pass by a general devise, though no release of the equity of redemption appears.^ Upon this subject Lord Loughborough says : " — " What is personal estate is to be decided at the time of the death. K it is no longer money, but land, by a release of the equity of redemption, it will go to the devisee of the freehold or lease- hold estate ; and I would never suffer the personal repre- sentative to take that as personal estate. It is no longer money. At the date of the will, I take it, upon the report, it was mere money, a mortgage title ; but if he lived the period, when all the equity of redemption was gone, then it exists in no shape as part of his property, but as land, held either by a leasehold title or a freehold title ; and I would 1 Silvester r. Jarman, 10 Price, 78. * Asay v. Hoover, 5 Barr, 21. - Harnett, &c., McLcl. & Y. 292. 5 Beck v. McGillis, 9 Barh. 35. 3 Ex parte Pricl, (Vice-Chancellor's '^ Atty. &c. v. Bowycr, 5 Ves. 299. Court,) Law Eep. June, 1850, p. 92. " lb. 303. 256 THE LAW OF MORTGAGES. [CH. XI. never take it up again as money in favor of the executor. There is no equity between the heir and executor, or 'the devisee and executor." 76. The interest of a mortgagee, deceased, is so strictly construed as personal estate, that though the heir be in pos- session, after breach of condition, and no want of assets, he shall be decreed to convey to the administrator.^ 77. But if the debt be paid, and a bill brought for recon- veyance, the heir of the mortgagee must be made party .^ 78. A statute of Massachusetts, 1788, ch. 51, provided, that mortgaged premises should be assets in the hands of executors and administrators, as personal estate. Also, that the executor or administrator of a deceased mortgagee, hav- ing recovered possession of the estate by a suit at law, should be seized to the sole use and behoof of the widow and heirs, &c. ; with a proviso, that the property might be distributed by the Judges of Probate as personal estate, un- less necessary for payment of debts, &c., in which case it might be sold under a license in the usual mode. The Court held, that this statute had the effect of vesting all authority over mortgaged estates, not taken possession of by the mortgagee in his life, in his executor, &c., as trustee of creditors and others interested in the personal estate.^ 79. In the case of Boylston v. Carver,* this provision was held not to vest in the widow, &c., an executed use, under the statute of uses, but to give the administrator a trust, to continue till certain purposes are accomplished thereby. If necessary for payment of debts, &c., he is to sell under a license ; if not, the Probate Court will pass a decree of dis- tribution among those entitled to the personal property, and it may vest in them by virtue of such decree, declaring the use, of the statute of uses, and the statute authorizing such distribution ; or perhaps the administrator, in execution of ' Ellis V. Guavas, 2 Clia. Cas. 50. Sec McCall v. Lenox, 9 S. & R. 304 ; - Silvester v. Jarman, 10 rrice, "8. Gay v. Miiiot, 3 Gush. 352. ^ Johnson V. Ikirtlctt, 1 7 Pick 484. "» 4 Mass. 009. en. XI.] ESTATE OF THE MORTGAGEE. 257 his trust, may be required to execute a deed without war- ranty, conformably to such decree. 80. In the case of "Webber v. 'W'ebber,^ the Court in Maine were of opinion, that the words " seized to the use of the widow and heirs," should be so construed as to vest the es- tate in the heirs, after the period of redemption had expired, and all the purposes been accomplished for which the admin- istrator became a trustee. 81. In the case of Johnson v. Bartlett,^ where an admin- istrator had thus recovered possession of the land mortgaged, the mortgagor conveyed to him all his right and title, speci- fying it as a right to redeem the mortgage, but not expressly as administrator. It was held, that the conveyance operated as a release of the equity of redemption, and vested an abso- lute title in the administrator, but subject to the same trusts as his former estate ; and that a sale by him, without license, either passed no title, or one subject to the like trusts in the hands of the purchaser, who should be presumed to have notice thereof, inasmuch as they were created by law, and depended upon acts and conveyances which were matter of record. The Court remarked, that the administrator had the same right to foreclose the mortgage in this way as in any other, and this was the real intent and effect of the trans- action. A contrary construction would charge the parties with fraud, which is never to be presumed. 82. In New Hampshire, an administrator may foreclose by entry and possession for one year, as the deceased might have done. Upon foreclosure, the legal title vests in the heirs, subject to his rights as trustee. It is there held the duty of the administrator to foreclose the mortgage, if the debt is not paid ; but he may elect between an action and a peaceable entry for this purpose.^ 83. It has been held in Massachusetts, that the estate of a deceased mortgagee in the mortgage, though not strictly real property, so far partakes of that character, as to require a 1 6 Greenl. 127. - 17 Pick. 477. 3 Gibson i-. Bailey. 9 N. H. 168. 22* 258 THE LAW OF MORTGAGES. [CH. XI. license from the Probate Court, to justify a sale of it by the administrator. 84. In the case of Blair,^ a petition was presented to the Judge of Probate by administrators, for leave to seU a note and mortgage, not due, and on which mortgage no posses- sion had been taken. The petition set forth that the estate was insolvent, and would be prejudiced by waiting for pay- ment of the note at maturity. The Probate Court dis- missed the petition, on the ground that such sale might be made without license, and the petitioners appealed. Held, the decree should be reversed, and the case remanded to the Court below. Shaw, C. J., says:^ — "We are of opinion, that the Court of Probate has authority to grant a license, in such cases, and that the petition presents a fit case for the exercise of it. It may be probable that the legislature, by the terms ' real estate so held by an executor,' &c., had more immediate reference to mortgaged estate, on which the exec- utor, &c., had entered in pais or by a judgment. But the terms are broad enough to cover all estate mortgaged to the testator. The right to enter, and the right to maintain a real action, given by § 11, imply that the executor or admin- istrator has a qualified seizin, and holds the estate. And the reason of the provision for a license to seU applies as strongly to estate of which the administrator has not ob- tained possession, as to that on which he has entered. It appearing to us, that a license is necessary, by law, to enable the administrator to sell the said mortgaged estate and the note secured thereby, the case is to be remanded." [q) 85. In Gibson v. Bailey,'^ decided in New Hampshire, 1 13 Met. 12G. - 13 Met. 127. ^ 9 jj. h. 173. {q) By St. 1849, ch. 47, any real estate held by an executor, &c., in mortgage, may be sold, before foreclosure, in llic same manner as personal estate is sold. And by St. 1851, ch. 288, all transfers of mortgaged real estate by executors, &c., subsequent to the Rev. Sts., and prior to the act of 1849, arc declared eflcctual and confirmed, though made without license of Court. CH. XI.] ESTATE OF THE MORTGAGEE. 259 Parker, C. J., remarks upon this subject: — "whether the administrator has, in such case, any right to sell except under a license from the Judge of Probate ; and whether the property, when the mortgage is foreclosed, is to be distribu- ted as personal estate ; or whether, in case the administrator does not sell, it is to be treated as if the absolute fee had been conveyed to the intestate at the date of the mortgage, so that a widow would be entitled to dower only, are ques- tions upon which it is not necessary for us now to express an opinion." 260 THE LAW OF MORTGAGES. [CH. XII. CHAPTER XIL ESTATE OF THE MORTGAGEE. WHAT CLAIMS AND DEMANDS SHALL BE SECURED BY THE MORTGAGE. TACKING. FUTURE ADVANCES. 1. Construction of the condition of a mortgage. Ambiguity of description. Variance between the mortgage and personal security, &c. 11. Tacking, 35. Whether adopted in the United States. 53. Future or subsequent advances. 1. In considering the nature of the mortgagee's title, and the connection between the mortgage and the debt thereby secured, it is proper to inquire, for what claims and demands a mortgage shall stand as security. Ordinarily, the debt designed to be secured is so distinctly specified in the mort- gage-deed itself, as to admit of no doubt, construction, or enlargement. Sometimes, however, questions have arisen upon this point, either from an ambiguity of description, or an attempt to extend th^ operation of the mortgage to claims which are only by implication to be brought within its terms.(a) And it wiU be seen, that the law itself has in some cases sanctioned, by virtue of an established rule of equity juris- (a) Sec Mobile, &c. v. Talman, 15 Ala. 472. A similar ambiguity may arise in regard to the name of a party. Thus a note was made to E. II., payable on demand with interest. Some months afterwards, the promisor made a mortgage to E. II. 3(1, conditioned for payment of a note of the same date, for the same sum, on demand, with interest. Held, in an action on the mortgage, parol evidence was admissible, that E. H. and E. H. 3d, were partners, doing business in the name of E. II., and that the note was made for a debt due the firm, and was the note referred to and secured by the mortgage. Hall v. Tufts, 8 Pick. 455. In the same case, the mortgage described the note as dated one thousand seventeen hundred and ninety-eight. The Court remarked, (p. 400) " This is so palpably a clerical mistake, that no reliance is made upon it by the counsel." en. XII.] ESTATE OF THE MORTGAGEE. — TACKING, ETC. 261 prudence, a still wider and more important enlargement of the literal terms of a mortgage. 2. In regard to the date and time of payment of a mortgage, it has been held, that a mortgage dated 1837, and payable in 1830, is payable immediately, and parol evidence is inadmis- sible to the contrary.' (i) {Infra, § 4.) 2 a. In case of a mortgage, conditioned to pay " $1,256.50, with interest, after the first day of April next, in fourteen equal annual instalments, on the first day of April of each and every year after the first day of next April," the obligor is bound to pay the sum in fourteen equal annual instal- ments, on the first day of April in each year, with interest on each instalment, payable at the time it became due.^ 2 b. A recital in a mortgage, that the mortgagor " is in- debted " to the mortgagee in a certain sum, for which " he has given his checks," &c., does not imply that the mortgage was made for an antecedent debt.^ 3. Upon the general ground, that the personal security is the principal, and the mortgage merely incident or collateral, it has been held, that where the mortgage is conditioned to pay a particular sum, but also to secure a bond, the condition of w^hich covers aU the liabilities of the mortgagor to the mortgagee, the mortgage shall be construed in conformity with the bond.* • 4. But where a mortgage contained a condition, that the mortgagor should pay the debt according to the condition of a bond recited in the deed, by which it was made payable on a day already past; held, the mortgage was still valid in equity.^ {Supra, § 2.) 1 Fuller r. Acker, 1 Hill, 473. Ace. ^ Bank, &c. v. Whyte, 3 Md. Ch. 508. Martin v. Rapelye, 3 Edw. Ch. 229. See ■* New Hampshire, &c. v. Willavd, 10 Mobile, &c. v. f alman, 15 Ala. 472. N. H. 210. '•^ French v. Kennedy, 7 Barb. 452. ^ Hughes v. Edwards, 9 Wheat. 489. (6) But it has been held, that a note, differing in some respects only iVom that described in the mortgage, may be shown by parol to be the one in- tended. Williams r. Hilton, 35 Maine, 547. 262 THE LAW OF MORTGAGES. [CH. XII. 5. A mortgage was conditioned to pay " on demand, with interest, the sum of $1,500, which I am indebted to him, on book and by several notes, the exact date and amount not recollected, but amounting in the whole, together with the debt on book, to $1,500, or thereabouts." At the making of the mortgage, the mortgagor was in failing cu'cumstances, and, in order to secure the mortgagee, it was necessary to make the deed before the exact indebtedness could be ascer- tained. The amount actually exceeded $1,500. Held, the mortgage was valid against creditors and subsequent incum- brancers.^ 6. A party owing $10,000, as the balance of an account, gave a mortgage for $3,000. Held, the mortgage was not void for uncertainty against creditors.^ But where a mort- gage was conditioned to pay a debt due by note, dated May 10, 1834, on demand, with interest ; held, invalid against a subsequent mortgage.^ 7. A mortgage recited, that on settlement of accounts the mortgagor was indebted to the mortgagee in a certain sum. Held, such settlement did not include a note made two days before.^ 8. A member of an unincorporated banking company executed a mortgage to the officers 'of the company, reciting that it was to secure his bond for his subscription for stock, and to bind him, in conjunction with each stockholder, " to all and singular, the holders of the notes, bills, checks, and other liabilities of the said company, now existing, or which may hereafter exist, at any time within fifteen years ; " pro- vided that if he paid and satisfied the bond, and the officers of the company and their successors, for the stock subscribed at the periods when due, and should pay off and discharge all the notes, &c. of the company, the mortgage should be void. Held, the mortgage was not only a security for the subscrip- tion, but also to the creditors of the company for their claims ; 1 Merrills v. Swift, 18 Conn. 257. ■' Hart i'. Clmlkcr, 14 Conn. 77. ■^ Chester v. Wheelwright, 15 Conn. ' Tharp v. Fcltz, 6 B. Mon. 6, 502. CH. Xir.] ESTATE OF THE MORTGAGEE. — TACKING, ETC. 263 and that a creditor of the company, to whom the mortgage was assigned, might bring a bill to foreclose, when his own dpbt became due, though no instalment was due on the mortgagor's bond for his subscription.^ 9. Mortgage to secure a certain sum which may be fur- nished in materials towards the erection of a house for the mortgagor. Held, this did not cover a liability assumed by • the mortgagee as surety or guarantor for the mortgagor.^ 9 a. A mortgage specified the liability of the surety " at about $2,000," when in fact it amounted to only half that sum. The mortgage did not, however, profess to state with accuracy the amount of the liability, and the actual liability was at the time unascertained. Held, that this over-state- ment was not conclusive evidence of fraud.^ 9 b. If the condition is to indemnify a surety, and a certain sum is mentioned, be the debts more or less for which he is surety, the mortgagor will be holden to pay for all the debts for which he was surety.^ 10. One becoming surety for another, for a certain sum, took from him a note for that amount, secured by mortgage, and afterwards paid the debt. Held, the mortgage was invalid against a subsequent mortgagee."^ 10 a. In Parker v. Parker,^ a mortgage was conditioned for payment of a certain sum on a certain day, the year being left blank, according to the tenor of a, note for the same sum. The plaintiff, the mortgagee, brings an action for breach of the covenants in the mortgage. It appeared by parol proof, that the note was never made, and only part of the money loaned, for which a receipt was given. Held, the action did not lie. Parker, C. J., says : ^ — " The deed must be considered as never having been executed and delivered for the purpose of having effect according to its tenor. The blank shows that something further was to be done ; no time 1 Wall 1-. Boisgerard, 11 Sm. & Mar. * Orr v. Hancock, 1 Koot, 265. 574. 5 North v. Eeklcn, 13 Conn. 376. 2 Doyle V. White, 26 Maine, 341. e 17 ]iijass. 370. 3 Bumpas v. Dotson, 7 Humph. 310. ■ P. 375. 264 THE LAW OF MORTGAGES. [CH. XII. of payment is limited ; so that it would be necessary to resort to parol evidence. The same species of evidence might be given, to show that that sum had never been lent. The bargain was incomplete, and never took effect." 10 b. A mortgage, given to secure a note, described the note as one for the penal sum of $787. The note produced • was for that sum without a penalty. Held, the deed was not invalid for this cause.^ 10 c. Mortgage, to secm*e a sum of money, to be ascer- tained by the award of two persons, chosen by the parties, and, in case of disagreement, an umpire to be chosen by the arbitrators. The referees, taking the data in the mortgage, were to make out their award, and return it to the parties in writing within thirty days of their appointment. The award failed through misconduct of the arbitrators. Held, the mort- gage was thereby defeated, and the mortgagee could have no relief in equity, upon a bUl for the sale of the property, and specific execution of the contract.^ 10 d. A mortgage recited, that the mortgagees were in- dorsers on two bills, when in fact they were indorsers on one only, and paid the other for the honor of the drawer before the mortgage was made. Held, the mortgage was still valid.'^ 10 e. Several mortgages, appearing on their face to be for distinct debts in equity, may be shown to be merely addi- tional evidence of and security for the same debt.* 10/. Bond for $2,000, with a mortgage to secure, and referring to the bond, but leaving a blank for the amount. The mortgage was recorded, but soon after, the mortgagor executed a sealed instrument, stating that the sum was omitted by mistake, which writing was attached to the regis- try. A second mortgage was made, the mortgagee having seen the record of the former. Held, the first mortgage should prevail.^ 1 Frink v. Branch, IG Conn. 200. * Anderson v. Davie.s, 6 Munf. 484. 2 Kmcjrv V. Owinss, 7 Gill, 488. ^ Lambert v. Hall, 3 Ilalst. Ch. 410, =' Fetter V. Cirodc, 4 B. I\l(jnr. 482. 651. CH. XII.] ESTATE OF THE MORTGAGEE. — TACKING, ETC. 265 10 g\ Where a mortgage is made to secure certain no^ described therein, but which by mistake are left with the mortgagor, and others taken by the mortgagee; the mort- gagee is entitled to relief in equity, against a subsequent mortgagee. So, if the notes are wrongly described.' 11. In this connection may be considered the subject of tacking, which, though as a distinct right or claim compara- tively unimportant, as will be seen, in American law, occu- pies much space, and has given rise to numerous and nice questions and distinctions, in the English cases; and still continues to furnish many analogies and illustrations, even where the doctrine itself is for the most part obsolete. 12. Judge Story defines the practice of tacking", as " uniting securities, given at different times, so as to prevent any inter- mediate purchasers from claiming any title to redeem, or otherwise to discharge, one lien, which is prior, without redeeming or discharging the other liens also, which are subsequent to his own title. Thus, if a third mortgagee, without notice of a second mortgage, should purchase in the first mortgage, by which he would acquire the legal title, the second mortgagee would not be permitted to redeem the first mortgage, without redeeming the third mortgage also ; for in such a case, equity tacks both mortgages together in his favor. And in such a case it will make no difference, that the third mortgagee, at the time of purchasing the first mortgage, had notice of the second mortgage ; for he is still entitled to the same protection." ^ (c) 1 Porter i-. Smith, 13 Verm. 492. tlicn, 18 L. J. ch. 281, N. S.; Young v. "Story's Et|. '^412. See Williams Eni;lisli, 7 Beav. 10; Watts v. Symes, V. Owen, 1.3 Sim. 597 ; Aldworth v. 8 Eng. Law vt Eq. 247. Robinson, 2 Beav. 287 ; Pelby v. Wa- (c) A tliird mortgagee may tack, though he buy in the first mortgage pendente lite, pending a bill by the second mortgagee to redeem it. This is upon the ground, that he acquires the right by the act of lending the money without notice, and is not bound to take measures for his protection, till actual danger occurs. But the right will not be accorded to liim, after a VOL. I. 23 266 THE LAW OF MORTGAGES. [CH. XII. W^- The doctrine of tacking has been defended upon various grounds. It is said, in (Eqnali jure., melior est conditio possi- dentis. Where the equity is equal, the law shall prevail ; and he that hath only a title in equity shall not prevail against a title by law and equity in another. So the right has been said to be a plank, gained by the third mortgagee in a ship- wreck, tabula in naufra^io. In Wortley v. Birkhead,' Lord Hardwicke said : — " As to the equity of this Court, that a third incumbrancer, having taken his security of mortgage without notice of the second incumbrance, and then, being puisne., taking in the first incumbrance, shall squeeze out and have satisfaction before the second ; that equity is certainly established in general, and was so in Marsh v. Lee, by a very solemn determination by Lord Hale, who gave it the term of the creditor's tahida in naufragio. That is the leading case. Perhaps it might be going a good way at first ; but it has been followed ever since ; and, I believe, was rightly settled only on this foundation by the particular constitution of the law of this country. It could not happen in any other country but this ; because the jurisdiction of law and equity is administered here in different courts, and creates different kinds of rights in estates. And therefore as courts of equity break in upon the common law, where necessity and con- 1 2 Ves. 573. decree to settle priorities. Coote, 476, 478; Brace v. Duchess, &c. 2 P. Wms 491 ; 1 Eden, 530; Bristol v.Hungerford, 2 Vern. 524 ; Knott, 11 Vez. 619. If a creditor by judgment, statute, or recognizance, buys in the first morti^agc, he shall not tack the two .securities; for such a creditor cannot be called a purchaser, nor has he any riglit to the land ; having neither y(« in re nor ad rem, but a mere lien, which it is doubtful whether he will ever enforce. Besides which, the judgment creditor docs not lend his money on the immediate view or contemplation of the land, nor is he deceived or de- frauded, though his debtor had before made twenty mortgages of his estate; but a mortgagee is defrauded or deceived, if the mortgagor has already mortgaged his land to another. Coote, 478; Brace v. Duchess, &c. 2 P. AVm.s. 401:2 Vez. 602. CH. XII.] ESTATE OF THE MORTGAGEE. — TACKING, ETC. 267 science require it, still they allow superior force and strength to a legal title to estates ; and, therefore, where there is a legal title and ^l^ity on one side, this Court never thought fit, that by reason of a prior equity against a man who had a legal title, that man should be hurt ; and this, by reason of that force, this Court necessarily and rightly allows to the common law and to legal titles. But if this had happened in any other country, it could never have made a question ; for if the law and equity are administered by the same juris- diction, the rule qui prior est tempore potior est in jure must hold." 14. Alderson (Baron) remarks :i — "The right of tacking seems to have been established upon this principle; — that where a mortgagee is in possession of the legal estate in two properties as a security for money lent on them, a court of equity will not allow the person entitled to the equity of redemption, to redeem either of them, unless he redeems both ; and allows the mortgagee a lien on the whole for his whole debt." So Judge Story says i^ — " When we come to the doctrine of tacking, equity there looks to the law, and stays its hand upon that, which constitutes a legal objection to relief." 15. He further remarks, upon the same subject: — "If a second equitable incumbrancer, without notice of a prior incumbrance, has by his diligence acquired a better equity, he will be entitled to be first paid. A better equity is thus acquired, when the legal estate being outstanding in a trus- tee, a second incumbrancer without notice of a prior incum- brance, takes a protection against a subsequent incumbran- cer, which the prior incumbrancer has neglected to take. Thus, for example, a declaration of trust of an outstanding term, accompanied by a delivery of the deeds, which create and continue the term, will give a better equity than a mere declaration of trust to a prior incumbrancer. So, where a second equitable incumbrancer has given notice to the trus- 1 White V. Hillaerc. 3 Y. & Coll. COS. -J Gray v. Jcnks, 3 Mas. 522. 268 THE LAW OF MORTGAGES. [CH. XII. tees, in whom the legal estate is vested, he will thereby acquire a priority over a prior incumbrancer, who has omit- ted to give such notice." ^ *•> 16. In Harrison v. Ferth,^ the purchaser of an estate, hav- ing notice of an incumbrance, transferred it to one having no notice. It was held, reversing a decision of the Master of the Rolls, that the second purchaser should hold, dis- charged of the incumbrance. And it is said :^ — " This doc- trine has ever since been adhered to, as an indispensable muniment of title. And it is wholly immaterial, of what nature the equity is, whether it is a lien or an incumbrance or a trust, or any other claim. Indeed, purchasers of this sort are so much favored in equity, that it may be stated to be a doctrine now generally established, that a bond fide purchaser for a valuable consideration, without notice of any defect in his title at the time of his purchase, may lawfully buy in any statute, mortgage, or other incumbrance upon the same estate, for his protection. If he can defend himself by any of them at law, his adversary will have no help in equity to set these incumbrances aside." 17. In Edmunds v. Povey,^ it was argued, that though the trade of buying in incumbrances had been formerly coun- tenanced, yet it was in truth against conscience, and contra- dictory to many established rules of law and equity. But the I^ord Keeper told the counsel he wondered they laid their shoulders to a point that had been so long since settled and received as the constant course of chancery; but although he would not change the rule which had so long prevailed in that Court, yet it might be he would do so, when he found a man designing a fraud, and thinking to make a trade of cozening by the rules of the Court. 18. But it is said, if a firat mortgagee takes the assign- ment as a trustee, he shall not be allowed to tack the mort- gages ; for if lie might, then a mere stranger, purchasing the 1 2 Storv's Eq. 1035^/. -^ Story's E(i. ■^^ 410, 411. '^ Tree. Clia. Gl; 1 Story's Eq. § 410. * 1 Vcrn. 187. CH. XII.] ESTATE OF THE MORTGAGEE. TACKING, ETC. 269 third mortgage, and declaring he had bought it in ti'ust for the first mortgagee, might tack both together, and defeat all the other incumbrancers.^ 19. No doctrine of the law has been more generally or more severely condemned than that of tacking: Judge Story says: — "There is certainly great apparent hardship in this rule ; for it seems most conformable to natural justice, that each mortgagee should in such a case be paid according to the order and priority of his incumbrances. It is assuming the whole case, to say that the right is equal and the equity is equal. The second mortgagee has a prior right, and at least an equal equity ; and then the rule seems justly to apply, that where the equities are equal, that title which is prior in time shall prevail. It has been significantly said, that it is a plank gained by the third mortgagee in a ship- wreck. But, independently of the inapplicability of the figure, which can justly apply only to cases of extreme hazard to life, and not to mere seizures of property, it is obvious that no man can have a right, in consequence of a shipwreck, to convert another man's property to his own use, or to acquke an exclusive right against a prior owner. The best apology for the actual enforcement of the rule is, that it has been long established, and that it ought not now to be departed from, since it has become a rule of property." ^ In reference to the same subject he remarks, " some of these distinctions are extremely thin, and stand upon very artificial and unsatisfactory reasoning." ^ 20. Chancellor Kent says :* — " There is no natural equity in tacking, and when it supersedes a prior incumbrance, it works manifest injustice. By acquiring a still more antece- dent incumbrance, the junior party acquires, by substitution, the rights of the first incumbrancer over the purchased secu- rity, and he justly acquires nothing more. The doctrine of 1 Coote, 474; Barnett v. Weston, 12 '■^ 1 Story's Eq. § 419. Ves. 130. * 4 Conim. 178. - 2 Story's Eq. §§ 413, 414. 23* 270 THE LAW OF MOETGAGES. [CH. XII. tacking is founded on the assumption of a principle, which is not true in point of fact ; for, as between A., whose deed is honestly acquired, and recorded to-day, and B., w^hose deed is with equal honesty acquired, and recorded to-mor- row, the equities upon the estate are not equal. He who has been fairly prior in point of time has the better equity, for he is prior in point of right." So Duncan, J,, says : ^ -^ " There is no natural equity in tacking debts, and where it interferes with the rights of others, it is most unjust." 21. Mr. Coventry was of opinion,^ that the English law of tacking is derived from the Civil Law. But Judge Story denies that this principle was adopted in the Civil Law. He says, the rule, qui prior est in tempore, &c., was applied, ex- cept in the two cases, where the first incumbrancer consented to the second pledge, so as to give a priority, and where the second pledge was for money to preserve the property ; and that the doctrine referred to by Mr. Coventry simply gave to a third mortgagee, paying off a first mortgage, the same prior- ity, by way of substitution, which the first mortgagee had, without changing his rights under his own mortgage. Judge Story cites various passages from the text of the Civil Law, which lie supposes to have been wrongly interpreted, as sus- taining the doctrine that he controverts. He comes to the conclusion, that none of them go further than to authorize a mortgagee to tack, as against his own debtor, a second loan, without security, when the debtor seeks to redeem.'^ 22. Upon the same subject he remarks :* — " In some cases, by the Civil Law, a sort of tacking of debts could be insisted on by the mortgagee against the mortgagor ; but not against intermediate incumbrancers." " It is clear that the Civil Law, in the case of the mortgagor seeking to redeem, did not per- mit it, unless the mortgagor paid not only the debt for which the mortgage was given, but all other debts due to the mort- gagee." But " where there was a first mortgage, and then a 1 AiKlcrson v. Nuff, 11 S. & li. 223. » j Story's Eq. § 415, n. - 2 rbw. 454, n. * 2 Slor/s Eq. 1010. en. Xn.] ESTATE OF THE MORTGAGEE. TACKIXG, ETC. 271 second mortgage, and then the first mortgagee lent another sum to the debtor, he could not tack it against the second mortgagee. Mr. Chancellor Kent has said, that in the Civil Law, the mortgagee was even allowed to tack another incum- brance to his own, and thereby to gain a preference over an intermediate incumbrance. If, as I presume, his meaning is, that the tacking gave a preference over the intermediate in- cumbrancer, with great deference I do not find, that the pas- sage cited supports the doctrine ; and it seems contrary to the passages already cited. There are other passages in the code, on the subject of a subsequent mortgagee acquiring the rights of a first mortgagee, by paying his mortgage, and thereby confirming his own title by substitution. But it appears to me, that they do no more than subrogate the subsequent mortgagee to all the rights of the fiirst mortgagee, and that they do not enlarge those rights. Dr. Brown, too, insists, that a mortgagee might tack another incumbrance to his mortgage ; and if he lent more money by way of a fur- ther charge on the*estate, he was in the Civil Law preferred, as to this charge also, before a mortgage created in the inter- mediate time. He cites the Dig. lib. 20, &c., which does not (as has been already stated) seem to support the conclu- sion." 23. The following decisions relate more especially to the right of tacking, as between the mortgagee ami mortgagor themselves ; some of them being cases of different mortgages between the same parties, Avhere a part of the securities were defective ; and others, cases of independent claims, not se- cured by mortgage, in favor of the mortgagee against the mortgagor. 24. In Purefoy v. Purefoy,^ it was stated by counsel as clear law, and not denied by the Court, that if a biU was brought to redeem two mortgages, and more money lent upon one of them than the estate was Avorth, the plaintiff" should not elect to redeem one, and leave the heavier one 1 1 Vera. 29. 272 THE LAW OF MORTGAGES. [CH. XII. unredeemed, but should take both or none. So, in Shuttle- worth V. Laycock,^ it is said : — " If there are two mortgages, and one is defective, if the mortgagor will redeem, he must take both." So, in Margrave v. Le Hooke,^ a party having made two several mortgages of distinct estates, and died, and his heir claiming one of them as tenant in tail, and filing a bill to redeem the other ; held, he should redeem both or neither. So, in Pope v. Onslow," the assignee of a bankrupt filed a bill to redeem a mortgage of a manor, made by the bankrupt. The answer alleged, that the defendant first lent the bankrupt <£200 on mortgage of a particular ten- ement, and afterwards £300 on the manor, which was of better value than the money due, and that the first mortgage was deficient in value. Held, the plaintiff could not redeem one without redeeming both. 25. In Ex jjccrte King,* Lord Hardwicke questioned the decision in Pope v. Onslow, as inaccurately reported. But in Titley v. Davis,''^ the same Judge held, that a purchaser of one of two mortgaged estates must redeem both estates, even as to the debt of a second mortgagee of the other estate, who liad filed a bill to redeem the first mortgage after the sale. 26. In Roe ik Soley,*^ the assignee of a bankrupt moved to stay proceedings, on payment of principal, interest, and costs, due upon the mortgage in question ; but it was objected, that the mortgagee held two other mortgages of other prem- ises made by the bankrupt ; whereupon the Court refused to order a redem})tion upon the terms above stated, and dis- charged the ryle with costs. 27. In Demainbray v. Metcalf," it is laid down, that if a sum of money be secured by mortgage, the mortgagor would not be admitted to redeem after the day of payment was elapsed, without also paying all that was due to the mortgagee on notes or sim})le contract. But Mr. Coote is of 1 1 Vci-n. 245. - 2 Verii. 2n7. ^ 2 A'crn. 28G. ■• 1 Atk. 300. (i 2 Y. .t C. N. K. 39'J. •^2 151. 72G. " IV. Ch. 421. CH. XII.] ESTATE OF THE MORTGAGEE. — TACKIXG, ETC. 273 opinion, that prior to St. 3 & 4 Will. 4, a mortgagee could not have tacked a mere simple contract debt against a mort- gagor ; but since the passing of that statute, that a simple contract debt may be tacked against the heir or devisee, where there is not a devise for payment of debts.^ 28. In the case of Cator v. Charlton,^ Stokes mortgaged to Charlton for £1,400. Afterwards Charlton advanced, at different times, several other sums, and different premises were added, and made redeemable on payment of X 1,900 and interest. These securities were registered ; and after- wards the mortgagor assigned to the plaintiff the premises first mortgaged. The defendant, the mortgagee, admitted that there was no agreement that the first premises should be security for more than <£1,400 and interest, but claimed that the plaintiff could not redeem without paying the whole sum due ; and it was decreed a,ccordingly. The same doc- trine was held in the case of Collett v. JMunden, and Jones v. Smith.-^ And in Ireson v. Denn,^ the Master of the Rolls said, he did not know why such a rule was ever adopted, but it had been in many cases ; and he proceeded to decree accordingly. 29. The rule, however, has been severely criticized and somewhat qualified in recent cases. Thus, in the case of Hooper, ex parte,^ Hopkins demised to Ford for years, by indentures of mortgage, subject to redemption on payment of <£400. Ford afterwards made further advances, and, by an account stated, a further sum of X400 appeared to be due him. He died, and Hopkins became bankrupt. The petition of the executors of Ford, alleging that it was under- stood and agreed, that the second sum of £400 should be tacked, and a further mortgage executed for that sum, prayed a sale of the premises, and an application of the pro- ceeds to the payment of both sums. Lord Eldon, after remarking upon the general subject of mortgaging by a mere 1 Coote, 471, 472. = ii,_ 463. 3 ii,_ 459. < 2 Cox, 425. 5l9Ves. 477. 274 THE LAW OF MORTGAGES. [CE. XII. deposit of title-deeds, proceeds to say : ^ — "I have more doubt upon my own decision, the addition of a second ad- vance ; but I put that upon the very ground, that the rede- livery of the deed is an idle ceremony,; if the original de- posit is continued with an agreement for a further advance, that will do. I speak with doubt upon this ; as the practice of conveyancers has always been, and the law is, that an original mortgage, vesting the legal estate by a contract in writing, cannot be added to by parol. There never was a case, where a man, having taken a mortgage by a legal con- veyance, was afterwards permitted to hold that estate as fur- ther charged, not by a legal contract, but by inference from the possession of the deed. The other cases have gone far enough, indeed too far ; and I will not add to their au- thority, where there are circumstances distinguishing the case before me." 30. The defendant mortgaged freehold and copyhold es- tates, and certain drainage bonds to the plaintiff, and by the same deed his daughters mortgaged their freehold and copy- hold estates, to secure £6,000 lent by the plaintiff to the defendant, the deed declaring, that without prejudice to any of the rights or remedies of the plaintiff, his heirs, &c., as between the defendant, his heirs, &c., on the one hand, and the daughters, their heirs, &c., on the other, the defendant, his heirs, &c., and his estates described in the mortgage, should be primarily liable for the £6,000. Some years afterwards, the defendant mortgaged the same estates to the plaintiff to secure another loan. Held, the plaintiff could not, as against the daughters, tack the second to the first mortgage, but they might redeem on payment of the £6,000.2 31. In White /;. Hillacre,^ James Hillacre mortgaged Madgeon for years, to Chane, for £'300. In 1808, by an indenture, to which the mortgagor was party, the mortgage 1 19 Ves. 477 :i. 470, " 3 Y. & Coll. (Kxc.) 597. ■-i Jiuwker 1-. IJiill, I Sim. (New,) 29. CH.-XII.l ESTATE OF THE MORTGAGEE. TACKING, ETC. 275 • was assigned to Clark. The mortgagor died, devising his estate (subject to the mortgage and other charges,) to Thomas Hillacre. Thomas also owned Westhay, and in 1812 mortgaged it for a term to Clitsome, as security for a bond for £1,800, and died in 1815, owning the equity of redemption in Madgeon and Westhay ; and having devised the estates to different persons. In 1816, Clark assigns to Clitsome the Madgeon mortgage. Clitsome having died, the plaintiff, her executor in trust, files a bill in equity against Henry Hillacre, a devisee of Thomas, his children and others, charging that the indentures of 1808 were exe- cuted with the defendant's approbation, and that Clitsome subsequently held Madgeon as security both for the balance of the £1,800 mortgage due at the time of the sale of West- hay, and for the £500 debt secured by Madgeon, and pray- ing for an account, and that, in default of payment, Mad- geon might be sold, and the proceeds applied, first to the £500 debt, and then to the Westhay mortgage. Held, the plaintiff had not the right of tacking, as the equity of re- demption belonged to different persons, who became entitled under the will of Thomas, before the Madgeon mortgage was assigned to Clitsome ; and^fcence the plaintiff, the repre- sentative of Clitsome, could not hold the Madgeon security, for the balance of the Westhay debt. 32. From an examination of these cases, it may be in- ferred that if two or more distinct mortgages be made of different estates between the same parties, or if money be advanced on one estate, and otiiers afterwards made a secu- rity for such money and for further advances, neither the mortgagor nor any one claiming one of the estates under him can redeem one mortgage alone. But this rule applies only where the parties are the same, or those claiming under the same ; for if two join in a mortgage of one estate, and afterwards one of them mortgage another estate to the same mortgagee for a different sum, still the other and those claiming under him may redeem the former without the 276 THE LAW OF MORTGAGES. [CH. KJI. latter. So, if the owners of two separate estates join in a mortgage of both estates, and one afterwards mortgages the former to the same party for a different sum, the other may redeem on payment of the first mortgage debt. 33. As the result of the cases, Judge Story states the law to be, that " Where a mortgagee has two mortgages on dif- ferent estates, separately mortgaged to him by the mortga- gor, and one of them is a deficient security for the debt, and the other is more than sufficient, the mortgagor and his heks Avill not be permitted to redeem one, without redeeming the other. And if the equity of redemption of one of the estates be sold, the purchaser will not be permitted to redeem that estate (if the mortgage has become absolute at law,) without redeeming both mortgages. The ground of this doctrine is, that he who seeks equity must do equity ; and a court of equity will not assist any person in depriving a mortgagee of any security which he would have against the mortga- gor.." ' 34. With regard to the right of bringing independent accounts between the parties into the redemption of a mort- gage, it is said, that if the right to the equity of redemption is in dispute, a tender will i^ stop the interest. If there is an open account between the parties, and a balance due the mortgagor ; a tender of the sum due, after deducting suqh balance, will not stop the interest or prevent the mortgagee's recovering costs.'^ 35. From what has been already stated, it may be inferred as a general principle, that tacking is not allowed, except in favor of a bond fide purchaser, without notice of the prior incumbrance, when he took his original security. Hence the doctrine of tacking is not to be regarded as a rule of Amer- ican law, as against mesne incumbrances du/i/ reg-istered ; because the registry acts are held not only to be constructive notice, but tlie acts themselves, in cU'ect, declare the priority 1 btory'.s E<[. § 1U2.'5, n. ^ Cootc, 513, 514. CII. XII.] ESTATE OF THE MORTGAGEE. TACKING, ETC. 277 to be fixed by the registration.^ It is said : — " The doctrine of tacking is not admissible in our courts, it being inconsistent with the statute providing for the registry of deeds, which establishes a different principle of priority, and also the stat- ute which prescribes the terms on which the mortgagor is entitled to redeem." ~ 36. Even as between the parties themselves, the doctrine of extending the lien of a mortgage to other claims than those expressly agreed to be thus secured, or of imposing upon the mortgagor, as a condition of redemption, the pay- ment of all debts due from him to the mortgagee ; has been held not to prevail in the United States. More especially is this the case in a court of law, and where a legal process is brought to enforce the mortgage." (d) 1 1 Storv's Eq. § 421, n. ; 1 Hill, R. P. Err. 112 ; Bank, &c. v. Finch, 3 Barb. 400. SceSiterj;.McClanachan,2GriUt. Cli. 298. 280; Brown v. Wright, 4 Yerg. G6 ; -Per Wilde, J., Peabody v. Patten, Grant v. Bissett, 1 Gaines's Gas. in 2 Pick. 520. (d) The doctrine of tacking is said to have been first attacked and ex- ploded in the case of Grant v. The U. S. Bank, (1 Gaines's Gas. in Err. 112,) in which General Hamilton made a celebi-ated argument against it. It ap- pears to have been recognized in the case of Robertson v. Campbell, 2 Call, (Vir.) 362. But see Colquhoun v. Atkinson, 6 Munf. 5o0. ' Mortgage to secure a money bond. To a suit for foreclosure, the defend- ants answered, that the bond and mortgage were made, to secure judgments in favor of third persons against the mortgagor, assigned to the mortgagee, ■which had since been satisfied by execution sales of other property of the mortgagor. Proofs were taken in support of the defence, and the plaintiff then offered evidence of payments made by him for the mortgagor since the date of the bond and mortgage, and other judgments against the mortgagor, since assigned to the mortgagee. Held, under the pleadings, the plaintiff could not have a decree for a sale to raise the latter sums. Hopper c. Sisco, 1 Halst. Ch. 343. Two mortgages, and a subsequent judgment against the mortgagor in favor of the first mortgagee, who purchased the equity of redemption at a sale under the judgment, and brings a bill against.the second mortgagee to foreclose. Held, he could not require payment of the judgment. M'Kinstry v. Mervin, 3 Johns. Ch. 4G6; ace. Burnett v. Dennison, 5, 35; Tanner i'. Wells, 8 Ham. 13G. VOL. I. 24 278 THE LAW OF MORTGAGES. [CH. XII. 37. In Darrow v. Kelly ,i the mortgagor became indebted to an assignee of the mortgage, on other accounts than the mortgage debt. In a scire facias upon the mortgage, it was contended for the plaintiif, that the mortgage should stand as security for the mortgagor's whole indebtedness to him ; but the Court (Shippen, President) held, that being a court of law, they could not assume chancery powers ; that they had no authority to foreclose the equity of redemption, or to impose terms upon a mortgagor applying to redeem ; but must be strictly governed by the act of the legislature which established this remedy. " This act expressly confines the remedy of the mortgagee to the recovery of the principal and interest due on the mortgage ; and the proceedings under the law show the uniform construction of it. The scire facias is to show cause w^hy the land should not be ^old for pay- ment of the principal and interest due on the mortgage. When judgment is obtained, the levari facias is to levy the principal and interest money only. There is no penalty, no judgment for a penalty, and we might as well refuse to stay proceed- ings in a suit on a single bill, till a subsequent debt was dis- charged, as in this case of a mortgage." ^ 38. It has been held in Massachusetts, that a subsequent mortgagee, upon a bill in equity, shall be allowed to redeem a prior mortgage, by paying the sum due thereon, though the defendant has another claim upon the property, subject to the plaintiff's mortgage ; unless the defendant files a cross- bill to redeem the subsequent mortgage.^ The Court re- mark :^ — " The defendants' title under the mortgages made prior to the plaintiff's mortgage, and their title to the equity under Congdon by a conveyance from him subsequent to the plaintiff's mortgage, cannot merge so as to defeat the plaintiff's tille." 39. Upon the same principle, and for a stronger reason, any payment made uj)oii Ww mortgage cannot be applied by the mortgagee to other claims. 1 Divll. 142. " Orecn v. Tanner, 8 Met. 411. 2 Ibid. 145. •• Ibid. p. 423. CH. Xn.] ESTATE OF THE MORTGAGEE. TACKING, ETC. 279 40. In the case of Hicks v. Bingham,^ Pepooii mortgaged the demanded premises, with another tract, to the defendant, to secure five notes ; and the equity of redemption came into the hands of the plaintiff. Pepoon afterwards assigned the other tract to Willard, and the defendant subsequently re- leased it to Willard, and immediately afterwards entered upon the demanded premises for breach of condition, and had remained in possession ever since. The plaintiff afterwards paid to the defendant certain sums of money, which, with the amount paid by Willard and the rents of the estates, were alleged to cover the mortgage debt. Upon a bill in equity to redeem, the question was, whether the defendant was bound to apply the sum paid by Willard to the mort- gage debt, or had a right to apply it to other claims against Pepoon. It was held, that it must be applied to the mortgage, having been received in consequence of the mortgage, and for a release of a part of the mortgaged premises. 40 a. In Loring v. Cooke,^ the plaintiff brought a biU to redeem an equity of redemption sold on execution ; and the defendant in his answer stated, that the plaintiff owed him other sums of money, that he was insolvent, and that the defendant purchased the equity merely that he might obtain satisfaction of some of those debts, and submitted that the Court would not decree a reconveyance without payment of the balance due him. W^ilde, J., says : — "It is very clear that the plaintiff is entitled to redeem on the repayment of the purchase-money and the interest. The right is ex- pressly given by statute, and cannot be charged with other independent demands, according to the doctrine of tacking as adopted by the English courts of equity." 40 b. A person borrowed money, and secured his indorsers by a deed of trust. He afterwards borrowed money with the same indorsers, applied it in part payment of the for- mer debt, and died. Held, the dower of the widow was chargeable with the unpaid balance in the deed of trust. Ml Mass. 300. - 3 Pick. 48. 280 THE LAW OF MORTGAGES. [CH, XII. but the indorsers could not tack to the deed the subsequent debt.i 40 c. Mortgage to A. from B., dated in 1795. C. became assignee of a lien on the land, created by B. in 1802. Sub- sequently, A. obtained a decree for an alleged balance due on his mortgage. C. obtained an injunction against the decree, alleging that the debt was wholly or nearly paid, in answer to which A. relied on other advances made on the faith of the mortgage. Held, such advances upon simple contract on land could not be tacked to the prejudice of C.^ 40 d. In Illinois, a subsequent mortgagee has priority of advances made by the former mortgagee, having notice of the second mortgage.'^ 41. So, in Vermont, it is held, that where the assignee of a mortgage which has become due, brings an action upon it, and holds another one which was not due at the commence- ment of suit ; the mortgagee may redeem upon payment of the former.* 42. In some of the States, however, the doctrine of the English law seems to have been adopted or recognized. Thus in Connecticut, in the case of Scripture v. Johnson,^ the plaintiff mortgaged to secure a note for fifty dollars. The note and mortgage were assigned, and the assignee brought ejectment against the plaintiff, recovered judgment, and took possession under an execution. The plaintiff was also indebted to another person by bond, who brought a suit upon it, and recovered judgment and execution, and assigned the execution to the assignee of the mortgage. The assignee levied the execution upon the mortgaged premises by ap- praisement in tlie name of the original obligee, who trans- ferred the title to the assignee. The plaintiff brings a bill to redeem the mortgage. The Court say:'^ — "There is no doubt as to the right of the plaintiff to redeem the whole of 1 Grccr v. Cijcstcr, 7 Ilimipli. 77. '* Lanison v. Sutherland,! .'5 Verm. 309. - llu;:lie.s v. Worlcy, \Vi\,\). noo. JJiit ''' .'5 C"oiiii. 1211. SCO l^owiiin;; v. riilinateer, I Moiir. G4. " Ibid. 21.3. " Fryc V. Uaiik, &c., 11 111. 3(37. CII. XII.] ESTATE OF THE MORTGAGEE. TACKING, ETC. 281 the premises mortgaged ; but as he who will have equity- must do equity, it must be on condition not only of paying the sum charged upon the land,, but the debt collaterally due to the mortgagee." 43. So it has been said by the same Court : — " Whenever he (the mortgagor) brings a bill to redeem, the rule, that he who seeks equity must first do equity, will be applied. And hence it is, that if the mortgagor owe a collateral debt to the mortgagee, he will not be entitled to redeem, without paying such debt, as well as that secured by the mortgage." ^ 44. And in the same case ^ it was held, in analogy to the doctrine of tacking, and upon the general principle, that he who seeks equity must first do equity ; that an execution creditor of the mortgagor should not be allowed to redeem, where his claim was founded upon the accidental omission of the word heirs, in a trust conveyance from the mortgagor, and the consequent alleged transfer of only a life estate in- stead of a fee by such deed. 45. So, in a late case, it is held, that a mortgagee may take another mortgage, which will be valid against an intervening incumbrance implied by equity, of which he had neither actual nor implied notice ; like that of a surety in the note secured by the first mortgage, where the note is in form a joint and several one.^ 46. In Maryland it is held, that, "if a mortgagor goes into chancery to redeem, upon the axiom^ of equity above mentioned," (that he who seeks equity must do equity, and a multiplication or circuity of action should be avoided,) " he will not be permitted to do so, but upon payment not only of the mortgage debt, but of all other debts due from him to the mortgagee. But if the mortgagee seek a foreclosure in chancery, the mortgagor will be permitted to redeem upon payment of the mortgage debt only, no matter to what amount, on other accounts, he may stand indebted to the 1 Chamberlain r. Tliompson, 10 Conn. ^ Orvis v. Newell, 17 Conn. 97. But 251. see Osboni v. Carr, 12 Conn. 195. - 10 Conn. 251. 24* 282 THE LAW OF MORTGAGES. [CH. XII. mortgagee. And if a subsequent mortgagee or judgment creditor file a bill to redeem, he will be permitted to do so upon the payment of the m.ortgage debt alone," ^ 47. In Coombs v. Jordan,^ Bland, Chancellor, says: — " Where a mortgagee has made further advances to the mortgagor, and taken his bond, binding himself and his heirs to secure payment, the mortgagee may tack such bond debt to his mortgage as against the heir or devisee of the mortgagor, who shall not be allowed to redeem without pay- ing the bond as well as the mortgage debt. This, however, is solely a matter of arrangement to prevent circuity of suits ; for, in natural justice, the claim has no foundation. But this tacking of the bond debt to the mortgage is never allowed, in any case, to the prejudice of creditors, whose claims as to the bond debt, are of equal degree." (e) 47 a. So, in Virginia, a married woman having, under a power in a marriage settlement, given a m.ortgage on her separate estate, to secure a debt which she had contracted, afterwards obtained a further loan from the mortgagee. Upon a bill filed by her trustee to redeem, held, she must pay the latter debt if the interest of third persons was not affected.^ 47 h. So, in Ohio, purchased lands, sold under a decree to satisfy a mortgage, for a sum exceeding the amount decreed. Held, he might apply the surplus in his hands to the redemp- tion of an elder niortgage.^ 47 c. So, in South Carolina, where a mortgagor comes into equity to redeem, and the mortgage would not be treated as such at law ; he must pay all that is due the mortgagee, on any account, in order to redeem.'' 1 Per Dorscv, J. Lee i". Stone, 5 G. '^ Woodson v. I'erkins, 5 Gratt. 345. 6 Johns. 21-22; Chase v. M'Donald, * Cowlcs v. Ra-riict, 14 Ohio. .38. 7 liar. &J., IGO. '^ Walling i-. Aikin, 1 McMul. Ch. 1. - 3 Bland, 330. (c) A statute of this State provides, that a mortgage is valid only for what appears upon the face of it. Md. L. 825. CH. XII.] ESTATE OF THE MORTOAGEE. TACKIXG, ETC. 283 47 d. So, in Kentucky, in order to redeem, it is held that the mortgagor must pay all equitable as well as legal claims against him, and must, therefore, pay subsequent advances made by the mortgagee.^ 48. Upon this subject, Mr. Greenleaf makes the following remarks : — • 49. " The doctrine of tacking, though now established in England, is there taken wdth this most important qualifica- tion, that the party who seeks to avail himself of it is a bond fide purchaser, without notice of the prior incumbrance, at the time when he took his original security ; for if he then had such notice, he has not the slightest claim to the protection or assistance of a court of equity." ^ 50. He proceeds further to remark as follows, with more particular reference to the application of the doctrine of tack- ing in the case of heirs, who, by the EngKsh law, are directly bound by the bond debts of the ancestor : — 51. " In the settlement of estates, it is a cardinal rule of American law, that all the property of the deceased is charged as a trust fund for the payment of his debts. The personalty is first to be exhausted, after which the executor, on applica- tion to the proper court, obtains ficense to sell all or so much of the real estate as may be necessary to pay the remaining debts ; the proceedings being regulated by statutes. Ordi- narily, therefore, remedy can be had in the first instance, only against the executor or administrator ; the heir being liable only in regard to those debts, for which no action could have been had against the personal representatives within the period mentioned in the statutes limiting such actions. Royce r. BurneH, 12 Mass. 395 ; Webber v. Webber, 7 Greenl. 127. The land descends to the heir, upon the death of the ancestor ; his title being liable to be divested by a sale by the executor or administrator, as above stated. Gibson r. Farley, 16 Mass. 280. If he should apply to redeem a mort- 1 Reed v. Lan-^dalc, Hardin, 6 ; Ogle - 2 Greenl. Cruise, 141, n. V. Ship, 1 A. K. :Mar. 287 ; Nelson v. Boyce, 7 J. J. :Mar. 401. 284 THE LAW OF MORTGAGES. [CII. XII. gage of his ancestor, in those States in which statute pro- visions exist, entitling the mortgagor to redeem on payment of the mortgage-money, it is conceived that the doctrine in the text (to wit, that the heir of the mortgagor cannot redeem a mortgage made by the ancestor, without paying off the money due upon a bond, for another debt) could not be ap- plied to his case. But in all other cases, where the redemp- tion of the land would immediately constitute it assets in the hands of the heir, in respect to Vi^hich he would be liable to the same creditor on the obligation of his ancestor, the prin- ciple in the text, of avoiding circuity of action, would doubt- less be applied by a court of equity here, as in England." ^ 52. The same writer further remarks : — " In all the cases on the subject of tacking, it is to be observed, that there is a broad distinction taken between a bill to redeem and a bill to foreclose a mortgage. In the former case, redemption being asked for on equitable grounds alone, the rule, that he who would have equity must do equity, applies, and tacking is allowed. But in a bill to foreclose a mortgage, the cred- itor applies on the ground of the mortgage debt alone." ^ 53. Somewhat analogous to the practice of tacking, is the right of a mortgagee to hold his mortgage as security for advances or liabilities, made or incurred subsequently to the date of the mortgage, but by virtue of an express provision contained therein, or an express agreement concurrent there- with. It is this last circumstance, which constitutes the fundamental distinction between these two rights and privi- leges of a mortgagee ; tacking being wholly founded in a construction of equity, while the right to hold land mortgaged as security for future demands, rests entirely upon the agree- ment of the parties. (/) The general principle is said to be, 1 2 Grccnl. Cruise, 142, n. 1 ; Elvy v. " 2 Grcenl. Cruise, 147, n. 1. Korwood, 11 Eng. Law & Eq. 224. {/) Sec Chase v. M'Donald, 7 liar. & J. IGO. en. XII.] ESTATE OF THE MORTGAGEE. TACKIXG, ETC. 285 that subsequent advances cannot be tacked to a junior mort- gage, to the prejudice of a bond fide junior incumbrancer ; but a mortgage is always good to secure future loans, where there is no intervening equity. In other \vord.s, where a mort- gage is expressly made to cover future debts, those debts will be secured by it, in preference to the claim of a third person, who takes another mortgage between the making of the first and the incurring of the proposed future debts, with notice, express or implied, of the first mortgage. But a mortgage cannot be enlarged by tacking subsequent advances to it in virtue of a parol agreement ; nor, it seems, under a written contract, unless the subsequent mortgagee has fuU notice of it.' (^) 54. The question, of the validity of a mortgage to cover future advances or liabilities, may arise under several differ- ent aspects. One inquiry is, what language in the deed itself, or what evidence, independent of the deed, is necessary and sufficient to create such a security. There is also a manifest distinction, between the principle of making a mort- gage to be a security for subsequent debts, as between the parties themselves, and that of giving it the same extended operation as against third persons, holding other liens upon the estate. So also the question arises, in connection with such adverse claims, how far the subsequent incumbrancers are bound by the notice arising from registration ; and 1 4 Kent, 175 ; 1 Hillianl, R. V. 401 ; Crowell, 11 N. H. 251 ; McDanicls v. Watson V. Dickens, 12 Sm. & M. G()8 ; Colvin, 16 Verm. 300 ; James ?-. Moi-ey, Craigv.Tappin, 2 Sandf. Ch. 78 ; Quin- 2 Cow. 240; Beekman v. Frost, 18 ebauf,', &c. v. French, 17 Conn. 129; Johns. 544 ; Van Wagner i-. Van Wag- Cootc, 441 : Clark r. Bull, 2 Root, .329; nor, 3 Halst. Ch. 27: Mobile, &c. v. Torrey ?;. Bank, &c. 9 Paige, G49 ; U. Talman, 15 Ala. 472; Whiting r. States V. Hooe, 3 Cranch, 73 ; North v. Beebe, 7 Eng. 421. {cj) Chancellor Kent says, (4 Comni. 13G, n. «,) " In tlie Roman law, the mortgage could be held as a security for further advances. The mortgagee was allowed to tack subsequent debts, in the ease of the mortgagor seeking redemption, though this was not permitted to the extent of impairing the rights of intermediate incumbrancers." 286 THE LAW OF MORTGAGES. [CH, XII. whether the first mortgagee shall hold for advances made after the making and recording of the second mortgage. Most of the cases upon this subject have turned upon the conflicting rights of mortgagees claiming under such a mort- gage, on the one hand, and general creditors of the mortga- gor, alleging that the conveyance was per se invalid or fraudulent, or subsequent mortgagees of the same property, on the other. 55. Upon this subject, the general doctrine has been stated by eminent Judges, as follows : — 56. " The giving collateral security, to indemnify against liabilities to be incurred thereafter, is liable to some suspicion on the ground of fraud ; but there is no objection to such a transaction, if it be explained and proved to be fair." ^ 57. " A mortgage made bond fide for the purpose of secur- ing future debts, expected to be contracted, in the course of dealings between the parties, is a good and valid security." ^ 58. " In many cases, a subject pledged for a debt may be considered as a security for further loans. I see no possible objection to it, if no intervening right exists, to prevent the justness of the application of the rule, and the plaintilT has no such intervening equity. It was a rule of the civil law, as was well shown by the Supreme Court of Massachusetts, in Jarvis v. Rogers, (15 Mass. 389,) that if the debtor pledged property to secure a debt, and afterwards another debt was contracted, the creditor might retain for both debts, provided there was nothing to negative the presumption of an implied contract, that the pledge should be so applied. In the present case, the deed being absolute in its terms, and the defeasance by agreement resting in parol, the application of the deed, as a security for future responsibilities, of whatever kind, becomes more easy and flexible ; and, as between parties, it ' Per Putnam, J.. Gardners. W(M)l)cr, Pet. 448; 2 Cow. 24r); Joll^^:on v. 17 Pick. 414; See Atkitisoii v. JMaliiifr, Bourne, 2 Y. & Coll. 2(58 ; Lyle »•. Du- 2 T. 11. 462 ; Edmonds r. Crenshaw, 1 conili, 5 Binn. 585; Bootli i\ Barnum, McC. CI). 265 ; Hendricks /•. Koliinson, 9 Conn. 280. 2 Jolins. Clia. 283 ; U. States r. llooe, 3 - Per Wilde, ,1., Conunerciul, &c. v. Crancli, 73 : Conard ?>. Atlantic, v<:e. 1 Cunnin;;,'lnim, 24 Pick. 274. CH. XII.] ESTATE OF THE MORTGAGEE. — TACKIXG, ETC. 287 is perfectly plain that it ought to be so held. It is only when the rights of third persons are prejudiced by want of notice, &c., that the extension of the security is prevented." ^(h) 59. In the case of Bank, &c. v. Finch,^ Whittlesey, V. C, says : — "A mortgage may unquestionably be taken and held as a security for future advances and responsibilities ; but it is contended that (the principle) is only applicable when the mortgage upon its face provides for security for future advances and responsibilities. This mortgage is taken to secure $30,000, stated therein to have been paid by the mortgagee to the mortgagor ; and it is recorded for that sum, which is all that the record expresses. If there had been no money actually paid, would the mortgagor be pro- hibited by his signature to the instrument from showing that fact by parol ? If the mortgagee had not advanced the money until three months after the execution of the mort- gage, would he be prohibited from showing this fact by parol ? The parol evidence was admissible, not for the pm-- iPer Kent, Cliancellor, James r. - 3 Barb. Clia. 297, 298. Johnson, 6 Johns. Cha. 429. (//) In Shepard v. Shepard, G Conn. 41, the restriction upon the right to hold property mortgaged, as secnrity for future advances, ■was thus ex- pressed : — " No creditor, on inspecting the record, can know wliether there is any lien on the premises, except eight hundred dollars, nor be furnished ■with any means of information on the subject." There is peculiar ground for suspicion, where the mortgage is really made to secure future advances, but does not purport to be given for that purpose. In such case, strict proof of consideration will be required. Craig r. Tappin, 2 Saudf. Cha. 78. In the same case, such a mortgage was held to be effectual for the amount advanced prior to the second mortgage, though the first mortgagee knew of the mortgagor's intention to make the second mortgage, to secure a pre- existing debt; but not for advances made subsequent to the second mort- gage. It is held in Illinois, that a mortgage, taken to secure future advances, is valid, although it does not show upon its face the real character of the transaction. In such a case, the mortgagee can only recover the amount actually due at the date of the sale of the equity of redemption. Collins v. Carlllc, 13 111. 254. 288 THE LAW OF MORTGAGES. [CH. XII. pose of explaining the written instrument, but for the purpose of establishing the fact, that credit had been given to Finch, upon the several discounts for him on the faith of the mort- gage. Here is a mortgage, the record of which is notice to all of an incumbrance to the extent of ^30,000. The holder of that mortgage may advance upon it up to that amount, and may be secure in his lien to the extent of his advances within that amount ; such having been the agreement be- tween himself and the mortgagor; unless indeed this lien should be affected by the equities of subsequent incum- brancers or grantees, attaching previous to any advance." 60. As examples of the general principle above stated, it has been held that a mortgage of this description may be given to secure future advances, or as a general security for future balances ; and this security may be taken in the form of a mortgage for a specific sum, sufficient to cover the float- ing debt intended to be secured.' So, when mortgagees have indorsed bills in blank, and taken the mortgage as an indemnity, it is not affected by subsequent mortgages, though made before the bills are put in circulation.^ Thus a mort- gage to indemnify indorsers in three bills of exchange for $4,000 each, indorsed in blank, and delivered to the mort- gagor to raise funds with, is valid.'^ So, a deed of trust or mortgage, to indemnify the sureties of an executor, will be upheld at law while the liability continues.'^ So, a mort- gage, to indemnify the mortgagee against future indorse- ments for the mortgagor, is good against a judgment recov- ered after such indorsements;'' (i) 1 Bank, &c. v. Finch, 3 Barb. Cli. =' H.id. 29.3. ■* Hawkins v. May, 12 Alab. 673. - Burdctt V. Clay, 8 B. Mon. 287. & Kramer v. Bank, &c. 15 Ohio, 253. (/) It is hold in Virjiinia, that a mortgage to secure all debts due, and all suretyships of the mortgagee for the mortgagor, shall be a valid security for lial^Ilitics exii^tiiig (il Ike timf:. Vatineter v. Vanneter, 3 Gratt. 148. So, in Oliio, where a mortgage contains a provision to secure future advances, a second mortgage will have precedence, to tlie extent of all advances made after it is recorded. S^jader u. Lawler, 17 Ohio, 371. CH. XII.] ESTATE OF THE MORTGAGEE. — TACKING, ETC. 289 61. Mortgage to secure " also what I may owe him on book." At the maldng of the mortgage, there was no sub- sisting account between the parties. Held, the condition must apply to future accruing accounts.^ 62. In Melland v. Gray ,2 a bond and mortgage were made by an only son to his father, nominally to secure a certain sum of money. It was decided, however, upon the facts and circumstances of the case, — the son having been a young man, just entering the army, and the father having lived more than fifteen years, and not being proved to have demanded or received any interest, but during the whole time having maintained the son, — that the bond should be taken as a running security, and the son charged only for the amount admitted by him to have been received, in the absence of other evidence. 63. A statute of New Hampshire provides, (in substance,) that a mortgage shall stand as security, only for such claims as are expressly stated therein. In the case of New Hamp- shire Bank v. 'Willard,^ on the 16th of August, 1836, a mort- gage was made by the defendant, conditioned to pay the plaintiff $5,000 on or before August 16, 1838, on payment of which " this deed, as also a certain bond," &c., " shall be void." The condition of the bond was to pay to the bank all discounts of the mortgagor on " notes, &c., made, &c., on or before August 16, 1838," or which being now made, &c., shall before said day be discounted by said bank ; and in- demnify the bank against all damages, &c., arising there- from. At the making of the mortgage, the plaintiffs held a note for $6,200 signed by the defendant and another, which had been discounted for them. September 3, 1836,'the de- fendant gave his note to the bank for $3,100, being his half of the other note ; and the other maker also secured his part of the note, which was given up. August 16, 1838, the de- fendant was indebted to the plaintiffs upon several notes 1 McDanicls r. Colvin. IG Verm. 300. ^ iq N. H. 210. 2 2 Y. & Coll. 199. VOL. I. 25 290 THE. LAW OF MORTGAGES. [CH. XII. made subsequent fo the mortgage. Held, the mortgage stood as security for the new note of $3,100, but not for the subsequent notes ; the statutory provision against subsequent liabilities applying as well between the mortgagee and mort- gagor, as in reference to third persons. 64. In Leeds v. Cameron,^ it was contended, that the com- mon law had been changed in Ncav Hampshire by the fol- lowing legislative provision (being the same above referred to, sect. 63,) — " no title, &c., shall be incumbered by any agreement, unless such agreement or writing of defeasance shall be inserted in the condition of said conveyance and be- come part thereof, stating the sum or sums of money to be secured, or other thing or things to be performed." In this case, the condition was to pay " all sums which now are or may be owing to, &c., from, &c., on account or otherwise," with interest. The mortgage also secured certain specified notes. It was held by Story, J., that such was not the operation of the act in question. He says : ^ — "If we were to give to these words the restricted construction contended for, the statute would defeat all mortgages, given as indem- nity ; — for it could not appear in certainty upon such mort- gages, what loss or injury the surety or other person would sustain. So, if a father should receive from a son a mort- gage to provide suitable maintenance during his life, the conveyance would be void; no mortgage would be good, given to secure all debts due to the mortgagee, or indeed any debt the amount of which was not specifically ascertained and stated. The whole language is perfectly satisfied, by considering it to require the nature and extent of the claim to be so' far set forth, as to leave no doubt as to its identity ; to require that all mortgages should be in wi'iting, as it would enable creditors in all cases to ascertain whether an estate granted was absolute or conditional, and would cut off many of the temptations to create secret, undefined trusts, or fraudulent and collusive securities." In the same case, 1 3 Sumn. 492. 2 ji,. 490^ 493. CH. XII.] ESTATE OF THE MORTGAGEE. — TACKING, ETC. 291 however, it was further held, that this statute avoids all mort- gages for the payment or security of any moneys or other things, which were not a matter of right and positive obliga- tion between the parties at the time of the mortgage ; and that a mere provision for prospective advances or accounts, resting in the discretion of the parties or either of them, could not be thus secured. 65. In Gordon v. Graham,^ a mortgage was made to secure a sum already lent, and all sums which should afterwards be lent or advanced. The mortgagor then made a second mortgage, to one having notice of the first, and the first mortgagee, having notice of the second mortgage, advanced a further sum. Lord Cowper decreed, that the second mort- gagee should not redeem, without paying the whole sum ad- vanced by the first mortgagee ; saying, " it was the folly of the second mortgagee with notice to take such security." 66. A mortgage dated on the 18th of May contained the following proviso : — " Whereas the mortgagee has indorsed for the mortgagor a note for $1,000, and has agreed to in- dorse $1,000 in a note or notes hereafter, when thereto re- quested," if the mortgagor shall pay said notes, the deed to be void. On the 16th of June, the mortgagee indorsed a note for the mortgagor for $1,000, and was afterwards com- pelled to pay it. In November, the mortgagor made another mortgage to a bond fide creditor, against whom the former mortgagee brings a bill for foreclosure. Held, the former mortgage was a valid security for the second note.^ 67. In the case of Crane v. Dewing,-^ a mortgage was con- ditioned, that if the mortgagor shall pay the mortgagee the sums to be advanced by the latter, according to an agree- ment mentioned in a certain bond of even date from the mortgagor to the mortgagee ; and fulfil every other agree- ment mentioned in said bond, and build the bridge therein mentioned, and do all other things contained therein ; the 1 7 Vin. 52 E. Tl. 3 ; 2 Eq. Cas. Abr. -^ Hubbard v. Savage, 8 Conn. 215. 598. ^ 7 Conn. 387. 292 THE LAW OF MORTGAGES. [CH. XII. deed and bond to be void. After a second mortgage to another person, advances were made by the first mortgagee to the mortgagor. Held, the mortgage should stand as security for such advances, 67 a. Mortgages, from parties in failing circumstances, to secure the mortgagee for certain liabilities ; the conditions setting forth, that the mortgagee was accommodation in- dorser and signer for the mortgagors on sundry notes, drafts, and bills of theirs to the amount of $50,000, which were then maturing ; of which they could not give a particular description, but which it belonged to them to pay and meet. When the mortgages were made, it was necessary, for the mortgagees' security, that they should be given immediately, and before the notes, &c., could be more accurately de- scribed ; they not being then in possession of either of the parties. Held, the mortgages were not void for uncertainty, but were valid against subsequent incumbrancers.' 67 b. Mortgage to two partners, to secure a claim " on book, for goods sold, &c., in about the sum of $5,000," as specified in the deed ; and to another person to secure him as indorser, &c., to the amount of $50,000. The real claim of the partners was $2,505.85 ; and the indorser's liabilities exceeded $50,000. The latter received other securities at the same time, but not equal to tlie amount of his indorse- ments. Held, the partners took pro rata, and only in the proportion of their real claim to $50,000 ; and that their claim was specified with sufficient certainty, as against sub- sequent incumbrancers.^ 67 c. In September, 1846, the defendant took a mortgage to secure certain notes. The mortgagor, to secure a note of $200, made a subsequent mortgage to the plaintiff, dated January 17, 1848, but delivered and accepted January 18th. Before the 18th the mortgagor was not indebted to the plaintiff", but the securities were given and taken under an agreement that the plaintiff" should open an account with ' Lewis V. Do Forest, 20 Conn. 427. '^ lb. en. XII.] ESTATE OF THE MORTGAGEE. — TACKING. ETC. 293 the mortgagor, and sell him goods, and that the latter should make payments which would keep the amount due not more than $200. An account Avas immediately opened, and goods sold to the amount of ^103. The account continued about nine months, the balance, at the closing of it, being $180, with interest, and having never equalled $200. After the second mortgage, the mortgagor conveyed his equity of redemption to the defendant, who gave up the mortgage notes. The plaintiff brings a bill to redeem. Held, the plaintiff's mortgage took effect' from the delivery ; that the securities given to the plaintiff, and the sale of goods made at that time, constituted parts of one transaction ; that the condition of that mortgage was truly expressed, and with sufficient certainty ; that the defendant did not stand as a purchaser for valuable consideration, but as a mortgagee, with the equity of the mortgagor in the first mortgage ex- tinguished, giving the plaintiff, whose right was unimpaired, a title to redeem ; and that the defendant had no equity superior to that of the plaintifiV 68. Mortgage, conditioned nominally upon the payment of a certain sum, but really to secure different sums then due, proposed subsequent advances, and liabilities to be in- curred to an uncertain amount. It appeared that there was no fraud in the transaction. Held, although the incorrect statement of the true condition rendered the mortgage sus- picious, yet, being proved fair, it should stand as security for all advances made upon the faith of it, as against all persons who were not injured and deceived by the misrepresentation; but not for advances made after notice of a subsequent con- veyance by, or incumbrance against, the mortgagor.^ 69. A_^ mortgage was made to secure a note, given by the mortgagor for the full amount of a debt due the mortgagee, and of the liability of the latter for the former as a surety. The next day, before any payment by the mortgagee as surety, the mortgagor assigned his property for benefit of 1 Mix r. Cowlcs, 20 Conn. 420. - Shirras v. Cai^', 7 Cranch, 34, 50-51. 25* 294 THE LAW OF MOKTQAGES. [CH. XII. creditors. Held, the mortgage was a valid security for the debt due to the mortgagee.^ 70. Mortgage, conditioned to pay any subsequent account which might accrue from the mortgagor. A second mort- gage having been made of the same premises and duly recorded, held, the first should stand as security for any balance which might become due to the mortgagee, unless he were expressly notified by the second mortgagee of his incumbrance, and that he must make no further advances upon the mortgage.^ 71. In New York, where a judgment may be confessed, as well as a mortgage made, to secure future indebtedness, it has been held, that the judgment shall take precedence of a subsequent mortgage, although the advances be made by the judgment creditor after registration of the mortgage, unless such creditor have actual notice of it. The recording act declares, that every conveyance not recorded shall be void against any subsequent purchaser in good faith and for a valuable consideration, whose conveyance shall be first duly recorded. (2 Rev. Sts. 3d ed. 40.) The record is construc- tive notice to a subsequent purchaser, but in no wise affects a prior purchaser or incumbrancer. It is prospective, not retrospective, in its operation.^ 71 a. A second mortgagee had a judgment, execution, and levy on the land for the mortgage debt ; and it was agreed that he should hold the mortgage and judgment to secure him as a surety on certain notes. Held, he should thus hold them against a subsequent incumbrancer ; and that the holder of the notes was also entitled to the benefit of the security in the same way.* 72. Where a mortgage is made in part to secure future debts, the Court will not interfere in appropriating the pro- ceeds of sale to the prejudice of the mortgagee, and in favor of a surety for the mortgagor. ' Sanford v. Wheeler, l.'J Conn. 1G5. ;?4G ; Stiivvesimt v. Hall, 2 IJarb. Clia. '■^ McDaniels v. Colvin, 16 Verm. -.im. 151. 3 Tniscott I'. King, G Barb. (Sup.j ' Skiilman r Tecplc, Saxt. 232. CH. XII.] ESTATE OF THE MORTGAGEE. — TACKING, ETC. 295 73. Mortgage, to secure payment of all sums then owing, or afterwards to become due, from the mortgagor to the mortgagee, upon any existing or future note, of which the mortgagor might be drawer or indorser. Upon a sale of the premises, the proceeds were insufficient to pay a note, for which there was no security but the mortgage. Held, an accommodation indorser, upon a note discounted after the mortgage, could not require an equal distribution of the fund between both notes. The Court say : — "To this mortgage, Stansbury and the Union Bank alone were parties. Under it, at law, no right was acquired, no interest passed ; upon it no action could be maintained but by the bank. The object of its execution was, not to indemnify drawers or in- dorsers, but to insure to the Union Bank the payment of all notes negotiated by them. 'Tis true, if the fund had been sufficient, those who were on his paper would, in equity, be protected from loss. But this was a consequence, not the design of his act. The attempt to sustain the claim of the appellee by the doctrine of substitution is equally un- tenable. Such relief is never extended to a security, but upon the assumption that the creditor's debt has been or is to be fully paid ; that his further detention of the mortgaged property is against equity and good conscience." ^ 74. In Garber v. Henry ,2 the condition was, to pay " the several sums of money which he may, from time to time, owe, at the times appointed, &c., according to the terms and conditions of an article of agreement," &c., which agreement was not recorded. Held, as the mortgage referred to the agreement, it was not necessary, as against a creditor who recovered a judgment while such agreement remained in force, that it should be recorded with the mortgage ; the reference being sufficient to put him upon inquiry. The case does not distinctly find, whether any part of the goods referred to in the contract were furnished after the judgment 1 Union Bank, &c. v. Edwards,! Gill ^ 6 Watts, 57. & J. 346, 363, 364, 365. 296 THE LAW OF MORTGAGES. [CH. XII. was recovered, but the Court remark:^ — " He has no equity against the mortgagee, as to claims subsisting when the lien of his judgment attached ; " implying that the whole debt was then subsisting. 75. Where one of several partners mortgages his separate property for future advances, to be made to the firm, to a certain amount ; the mortgage security will terminate at the death of any one of the partners, as to any advances not then made, unless the guaranty be clearly intended to be a continuing one.^ 76. The rights of a subsequent mortgagee cannot be prej- udiced by any enlargement of the liability of the mortgagor to the first mortgagee, growing out of the further relation be- tween them of lessor and lessee. 77. In the case of St. Andrew's Church v. Tompkins,^ the defendant purchased land subject to certain leases, and to secure the price gave the plaintiffs three bonds, payable with- out interest, with a mortgage of the land, and also a bond with interest ; for non-payment of which interest the plain- tiffs bring this bill to foreclose. It was agreed in writing, at the time of purchase, that the plaintiffs should receive the rents on the leases instead of interest upon the three bonds, the leases terminating at the times of payment of the bonds. The defendant made a subsequent mortgage, the second mortgagee having no notice of the leases, or of the arrange- ment between the plaintiffs and defendant, above referred to. / Neither the leases, nor any assignment of them, nor the agreement as to the rents, were on record. The lessees con- tinued to occupy and pay rent to the plaintiffs, till they sur- rendered the leases to the defendant, without notice to the plaintiffs, and the defendant paid rent to the plaintiffs, till a short time before the suit. The second mortgagee, until re- cently, knew nothing of the leases, or their surrender. Upon 1 6 Watts, 59. 3 7 Johns. Clia. 14. - Bank, &c. v. Cliri.stic, 8 CI. & Fin. 214. CH. XII.] ESTATE OF THE MORTGAGEE. — TACKING, ETC. 297 a foreclosure and sale of the premises, held, the plaintiffs could not be allowed to enlarge their demand beyond what it appeared upon the record, by receiving interest upon these bonds, in consequence of the arrangement as to rents. The Court say:^ — "The bank is not chargeable with notice of the leases, or of the agreement of the mortgagor to apply the rents to the plaintiffs as a substitute for interest. It is the policy of the registiy act, that a subsequent incumbrancer should be able to ascertain with certainty the extent of the prior incumbrance ; and if moneys not mentioned in the bond or mortgage can be covered by them, when the rights of a subsequent mortgagee are interposed, and to whom no fraud or negligence is to be imputed, it would go to weaken very essentially the value of mortgage security." 1 7 Johns. Ch. 16. 298 THE LAW OF MORTGAGES. [CH. XIII. CHAPTER XIII. ESTATE OF THE MORTGAGEE. SUCCESSIVE MORTGAGES OF THE SAME PROPERTY. RIGHTS OF PARTIES COLLATERALLY INTER- ESTED IN THE MORTGAGED ESTATE. 1. Land subject to mortgages may be further mortgaged. General rights of subsequent mortgagees ; when they be- come entitled to priority, &c. 20. Assignment of a prior mortgage to a subsequent mortgagee ; rights of such mortgagee, upon paying the first mortgage. 24. Equitable application of estates subject to successive mortgages. 31. Rights of parties collaterally lia- ble for debts secured by mortgage ; sure- ties ; subsequent mortgagees. 47. JMortgages of indemnity to sure- ties, &c. 57. Transfer of different estates, sub- ject to one mortgage. Equitable appor- tionment of the mortgage debt. 1. A MORTGAGOR may mortgage his equity of redemption, or, as it is commonly expressed, make a second mortgage of the land, (a) So the right of redeeming any number («) So a mortgagee takes subject to ipr'ior judgment liens; but they do not affect the validity of the mortgage. Fitzgerald v. Beebe, 2 Eng. 311. See Taylor v. Maris, 5 Rawle, 51. Land, subject to the lien of an e.xecu- tion, may be mortgaged; and the mortgagor cannot interfere with the mort- gagee's title, by ordering a sale of more than enough to satisfy the execu- tion. Addison v. Crow, 5 Dana, 279. Conveyance, Avith warranty, of land subject to three mortgages, and also to a judgment prior to the first, of which the grantee had no notice. Upon this judgment an execution was issued, the land sold under it, and purchased by the plaintill", and after- wards from liim by the grantee. Held, the latter took the land discharged of the third mortgage. McCammon r. Worrall, 11 Paige, 09. Where a judgment is docketed against a mortgagor, between the time of giving the mortgage and its foreclosure by advertisement, and aji.fa. issues after fore- closure, upon which the land is sold, and the purchaser tenders to the pur- chaser.under the mortgage sale the amount of the mortgage, with the costs of foreclosure ; the former cannot maintain ejectment against tenants of the latter. Post v. Arnot, 2 Denio, 344. Land being subject to two mortgages, a person advanced money to the mortgagor to pay the second, which was CH. XIII. J SUCCESSIVE MORTGAGES, ETC. 299 of successive mortgages may be mortgaged anew. More numerous and complicated questions in the law of mortgages discharged, and the lender took a new mortgage, the premises l)eing then subject to a judgment against the mortgagor, who had concealed the fact from the lender. Upon a bill to foreclose the first mortgage, the premises ■were sold. Held, that the surplus, after paying the first mortgage, should be applied to the last, the judgment creditors having neglected to present their claim. Bui'chard v. Phillips, 1 1 Paige, 6G. In New York, a mort- gage for purchase-money has priority of a judgment against the mortgagor, whether prior or subsequent to such mortgage. Frelinghuysen v. Golden, 4 Paige, 204. Laud on which was a mortgage for the purchase-money, was sold for taxes, and A., the purchaser, gave his bond to the treasurer, for the use of the last owner of the lot, for the surplus over the amount due for taxes. B. had obtained a judgment against the owner of the land, and sum- moned A. as his garnishee. Held, the owner of the mortgage was entitled to the surplus under the Act of April 14, 1840, and that A. was bound to de- fend the interest of the mortgagee. Kelso v. Kelly, 14 Penn. 204. A mortgagee was compelled, for his own security, to satisfy a prior judgment against the mortgagor. Upon a sale of the property, held, he should re- ceive from the proceeds the amount of the judgment, as well as the mort- gage. Silver, &c. i'. North, 4 Johns. Ch. 370. Land being subject to a mort- gage and judgment, the owner of a part of it sold such part to the owner of the residue, " under and subject to the j^ayment of the judgment and liens thereon," and took a mortgage back. The whole land was afterwards sold on execution against the vendee. Held, the vendor's mortgage should be paid from the proceeds of the whole lot, next after the first mortgage and judgment, in preference to the judgments against the vendee. Devor, 1 Harr. (Penn.) 413. Where a mortgagee, whose mortgage is the first lien on an estate, buys the same at a sale under a junior judgment, without any express stipulation between him and the sheriff, — he stands like all other purchasers, and cannot require a deed from the sheriff, on crediting the amount of his bill in satisfaction of his mortgage. Crawford v. Boyer, 14 Penn. 380. Mortgaged premises were sold under a judgment subse- quent to the mortgage, which was afterwards foreclosed, aud the mortgage debt paid by the purchaser at sheriff's sale. Held, such purchaser should be protected against the purchaser under the mortgage, having notice of the sheriff's sale before his purchase was complete. Seymour r. Preston, Spears, Ch. 481. If the assignee of an equity of redemption acquires a title obtained under a judgment, prior to the mortgage, and the mortgagor re- funds to him the sum paid for the judgment, the title acquired under the 300 THE LAW OF MORTGAGES. [CH. XIII. probably arise from this source than from any other. The general principle is, that mortgages duly recorded have pref- erence according to the order in which they were made ; (6) that a second mortgagee stands in the place of the mort- gagor, as to his right of redeeming the first mortgage ; and so, in reference to further mortgages of the same property, each new mortgagee succeeds to the rights of his mortgagor. A second mortgagee may either redeem from the first mort- gagee, or foreclose his own mortgage.^ It is said, a second mortgagee has full power, by paying off the first mortgage and taking the entire control of the mortgaged premises, as against the mortgagor, to protect himself against any appre- hended injury from the neglect of the first mortgagee to take and continue actual possession, so as to render the in- come of the premises available towards the discharge of the debt secured by the first mortgage. This would effectually secm'e him against any collusion between the first mort- gagee and the mortgagor.^ (c) So, it is said, a second mort- 1 Norton v. Warner, 3 Echv. 106. - Per Dewey, J. Charles v. Dunbar, 4 Met. 502. judgment -will be subordinate to the mortgage. White r. Butler, 13 111. 100. In equity, such title will be treated as if obtained by and in the name of the mortgagor. lb. If the mortgagor, or a purchaser from him, pays off the mortgage, and it is discharged, there being a subsequent judgment on the premises, under which they are sold, the purchaser at the latter sale will take the premises discharged of the mortgage, and equity will not re- lieve the vendee of the mortgagor, there being no mistake of fact, fraud, or accident. Garwood v. Eldridgc, 1 Green, Ch. 145. (I)) So where an estate is purchased free from incumbrance, and the pur- chaser takes possession without payment ; the purchase-money is considered as applied, so far as it will go, in payment of the incumbrances according to priority. Coote, 483 ; Greenwood v. Taylor, 14 Sim. 505 ; Smith v. Smith, 9 Beav. 80. See Mackenzie v. Gordon, 6 CI. & Fin. 875. (c) A subsequent mortgagee sought to set aside a purchase under a de- cretal sale in favor of a prior mortgagee, at which the latter had become the purchaser. The (Jourt of Appeals allowed him to redeem upon terms ; but, he having delayed to do so, the Chancellor afterwards refused to quash the CH. XIII.] SUCCESSIVE MORTGAGES, ETC. 301 gagee of two estates, subject to prior distinct mortgages, may redeem either of them, and then foreclose as to that particular estate ; and if he sue to redeem both the prior mortgages, he may have a decree to redeem both or either of them, and to foreclose the mortgagor accordingly.^ {d) 1 o. Where a mortgagee has been compelled to pay an existing incumbrance, as well on the lands mortgaged to him as on other lands, the owner of such other lands will be de- creed to pay him his proportion of such incumbrance.^ . 1 b. A mortgage was made to secure a void claim, and a subsequent mortgage, to another person, to secure a just debt. The assignee of the right to redeem paid the first mortgage. Held, the last mortgagee could not recover of the first, the money so paid.^ 1 Coote, 470. -^ Ellsworth v. Mitchell, 31 Maine, 247. 2 Lyman v. Little, 15 Verm. 576. sale and allow him to redeem. Held, on account of the delay and a subse- quent compromise and pending litigation between the parties, the refusal ■was proper. Dale v. Shirley, 8 B. Mon. 524. In Alabama, a second mort- gagee may either pay the first mortgage, and then file a bill to have a sale for payment of both mortgages, or he may file a bill for foreclosure without payment, making all necessary parties, and have a decree for sale to pay both. Cullum v. Erwin, 4 Ala. N. S. 452 ; Chambers v. Mauldin, lb. 477. In Michigan, a subsequent mortgagee may redeem, where the premises are sold upon a prior mortgage under the statute. Kimmell v. Willard, 1 Doug. 217. (d) Where B. executed to A., at different times, two mortgages of sepa- rate parcels of land, to secure distinct debts ; on a bill of foreclosure, brought by A. against B. and subsequent incumbrancers ; held, A. was not entitled to a decree, foreclosing such subsequent incumbrancers of all right to redeem either mortgage, upon failure to pay both, but that they were en- titled to redeem one of such mortgages, without the other. Frink v. Branch, 16 Conn. 260. Where two successive deeds of trust are made to one trustee of the same property, but for different cestuis, and the trustee sells under the latter one ; the grantor's equity of redemption passes, and, upon a bill to enforce the prior lien, the purchaser's title cannot properly be declared void. Graham v. King, 15 Ala. 563. VOL. I. * 26 302 THE LAW OF MORTGAGES. ' [CH. XIII. 2. In England, upon the principle of tacking, to which reference has been already made, ( Supra, ch. 12 ;) a third mortgagee may gain priority over a second mortgagee, by buying up the first mortgage and tacking it to his own, thereby obliging the second mortgagee to redeem both in order to redeem one. 3. A second mortgagee succeeds to all the rights of the mortgagor, arising out of any special agreement between the mortgagor and the first mortgagee in relation to the land. Thus if the mortgagor leased to the first mortgagee, who covenanted to pay rent, but refuses to pay it to the second mortgagee upon demand, not having paid it to the mort- gagor ; upon redemption of the first mortgage by the second mortgagee, the first mortgagee must account for the profits towards the payment of his claim.^ 4. By agreement of parties a subsequent mortgage may take precedence of a prior one. 5. By an express statute, the State Bank was prohibited from taking a mortgage of property already incumbered, to secure a loan ; but the bank took a second mortgage under a valid agreement between all parties, that it should have precedence of the first. Held, this agreement was binding on the mortgagor, and an execution purchaser of the equity took subject to both incumbrances.^ 6. Where a prior incumbrancer contracts for a purchase of the land in discharge of his debt, and assumes the pay- ment of a subsequent mortgage as part of the consideration ; such purchase will operate as an extinguishment of his mort- gage, and give priority to the subsequent mortgagee. Thus in the case of Brown v. Stead,^ after two mortgages, the mortgagor charged the land with another debt to the first mortgagee. He -afterwards entered into an indenture with the second mortgagee, setting forth that the latter had agreed for an absolute purchase of the land for a certain J Newall V. Wright, 3 Mass. 138. a 5 Sim. 535. 2 State Bank v. Campbell, 2 Rich. Eq. (S. C) 179. CH. XIII.] SUCCESSIVE MORTGAGES, ETC. 303 sum, being the amount of all the debts, from which he was to pay a certain part to the first mortgagee, and retain the balance in satisfaction of his debt. In consideration of the sum named, being the amount of the first mortgagee's two claims, the payment of ivhich the second mortgagee assumed^ and of the second mortgagee's own debt, the mortgagor con- veyed the equity of redemption, subject to the claims of the first mortgagee, to the second mortgagee, and the latter cov- enanted to pay the former. Held, the second mortgagee's claim was hereby extinguished, and the first mortgagee need not pay it in order to maintain a bill for foreclosure upon both his incumbrances. 6 a, F. sold land to C, and took a bond and mortgage from C. and M. to secure payment ; C. afterwards sold to M. and took a mortgage back ; F. obtained a judgment on the bond against C.and M., and levied on the personal property of M., but the execution was never returned ; after the lapse of two years, F. assigned the balance of his judgment to T., who procured from M. a revival of the judgment, and agreed that he would have the execution returned, but never did. Held, that such agreement did not postpone T.'s claim under F.'s mortgage, to C.'s mortgage.^ 7. If an agreement is entered into between a mortgagor and two successive mortgagees, that the first mortgagee shall take other security and release his mortgage, and the second mortgagee takes the land in satisfaction of his claim, accord- ing to an appraisal, which is actually made ; the first mort- gagee cannot maintain a bill to foreclose his mortgage, though the mortgagor has not wholly fulfilled his part of the agreement.^ 8. But the second mortgagee not having filed a cross-biU for relief ; held, he must be dismissed from the case, with costs ; and a decree of foreclosure was made against the mortgagor alone.^ 1 Cathcart's Appeal, 13 Penn. 416. 3 jbiQ, 2 Simonds v. Brown, 18 Verm. 231. 304 THE LAW OF MORTGAGES. [CH. XIII. 9. In the case of Irwin v. Tabb,' it was held, that where a mortgage is made to several persons, to seciire several debts, but giving a partial priority to some over others ; they are to be treated, in reference to their respective claims upon the property, as parties to one deed, with full notice, and not as prior and subsequent mortgagees. The facts of the case were, that a mortgage was made to three several creditors of the mortgagor, to secure preexisting debts. The mortgagees were absent and had no notice of the mortgage. The sum secured was $8,000, $2,000 to be paid to the one last named, and $3,000 each to the others. At this time, the second and third had advanced the amount of their respec- tive claims, but the first had not. He afterwards, however, made up the full amount. The property was sold on exe- cution under the mortgage, but the proceeds were less than the whole sum secured. Held, the mortgagee last named did not stand in the position of a subsequent incumbrancer, but as having an interest in common with the others, under the same title ; that he had neither done any act nor relin- quished any right by reason of the mortgage, to his own prejudice ; that having affirmed the mortgage in part, he was bound by it in the whole ; and therefore that the pro- ceeds of sale should be distributed in the proportions men- tioned in the deed. 10. Where the mortgages bear the same date, and are ac- knowledged at the same time, with a general agreement that one shall have priority of the other ; the former is presumed to have been first delivered.^ 10 a. A first mortgage described the land as lot eighteen instead of eight. A second mortgage described it correctly as to the number, but the second mortgagee had notice of the mistake in the prior mortgage. Held, the prior mortgage should have precedence of the other.' 11. Where a bill to foreclose was brought against a de- ' 17 S. & R. 419. 8 Wiirbuiton v. Laiiman, 2 Greene, - Jones V. Phelps, 2 IJurh. Ch. 440. 420. CH. Xm.] SUCCESSIVE MORTGAGES, ETC. 305 fendant as second mortgagee, and he did not directly deny the priority of the plaintiff's mortgage, but merely stated that his was of the same date ; held, it should be presumed to be subsequent to the plaintiff's, and was no defence.^ 12. A second mortgagee, who has taken a conveyance with the title-deeds, without notice of the first mortgage, will not be compelled in equity to deliver up the deeds ; but the first mortgagee will be left to his action of trover at law, where the right to the deeds accompanies the legal estate.^ 13. The prior right of a first mortgagee may be established, in a proceeding instituted by a second mortgagee, to which the former is made a party defendant, although the object of it is to foreclose the second mortgage. Thus the assignee of a second mortgage filed a bill of foreclosure, making the assignee of the first mortgage a party, who in his answer prayed "for a sale of the land and priority of payment. Held, in case of sale, he should be first paid.^ 14. A sale on execution upon the debt secured by a first mortgage may operate to extinguish all subsequent mort- gages. 15. Mortgage, to secure bonds payable in ten years, with interest semi-annually. Judgment was recovered on the bonds for interest, and a sale made within ten years to the mortgagee, upon a venditioni. Held, this divested the mort- gage and all subsequent mortgages.* 16. In the following case, however, no such extinguish- ment of subsequent mortgages was held to result from an execution sale. 17. Three successive mortgages of the sdme land were made to three different persons. The two first mortgagees entered on the same day for breach of condition. Subse- quently, a creditor of the mortgagor attached his right of redemption, recovered judgment against him, and afterwards 1 Holabird r.Burr, 17 Conn. 556. ^ Troth v. Hunt, 8 Blackf. 580. 2 Head v. Egerton, 3 P. Wms. 280; « Clarke v. Stanley, 10 Barr, 472. Hooper v. Eamsbottom, 6 Taunt. 12. 26* 306 THE LAW OF MORTGAGES. [CH. XIII. purchased the first mortgage, and took an assignment of it. He subsequently bought the right in equity at the execution sale, and, a year having expired, supposing and representing himself to be absolute owner of the estate, made a warranty deed of it. The second mortgagee tendered to the grantee the sum due upon the first mortgage, protesting that he con- sidered it as extinguished, and brings a bill in equity to redeem. Held, the execution purchaser did not, by buying the equity of redemption, exclude intervening incumbrances, as by the English law would have been the result, the doc- trine of tacking being unknown in Maine ; that the execution sale did not abridge the right of the second mortgagee to redeem the first mortgage from three years to one year, this provision applying exclusively to the relation between the mortgagor and execution purchaser, and not affecting the claims of other mortgagees, prior to the attachment, which are not liable to be impaired by any dealing between the mortgagor and his creditors ; and that the first mortgage was not extinguished, by being united with the equity of redemp- tion in the hands of the execution purchaser. Decreed, that on payment of the sum due on the first mortgage, the grantee of the execution purchaser should surrender the land, and convey and release his right as the assignee of such pur- chaser." 18. A second mortgagee may take an assignment of the first mortgage, with all the benefits incident thereto.^ But to an action by a second mortgagee for the land against a stranger, it is no defence that, after commencement of suit, he has become assignee of the first mortgage.'^ 19. Where the first mortgage is paid by the mortgagor, a second mortgagee may file a bill for an assignment of the legal estate, though the mortgagor have tendered him the amount of his debt, and a decree been obtained for redemp- tion, until the time fixed for redemption has arrived ; though 1 Thompson v. Chandler, 7 Greenl. ^ Bank, &c. v. Peter, 13 Pet. 123. 377. 'iHallu. Bdl, G Met. 431. en. xni.] SUCCESSIVE mortgages, etc. 307 (it is said) he will probably be thereby charged with costs, if he were properly notified, six months beforehand, of the pro- posed tender.! 19 a. On a bill to foreclose by a junior mortgagee, the prior mortgage not being due, the plaintiff will be allowed to sell, subject to the first mortgage.^ 20. Where a second mortgagee pays the first mortgagee, if justice requires it, the law will presume aif assent by the latter to the use of all securities in his hands, in order to compel payment.^ 21. Certain premises being subject to a mortgage, an attachment, and a second mortgage subsequent to both, the first mortgagee brings a bill for foreclosure, to which the mortgagor and subsequent mortgagee are parties, and obtains a decree. The attaching creditor then recovers judgment, and levies his execution upon the premises, subject to the first mortgage. Pending the time limited by the decree of foreclosure, and within six months after the levy, the second mortgagee redeems the first mortgage, by depositing with the clerk of the court the amount of the decree. Held, he was hereby subrogated to all the equitable rights of the fu-st mort- gagee, and could hold the land as against the execution creditor, till reimbursed the amount paid.* 22. On the 4th December, 1846, A. executed two mort- gages on the same premises for the purchase-money ; one to B., payable in nine equal annual instalments ; and the other to C, for $8,623, payable in three annual instalments ; the first to become due December 4, 1856. It was agreed that the mortgage to B. should be the first lien. This mortgage was subsequently assigned to C, and foreclosed under the statute. Upon the sale of the premises, January 5, 1850, they were struck off to D. for a sum larger than the amount due upon the mortgage, and costs of foreclosure. Held, C. was 1 Coote, 476 j Grugeon v. Gerrard, 4 ^ Downer v. Fox, 5 Washb. (Verm.) Y. & Coll. 119. 388 ; Ace. King v. McVickar, 3 Sandf. 2 Western, &c. v. Eagle, &c., 1 Paige, Cha. 199. 284. * Downer v. Fox, 5 Washb. 388. 308 THE LAW OF MORTGAGES. [CH. XIII. entitled to have the mortgage for $8,623 first satisfied out of the surplus money, and A. only to the balance.^ 23. Upon a principle of equitable adjustment, if the owner of two estates first mortgages both to the same person, and afterwards one of them to another person, a court of equity may order the first mortgagee to satisfy his claim from the estate not included in the second mortgage, if sufiicient for that purpose, in order to make room for the second mort- gagee.2 (e) 24. So, upon a bill for foreclosure, subsequent mortgagees may require the plaintiff to apply towards the payment of his debt collateral security in his hands, to which they are not parties.^ So, it is said this equitable application will be made, " provided it will not prejudice the rights or interests of the party entitled to the double fuiid, nor do injustice to the common debtor, nor operate inequitably on the interests of other persons." ^ 25. Spencer, C. J., applies the following important qualifi- cation to this rule : — "A court of equity will take care not to give the junior creditor this relief, if it will endanger thereby the prior creditor, or in the least impair his prior right to raise his debt out of both funds. The utmost that equity enjoins in such a case is, that the creditor who has a prior right to two funds, shall first exhaust that to which the junior creditor cannot resort; but where there exists any doubt of the suflaciency of that fund, or even where the prior 1 Barber v. Gary, 11 Barb. 549. •'' Pettibonc v. Stevens, 15 Conn. 19. * Lanoy v. Athol, 2 Atk. 446 ; Me- * Per Storrs, J., Ayrcs v. Hiisted, 15 chanics' &c. v. Edwards, 1 Barb. 271. Conn. 516. (t?) In South Carolina, the right to compel a resort to one particular fund amonT several, is not applied in favor of subsequent incumbrancers or gen- eral creditors. Bank v. Mitchell, Rice, (Equ.) 389. The principle stated in the text applies to a judgment creditor and mortgagee, as well as two successive mortgagees. But if the mortgagee, by negligence, allows the judgment creditor to levy on property included in the mortgage, equity will not relieve. Baine v. Williams, 10 S. & M. 113. CH. Xm.] SUCCESSIVE MORTGAGES, ETC. 309 creditor is not willing to run the hazard of getting payment out of that fund, I know of no principle of equity which can take from him any part of his security, until he is completely satisfied." ^ 26. A husband and wife conveyed the equity of redemp-_ tion of her land, to be applied in payment of certain claims against the husband, which were previously secured in part by attachment of the husband's personal property, upon which two other creditors had subsequent attachments ; the residue of the equity of redemption to be applied in payment of a debt due from the husband to his daughter, and the balance, if any, to be paid to anotlier creditor of the hus- band. The two subsequent attaching creditors claimed that the grantee should be required to resort to the equity of redemption for satisfaction, before proceeding against the attached property. Held, upon a bill of interpleader, the law would not require him to do so, as the property constituting the two funds did not wholly belong to the husband, but the land belonged to his wife, and was conveyed only as collat- eral security, and specifically for the benefit of other creditors, whose equity was equal to that of the subsequent attaching creditors.^ 27. In general, a second mortgagee of one estate cannot be compelled by a first mortgagee of that estate and another to redeem the fij-st mortgage, without a transfer of both estates. But if between the two mortgages the mortgagor sells the estate not included in the second mortgage, and the purchaser afterwards takes an assignment of the first mort- gage ; the purchaser may have a decree in one suit against the mortgagor for the completion of the purchase, and against him and the second mortgagee for the redemption of the estate not purchased by the plaintiff, on payment of the whole of the fijst mortgage debt, or for foreclosure of that estate.^ 1 Evcrston r. Bootli, 19 Jolins. 493 ; ^ Ayrcs v. Husted, 15 Conn. 505. Butler w. Elliott, 15 Conn. 187; Hen- '* Sober f. Kemp, 6 Hare, 155. shaw f. Wells, 9 llum|ili. 5G8 ; Stam- lord, &c. V. Bencdiet, 15 Conn. 437. 310 THE LAW OF MORTGAGES. [CH. XIII. 27 a. Where a mortgage debt is secured by other property, and the mortgagor conveys the land subject to the incum- brance, the amount of which is taken from the price, and the mortgagee receives a part of his debt from the other security, in equity, the whole is still chargeable upon the land, for the benefit of the mortgagee, to the extent of the balance of his debt, and of the mortgagor for the residue.' (/) 28. The rule of equitable adjustment or apportionment is applicable, where mortgaged estates descend to different heirs? So an execution purchaser of an equity of redemption, as well as a subsequent mortgagee, may in equity compel a prior mortgagee, having other security, to exhaust it, before resorting to the land.^ 29. Where there is a first mortgage on two estates, a second on one of them, and a third on the other or both, the right of marshalling will not be exercised in favor of the second, against the third mortgagee, though with notice of the second incumbrance. In such case, the first mortgage will be ratably apportioned between the two estates.* 30. Mortgage to the defendants, to secure debts due to them from the mortgagor, and also from a corporation, the corporation at the same time mortgaging to secure the de- fendants' liabilities on its account. The whole property was insufficient to extinguish the liabilities of either description. Held, subsequent mortgagees could not claim the application of a proportional part of the value of the former mortgage, towards the company debt, but the defendants might apply the whole of it to the private debts of the mortgagor.^ 31. In connection with the rights and obligations of parties 1 Ferris v. Crawford, 2 Dcnio, 595. * Barnes v. Racstcr, 1 Y. & Coll. 401. ■■^ Larioy v. Duke, &c. 2 AtU. 444. ^ Kellogg v. Kockwell, 19 Conn. 446. 8 Miami, &e. v. Bank, &c., Wright, 249. (/) In such case, it seems, the mortgagee, having brought a suit for fore- closure, cannot discontinue it, until the amount due the mortgagor is paid. Ibid. CH. XIII.] SUCCESSIVE MORTGAGES, ETC. 311 arising from successive mortgages, may be considered tjiose which result from other relations, collateral to the original transaction between mortgagor and mortgagee. It w^ill be seen, that the discretionary and flexible powers of a court of equity are strikingly exhibited, in adjusting the various claims which grow out of a conveyance in itself very sim- ple, — the transfer of land as security for a debt. 32. One of the cases in which the rules of equity are thus applied, is where^a debt secured by mortgage has also been secured by the personal obligation of a surety. In such case, it is held to be " a general and well-established principle of .equity, that a surety, or a party who stands in the situation of a surety, is entitled to be subrogated to all the rights and remedies of the creditor whose debt he is compelled to pay, as to any fund, lien, or equity, which the creditor had against any other person or property on account of such debt." ^ So it is held, that a surety for a debt secured by mortgage may, before he has been injured, compel payment from the land, in the first instance.^ 33. In Hays v. Ward,^ Chancellor Kent says : — " This doctrine does not belong merely to the civil law system. It is equally a well-settled principle in the English law, that a surety will be entitled to every remedy which the principal debtor has, to enforce every security, and to stand in the place of the creditor, and have those securities transferred to him, and to >fivail himself of those securities against the debtor. This right stands not upon contract, but upon the same principle of natural justice upon which one surety is entitled to contribution against another." ^ So it is said in a recent English case, that " the surety's right is not merely a 1 Per Johnson, J., Mathews v. Aikin, Barnes v. Morris, 4 Ired. Equ. 22 : Skill- 1 Comst. 599; Root v. Bancroft, 10 man r. Teeple, Saxt. 232. Met. -IG ; Copis v. Middleton, 1 Tur. & - M'Lean v. Lafayette, &c., 3 McL. K. 231 ; Hod^i,^son v. Shaw, 3 My. & K. 587 ; State, ^^c. v. Campbell, 2 Rich. 195; Williams r. Owen, 13 Sim. 597. Eq. 179. See Sprigg v. Lyles, 2 Gill & J. 446 ; » 4 John. Ch. 130 ; ace. Bowker r. Ryan v. Shawneetown, 14 Illin. 20; Bull, 1 Smi. (New) 34. Galium V. Brancli, &c. 23 Ala. 797 ; * See Hodgson v. Shaw, 3 My. & K. Garwood v. Eldridge, 1 Green, Ch. 145 : 183 ; Norton v. Coons, 3 Dcnio," 130. 312 THE LAW OF MORTGAGES. [CH. XIII. potential equity ; which, though it may be asserted by the party himself, yet cannot bind third persons. The equity gives to the surety a right to call for a transfer of the securi- ties, and so binds those securities, into whatever hands they may come with notice of the charge." ^ And it is now held, that the right of subrogation, though originating in courts of equity, is fully recognized as a legal right ; and any act of the creditor which interferes with that right, and is a fraud upon it, in law, as well as at equity, oper^es to discharge the surety.^ 33 a. A creditor recovered judgment against his debtor, sold his goods on execution, and took a mortgage to secure the payment. A surety subsequently paid the debt. Held, the surety was entitled to the benefit of the mortgage.^ 33 b. More especially is a surety entitled to the benefit of an accompanying mortgage, in case of a special agreement to that effect. 33 c. A. executed a mortgage to B., to secure a debt, and also transferred to B., without indorsement, two notes on a third person, which notes A. guaranteed ; B., at the same time, by a defeasance, stipulated that " B. should not call on A., or hold him liable, until the insolvency or inability to pay of the obligors was ascertained by legal process." Held, the deeds must be construed together, and the mortgage was not to be enforced, until the insolvency and inability to pay of the maker of the notes.* 33 d. Held, also, that collection " by legal process," referred only to a judgment and execution at law, and that the party was not bound to resort to equity, to remove any impedi- ments to a satisfaction of a judgment and execution at law, such as a fraudulent conveyance, or the like.^ 34. A surety may claim the benefit of the mortgage, as against a purchaser of the land from the mortgagor, although he satisfied the debt after having notice of the conveyance. 1 Bowker v. Bull, 1 Sim. (New) 34; ^ Ottman v. Moak, 3 Sandf. Ch. 431. see Higfrin.s v. Frankis, 10 Jur. 328. ^ Burton v. Wheeler, 7 Ired. Eq. 217. 2 La Faree v. Ilertcr, 11 Barb. 1.59. '" Ibid. CH. XIII.] SUCCESSIVE MORTGAGES, ETC. 313 Thus, a mortgage being made to secure the indorser of a note, the mortgagor afterwards conveyed the land ; the in- dorser confessed a judgment on the note, at the same time taking other security from the maker, which proved worth- less ; the indorser satisfied the judgment after he had notice of the conveyance from the mortgagor ; and the judgment creditor assigned the mortgage to the indorser, to secure his indemnity. Held, the mortgage was still in force for the indorser's benefit, he being subrogated to the rights of the mortgagee.^ 34 a. "Where a deed is executed for the security of notes indorsed by different individuals, a court of chancery, at the instance of any of the indorsers, will compel a pro rata dis- tribution of the proceeds of the trust sale.^ 35. The following distinctions have been laid down upon this subject. Where one executes a bond with surety, and at the same time a mortgage to secure the same debt, which the surety pays, the latter shall stand in the place of the cred- itor in respect to the mortgage. So if there be only one specialty, namely, the mortgage ; because there the payment does not, as in case of a bond, extinguish the security without a reconveyance ; there is something to assign or transfer. But if a further charge is afterwards made by the mortgagor, in favor of the same mortgagee, the surety cannot, on paying off the first charge, call for an assignment of the mortgage, without redeeming the latter, unless a right of redemption is given him.^ 36. The doctrine of subrogation does not apply, where the surety guarantees one part of the debt, and the security is given for another part ; nor, it seems, when the security is subsequently given, by an independent transaction. Nor can the surety require an assignment of the original debt, nor of 1 Gossin r. Brown, 1 1 Penn. State, ^ Copis v. Middleton, 1 Turn. & R. (lJones,)527. 231; Hodgson v. Shaw, 3 Mv. & K. - McDermott v. Bank, &c. 9 Humph. 195 : Williams v. Owen, 13 Siiii. 597. 123. VOL. I. 27 314 THE LAW OF MORTGAGES. [CH. XIII. an instrument which becomes void by payment of the debt, as in case of a joint and several bond by principal and surety. Otherwise, where the surety has executed a separate obliga- tion, which is paid by him or from his estate.' 37. A surety for a debt, secured by mortgage, has in equity substantially the same rights in reference to the property, which he would have if he were actually a party to the mort- gage. 38. In 1827, R. & J. Bancroft mortgaged to Root & Stow to secure a note to Root, and two others, signed by them, and Stow as surety. In 1832, the first note being unpaid, a writ of entry was sued out against the mortgagors, and a condi- tional judgment recovered and execution taken out, but never delivered to an officer, nor was possession ever taken. Stow, having paid the notes for which he was liable, brought an action against the Bancrofts for the amount paid by him, recovered judgment, caused the equity of redemption to be sold on execution, and became himself the purchaser. The first note remaining unpaid, the plaintiffs, adrninistrators of Root, demanded possession of the land, and bring this suit, being a bill in equity against the mortgagors and Stow, alleging that the latter held his moiety of the legal estate in trust to secure payment of the first notes, and was bound to account with the plaintiffs for the rents and profits. Held, the lands should be held by the plaintiffs, according to their respective equitable rights ; that the Court had jurisdiction in equity, both because the original mortgagees were trustees for each other and tenants in common, and because, in regard to mortgaged lands, the administrator represents the intestate. " On the face of the mortgage deed. Stow took a moiety of the real estate, but having no beneficial interest in the con- dition, he was p?im(t facie trustee of such moiety, in the first instance, for Root. Then, if Stow, by this deed, acquired any right, legal or equitable, to the mortgaged property, as security for the repayment to him of any sums which he, as 1 Wade V. Coupe, 2 Sim. l.->5 ; 1 Turn. &. R. 231. CH. Xin.] SUCCESSIVE M(JfeTGAGES, ETC. 315 surety on the two notes, might be held to pay — as we think he did — his condition in relation to Root could not be better than that of a second mortgagee. His claim must be sub- ordinate to that of Root, and after Root had been paid in full. The condition was, to secure to Root the payment of ♦ all the notes. It was only after the mortgagors had failed to pay Root, and after Stow, as surety, had been obliged to pay Root, that Stow had any claim for security, or any equitable or beneficial interest. If the name of Stow had not been introduced into the first deed, but the Bancrofts had made a second mortgage to Stow, conditioned to indemnify him against his suretyship to Root, the relation of Root and Stow would have been nearly similar; the claims of the latter being subordinate to those of the former." " Being tenants in common, no entry of the one, under a purchase of the equity of redemption, or under color of a judgment or other- wise, would be deemed an ouster of the other ; but, as between themselves, the entry enures to the benefit of both." Decreed, accordingly, that an account be taken of the sum due on the first note ; upon payment of which, the defendant. Stow, should hold the land ; but unless paid within some short time, to be fixed by the Court, the plaintiffs to have posses- sion.' 39. If, by the creditor's neglect, the benefit of some of the securities is lost, the surety is pro tanto discharged.- {g) 39 a. A., as principal, and B., as surety, executed a note , 1 Root V. Stow, 13 Jlet. 5, 9, 10. " Capcl v. Butler, 2 Sim. & S. 457. {g) On the otlier hand, a surety may lose his claim on the principal, by his own laches in relation to a mortgage. A.'s land was sold on execution against him as B.'s surety, and, within the year allowed for redemption, A. mortgaged the land to Q., without referring to the sale. C. filed a bill for foreclosure, to which A. and B. were parties. ^S^eitlier party answered, and the land was sold under a decree. Held, A.'s payment was. withdrawn and lost toB.by A.'s own default, and therefore A.'s claim on B. was extinguished. Jarvis v. Whitman, 12 B. Mon. 97. 316 THE LAW bF MORTGAGES. [CH. XIII. to C. After the note fell due, A. executed a deed in trust to C, with authority to the trustee to sell, for the satisfaction of this debt, after six months. The deed was made without the assent of B. Held, an agreement that the collection of the note should be delayed was necessarily implied, being further established by the attending circumstances ; and the surety was discharged.' 39 b. On the other hand, it has been held, that if a creditor accepts from the principal debtor a mortgage to secure his debt, which mortgage is payable at a day subsequent to the maturity of the debt, he does not thereby give time to the principal upon the debt, and a surety for the debt will not be discharged. A giving time, to discharge a surety, must operate upon the debt itself.^ 40. Where the mortgage is made to a surety by way of indemnity for his liability, and the promisee by delay loses his remedy upon the note, he cannot claim the benefit of the mortgage, as being held in trust for him. 41. Two persons, one as principal, the other as surety, signed a note in consideration of a loan to the former, who, at the same time, gave a mortgage to the latter, conditioned to pay the note and indemnify the surety, and also pay a debt of his own to the surety ; but the mortgage was not the inducernent for the loan, nor was it made at the request, for the benefit, or by the procurement of the promisee. The mortgagor paid the interest on the note for several years, but no part of the principal, or of the debt due from him to the mortgagee, and afterwards died intestate and insolvent, and no administration was taken upon his estate. The mort- gagee was never called on to pay, and never paid, either the interest on the note, or any part of the principal, and the note became barred by the statute of limitations. The mortgagee afterwards transferred his interest under the mortgage for a valuable consideration, secured by notes, without notice to the purchaser or knowledge on his part that the promisee ' Lear. ])ozier, 10 Iluiiiph. 447. - U. States v. Ilodgc, 6 IIow. U. S. 279. CH. XIII.] SUCCESSIVE MORTGAGES, ETC. 317 claimed any interest therein, by way of trust or equitable lien or otherwise ; and subsequent conveyances and dispo- sitions of the mortgaged premises were made in like manner, without knowledge or notice of any such claim. The prom- isee brings a bill in equity against the mortgagee and the purchaser under him, praying that the mortgagee might be decreed to pay or assign to the plaintiff, as the equitable owner, the proceeds of the sale to such purchaser ; and the latteir decreed to hold the premises as trustee of the plaintiff, subject to his equitable lien, and as security for the payment of his note, and also to pay the plaintiff, as equitably entitled thereto, the amount due from the purchaser to the mortgagee for the premises. Held, this bill could not be sustained.^ 41 a. Where one of two sureties for a mortgage debt paid it, and took an assignment of the mortgage ; held, he should be allowed, as against the other, a commission of five per cent, on the value of the property, and the expenses of fore- closure and sale.- 42. The doctrine of subrogation does not apply, where a party, though in fact a mere surety, does not appear as such either upon the note or the mortgage. (A) 43. The defendants executed a mortgage to the plaintiff, 1 Becket v. Snow, 1 Cush. 510. - Livingston r. Van Rensselaer, 6 Wend. 63. (li) After the recovery of a judgment against principal and surety, and a levy upon the property of the principal, the creditor took a bond and mort- gage from the principal, for the amount of the judgment, and in absolute payment thereof, and acknowledged satisfaction of the execution, by an indorsement thereon, and afterwards brought an action upon the judgment. Peld, the suretyship might be proved by evidence aliunde; and was a defence to the action. La Farge v. Herter, 11 Barb. 159. Also, that the plaintiff could not prove that the bond and mortgage were usurious. Ibid. Had the plaintiff attempted to foreclose, and the mortgagor set up the usury, the plaintiff might rely upon the invalidity of the bond and mortgage ; but his remedy on the judgment, even then, would only be revived against the mortgagor, and not against his co-defendant. Ibid. 27* 318 THE LAW OF MORTGAGES. [CH. XIII. to secure a joint and several note, one of them, however, being in fact only a surety for the other. The principal debtor afterwards mortgaged a part of the land, and the mortgage was assigned to the plaintiff, who foreclosed the second mort- gage. He then brings this bill to foreclose the first. Held, the surety defendant was not entitled, as he claimed, to stand in the place of the first mortgagee, and hold the whole prop- erty for his indemnity, because neither the record of the Gist mortgage nor the note indicated that he was a surety, and the plaintiff stood as a bond fide purchaser of that mortgage without notice.^ 44. Where one mortgages land, and afterwards gives the mortgagee collateral security for the debt, a purchaser of the land from the mortgagor, subject to the mortgage, cannot claim the benefit of such security, but the land becomes the primary fund for payment of the debt.^ 45. A mortgagor conveys the equity of redemption, the purchaser assuming the mortgage debt. The latter then conveys it, the purchaser from him also assuming such debt. The mortgagor obtains a decree in equity against both pur- chasers for payment of the debt, and to save him harmless, and the first purchaser is compelled by an execution to pay it. Held, he was thereby subrogated to the mortgagee, and, whether the securities were assigned to him or not, might foreclose the mortgage."^ 46. A subsequent mortgagee, as well as a surety, may in equity claim the benefit of other security taken by the first mortgagee. And where a mortgagee takes subsidiary security, to the benefit of which a subsequent mortgagee is entitled, and there is likely to be a long controversy, a decree will be made for the immediate satisfaction of the first mort- gage, instead of requiring the mortgagee to resort to the additional security; and the decree will at the same time provide for the second mortgagee's right of subrogation.^ 1 Orvis V. Ncwoll, 17 Conn. 97. * King v. McVickar, 3 Sandf. Ch. ^ Brewer v. Staples, 3 Sandf. Cli. .'')79. 192. ^ McLean v. Towle, 3 Sandf. 117. CH. XIII.] SUCCESSIVE MORTGAGES, ETC. 319 47. Where a mortgage is made to a surety^ for the purpose of indemnifying him against his liability on account of the mortgagor, substantially the same equitable rules are applied as in the case above referred to, of a mortgage accompanied by other security.' It is held, that such a mortgage is, in reality, a security for the debt itself ; to the benefit of which the creditor is entitled ; ^ more especially where both debtors become insolvent."^ [i) 48. Where a mortgage is made to indemnify a surety upon a note, proof of execution and registry is prima facie evidence of title, without producing the note, which is not presumed to be in possession of the mortgagee. The bur- den of proof is on the party, who denies the existence of such note.* 48 a. A deed, conditioned to become void, unless a cer- tain sum is paid by a certain day, is a mortgage.^ 48 b. If the mortgagee give security for the debt, he has the burden of proving payment. K payable in money on a certain day, he must prove payment on that day, otherwise the condition is broken, and the estate revests, by operation of law, without formal entry ."^ 1 See Holabird v. Burr, 17 Conn. 556 ; Storer v. Herrington, 7 Ala. 142 ; Dick Reinbard r. Bank, &c. 6 B. Monr. 252 ; v. Trulv, 1 S. & M. Ch. 557. Miller v. Musselman, 6 Whart. 354. * Davis v. Mills, 18 Pick. 394. '^ Lewis V. De Forest, 20 Conn. 427 ; ^ Austin v. Dowuer, 25 Verm. 558. Stockard v. Stockard, 7 Ilumpli. 303. « lb. 3 Moore v. Moberly, 7 B. Men. 299 ; (i) Where a mortgagee assigns the mortgage and guarantees the debt, taking other security for his own indemnity, the general rule of the text is applicable in favor of the assignee, that where a surety receives collateral security, the principal creditor is entitled to the benefit of it ; even though the assignee did not originally rely upon it or know of its existence. Curtis V. Tyler, 9 Paige, 432. It has been held, that a mortgage given by a guar- dian to his sureties, conditioned " to pay over to the ward all the moneys in the hands of the guardian, as such, when he (the ward) should arrive of full age," does not create a trust in favor of the ward ; the mortgagees have the legal and beneficial interest in it, and may use it as their own. JNIiller V. Wack, Saxton, 204. 320 THE LAW OP MORTGAGES. [CH. XIII. 49. A mortgage to secure liabilities incurred for the mort- gagor's accommodation, reciting an accompanying bond, which, in fact, was never delivered, is valid.^ But not a mortgage, reciting that the mortgagee is liable for the mort- gagor, when, in fact, the former has made a mere verbal promise, not binding in law, as against creditors of the mort- gagor.2 50. Where a mortgage is made to secure an accommoda- tion indorser, the creditor cannot claim the benefit of it till the indorser's liability is fixed ; and, if the latter is dis- charged by his laches, he loses all title to the property .^ (j) Nor can a surety foreclose a mortgage made to him till he has paid the debt.* But if there is a power of sale, when- ever a judgment on the debt is rendered against the surety, and before maturity of the debt he purchases or pays it ; equity will enforce the deed for his benefit, to the extent of his disbursement.^ So it is held, that an accommodation indorser may discharge a mortgage made for his indemnity, at any time before his liability becomes absolute.^ 50 a. Where a surety obtains a mortgage from the princi- pal debtor, to secure him against his liability, and also to secure a debt due to himself, the creditor is entitled to the benefit of the mortgage, and to be paid out of the first pro- ceeds, in preference to the surety himself, or his assignees under an assignment for the benefit of his creditors.''' 1 Goodhue V. Berrien, 2 Sandf. Ch. * Shcpnrd v. Shcpard, 6 Conn. 37. 630. ^ Gralmm v. King, 15 Ala. 5G3. ^ Lake v. Brutton, 23 Eng. L. and Eq. '^ Tilfonl v. James, 7 B. Mon. 336. 628. "^ Ten Eyck v. Holmes, 3 Sandf. Ch. 8 Tilford V. James, 7 B. Mon. 336. 428. (/) The maker of a note gave to the indorser a judgment bond for secu- rity. 'J'iie note was protested, but no notice given to the indorser, who, however, in consideration of a release from his liability, assigned the judg- ment to the holder of the note. Held, the waiver of want of notice defeated the claim of a subsequent mortgagee. Phillips v. Thompson, 2 Johns. Ch. 418. CII. XIII.] SUCCESSIVE MORTGAGES, ETC. 321 50 b. A. made a mortgage to B., conditioned to pay a debt due him, and also certain other debts on which B. was liable as surety of A., in some cases, alone, and in others, jointly with others. A. also assigned to B. certain personal securities for the same object. Held, that B. held the mort- gage and securities for the benefit of all such creditors and his joint sureties ; that the fund arising from them should be applied pro rata to all such debts, and, on a proceeding for contribution by B. against his co-sureties, that they were liable only for their shares of the deficit after such pro rata application of the fund to all the debts, including the debt due to B.i 51. A mortgage was given, conditioned to pay a debt due the mortgagee, and other debts for which he was liable as surety for the mortgagor, in some cases separately, in others jointly with other persons. Held, the mortgage stood as security for all the debts, and, upon a sale of the property, the proceeds should be distributed pro rata among the whole, the mortgagee's included.^ 52. A mortgage was made to indemnify the mortgagee for his liability as surety upon several notes. Some of the notes being barred by the statute of limitations, the mortgagor be- came an insolvent debtor under the insolvent laws of Mas- sachusetts. Held, the mortgagee might apply the property first to the notes still in force, and the rest should be distrib- uted pro ratd among the holders of the others, who had an equitable lien on the fund ; but that he could not pay some of the outlawed notes from the property to the exclusion of others, the latter having an equal equitable claim with the former. Also, that the property was subject to this equita- ble lien, although the mortgage had been foreclosed, and as against attaching creditors or grantees of the mortgagee, or an assignment under the insolvent law.^ 53. A mortgage having been made to indemnify a surety 1 Moore v. Moberlv, 7 B. Mon. 299. ^ Eastman v. Foster, 8 Met. 19. 2 lb. 822 THE LAW OF MORTaAGES. [CH. XIII. for the mortgagor upon various' debts ; by an arrangement between one of the creditors, the mortgagor and mortgagee, the mortgagor paid a part of the debts, and the creditor the rest, the latter taking an assignment of the mortgage, to hold as security for his own debt. Held, as against a judgment creditor of the mortgagor, prior to the assignment, the as- signee could enforce the mortgage only for the amount paid to procure it.' 54. Mortgage to indemnify an indorser ; with a provision, that if the mortgagor fail in payment of the note, whoever might be the holder, the mortgagee, upon affidavit of non- payment and the amount due, might foreclose, &c. The mortgage was afterwards transferred without recourse to the indorsee of the note. Held, the mortgage was valid in the indorsee's hands, and might be foreclosed by him, and the property subjected to payment of the note.^ 55. Such mortgage creates a trust for the benefit of the indorsee ; and, if the mortgage is not assigned, the mortga- gee may be compelled to allow the use of his name in a suit to enforce payment of the note.^ 55 a. Where judgment is recovered against both principal and 'surety, the former having given a mortgage of indemnity to the latter, the surety cannot claim priority of older judg- ments against the principal alone, in reference to a lien upon the land, by reason of his mortgage. He can claim only upon the mortgage directly.* 55 b. If the surety, believing that his mortgage gives him such priority over older judgments, causes the execution against himself and the principal to be levied on the mort- gaged land, and become, himself the purchaser ; he may afterwards foreclose in equity, especially after stipulating that the land shall sell for as much as the execution price.^ 56. Where a mortgage is made to indemnify the mortga- 1 Yclverton i'. Slicldcn, 2 Sandf. CIi. » Ih. 481. * Stover ;;. Ilcrriiigton, 7 Ala. 112. - Stewart v. Preston, 1 Branch, 10. ^ lb. CH. XIII.] SUCCESSIVE MORTGAGES, ETC 323 gee for his liability upon subsequent indorsements on ac- count of the mortgagor, judgments having been recovered against the indorser upon his indorsements ; if others, having a lien upon the land, bring a bill in equity, for the purpose of having it sold, and all parties in interest are before the Court ; the mortgagee may require that the proceeds be ap- plied to such judgments, though he has not paid themJ 56 a. Where a conveyance is made to a trustee, to indem- nify the surety of the grantor, vi^ho, after paying the debt, takes a conveyance from the trustee in satisfaction of the debt, under an order from the heirs of the grantor, made for " the safety of the trustee," and under an impression that they " have no interest in the premises ;" the equitable rights of the heirs are not thereby prejudiced.^^ (A-) 56 b. Where one of several sureties receives a mortgage as indemnity, and pays the debt, unless he use reasonable dili- gence to appropriate the mortgage to a repayment, he can- not compel contribution.^ 56 c. Where a mortgage is made to a surety, to indemnify him as surety on several debts, on some of which there are co-sureties, and the mortgage proves insufficient to satisfy all the debts, it should be applied to them pro rata^ * 56 d. Where one of several sureties is secured by mort- gage, he is not bound to enforce his mortgage, before he pays the debt, or has reason to apprehend that he must pay 1 Kramer v. Bank, &c. 15 Ohio, 253. » Goodloe v. Clay, G B. Mon. 236. - Invin L\ Longvortli, 20 Oliio, 561. * lb. (Jc) If the trustee, in such case, convey to the surety, in satisfaction of the debt of the grantor, the surety, as to minor heirs of the grantor, takes the premises charged Avith the trust ; and the original trustee will be responsible for a breach of the trust by his grantee. Irwin's Heirs v. Longworth, 20 Ohio, 581. In such case, an order to the original trustee to convey to the surety, executed by the heirs, for the safety of the original trustee, is not a surrender of the equity of the heirs in the premises so conveyed, unless the order contain words which expressly, or by inference, surrender the ccjuity. Ibid. 324 THE LAW OF MORTGAGES. [CH. XIII. it, unless the mortgagor is wasting the estate ; in which case, if he fails to do so, he is chargeable to his co-sureties, with the fair value of the property at a coercive sale.^ 56 e. Where one of two sureties receives property by deed of trust, to indemnify him, and the trustee sells the property by direction of the surety, but fails to collect the money, he is not entitled to contribution.'^ 56/. Where property was mortgaged to two sureties of the mortgagor to secure them, and, after his default and theu' payment of his debt, was sold and purchased for the joint benefit of the mortgagees, and one of them sold all his interest in the purchase to a junior mortgagee, with the agreement that if he was entitled to the whole, it passed by the sale, and if he was^ entitled to only half, that part passed : the co-mortgagee having died ; held, on a bill to which all interested were parties, that one half of the mortgaged prem- ises purchased for the joint benefit of the mortgagees, should be .decreed to the heirs of the deceased mortgagee, and, as the original bill by the joint mortgagees for foreclosure was not yet finally determined, this decree was entered on that bilL3 56 g. "A. became security for B., for a separate debt due from B., and for B. and C, for other debts jointly due from both. B. executed a note and mortgage to A., to secure him for the whole of the separate debt, and for B.'s ratable pro- portion of the joint debts. It was, at the same time, agreed, that, when B. had paid the whole of the first debt, and a moiety of each of the others, the note and mortgage should be cancelled. B. having paid the amount thus stipulated to be paid by him on all the debts, held, A. could not avail himself of the note and mortgage as security against the remainder, and a bill by him to foreclose was dismissed with costs.'* 1 Teeter r. Pierce, 1 1 B. Mon. 399. =^ Stemmons v. Duncan, 9 B. Mon. '•^ Cliilton V. Cliapinan, 13 Mis. 470. 3.51. ■1 Newell V. Ilurlljurt, 2 Verm. 35. Cir. XIII.] SUCCESSIVE MORTGAGES, ETC. 325 56 h. A mortgage was taken from A. to indemnify B., who had given his bond for a loan to A., in which bond C. was bound for B. The mortgage was afterwards assigned absolutely by B. to C, the same to be at C.'s risk, and the debt to be collected at his expense. Held, that C. might recover on the mortgage, not only the debt and interest for which he was bound, but the reasonable expenses of col- lection ; and that the Court should have decided the amount recoverable under the assignment, as matter of law arising on the assignment.^ 56 i. A., being the principal debtor on a note, assigned to his sureties thereon a bond and mortgage, with the condition that they should pay the note, and afterwards assigned other property to trustees, to sell the same, and apply the proceeds to the payment of the note, and the residue, if any, to other certain creditors named. Upon a creditor's bill, afterwards filed against A., held, the complainants could not insist that the note should be paid out of the fund in the hands of the trustees, so as to give them the benefit of the bond and mortgage ; but the bond and mortgage were the primary fund for the payment of the note, which the holders were bound first to exhaust, before resorting to the fund in the hands of the trustees, so as to give the other creditors, mentioned in the assignment to trustees, the benefit of that fund, the complainant's equity being subsequent to theirs.2 56 j. Where there are more sureties than one, to w^hom a mortgage is given for indemnity, one cannot buy the land from a prior mortgagee, who has bought it under a decree enforcing his mortgage, to the prejudice of the other sureties; but they shall share in the benefit of such purchase.'^ 57. Somewhat analogous to the case of successive mort- gages, in so far as it involves the change of a single liability 1 Knox V. Moatz, 15 Penn. 74. -^ Hilton v. Crist, 5 Dana, 384. ■■^ Beslcy r. Lawrence, 1 1" IJaige, 581 . VOL. I. 28 326 THE LAW OF MORTGAGES. [CH. XIII. and charge, into several distinct burdens upon the same property, is that of a conveyance by the mortgagor of a por- tion of the land mortgaged, retaining the remainder ; or the conveyance of different portions, included in one mortgage, to successive purchasers ; and the apportionment of the mortgage debt upon such parcels, respectively. The gen- eral rule upon this subject is, that if the mortgagor conveys a part of the land, retaining the rest, the part retained is pri- marily liable for the mortgage debt. If he retains a part, and conveys the rest to different purchasers, the part retained is primarily liable, and the portions conveyed are liable in the inverse order of their alienation. And the latter branch of the rule applies, where the whole land is successively con- veyed.i The rule is said to apply to different mortgages of different dates ; and to be so administered as to throw a general lien upon such particular parcel, as will give a mort- gagee the benefit of his priority either upon the whole or a part of the land.^ As between the purchasers themselves, it is held, that a mortgage binds every part of the land it covers, and each spot is subject to its operation ; and, where it is made to bear on purchasers of different parcels from the mortgagor, they are bound to contribute only in proportion to the value of the share that each holds ; and the same rule applies to the equitable liens, acquired by proceedings and attachments in chancery.^ 57 a. The doctrine above stated is of ancient origin. In Harherfs case,^ it is laid down, that if one is seized of three acres under an incumbrance, and enfeoffs A. of one acre, and B. of another, and the third acre descends to the heir, who 1 Ferguson v. Kimball, 3 Barb. Ch. lis, Saxt. 413; Britton v. Updike, 2 G16; Cusliinf; r. Aycr, 2'y Maine, 383 ; Ovccn, Cli. 125; Wikoff r. Davis, 2 Kellogg I'. Hand, 11 I'aige, 59; Cum- Green, Cli. 224; Porter v. Scahor, ming f. Cumniiiig, 3 JCeliy, ((ia.) 400 ; 2 Koot, 146; Mayo i'. Tompkins, 6 Knickcrbaeker v. J5outvvell, 2 Sandf. Munf. 520 ; Black v. Morse, 3 Ilalst. Ch. 319; llenklc ?;. Allstadt, 4 Gratt. Cli. 509; Howard, &c. v. Ilalscy, 4 284; Skecl v. Sprakcr, 8 Paige, 182; Sandf. 505. Allen V. Clark, 17 I'iek. 47 ; Clowes u. 2 Sehryver v. Teller, 9 Paige. 173. Dickenson, 5 Johns. Cli. 240 ; Scluun- ?>. » Beall i\ Barclay, 10 B. Mon. 201. Bobbins, 1 Koot, 400; Hlieperd y. Ad- ''3 Co." 11. ams, 32 Maine, G3; .Sliannon v. Marscl- CH. XIII.] SUCCESSIVE MORTGAGES, ETC §27 discharges the incumbrance, he shall not have contribution, " for he sits in the seat of his ancestor." 57 b. In Massachusetts, the doctrine is thus laid down : — " It is a well settled legal doctrine, that where lands are charged with a burden, that burden should be shared equally. Courts of equity will always enforce this rule, either upon the principle of contribution, or in some other mode that wiU do substantial justice between the parties. It is an equally well settled rule, that if one party has deprived the other of his right to enforce a contribution, or, what is here deemed equivalent, the right of substitution in the place of the mort- gage, he will be excluded from so much of his demand as the party might have enforced but for the interference of him who has thus discharged a portion of the lien." i 58. It has been held, that where a purchaser by parol of part of a mortgaged tract pays the mortgage to prevent a sale, he is entitled to be subrogated to the mortgage and the judgment thereon.^ 59. Where the purchaser of mortgaged land assumes in the deed, or covenants, to pay the mortgage, especially if the amount is deducted from the price, he is liable to pay the amount of it to the grantor, as part of the price ; and, as be- tween them, the mortgagor becomes a surety in respect to the mortgage ; (/) and at maturity the purchaser may be 1 Per Dewey, J., Paikman v. Welch, ~ Champlin i'. Williams, 9 Barr, 341. 19 Pick. 238. (I) In reference to the mortgagee, the mortgagor still remains the prin- cipal debtor. Marsh v. Pike, 1 Sandf Ch. 210; 10 Paige, 595. Although the language is used " on condition that said, &c., shall assume and pay said note," &c. ; yet the grantor, after paying the interest, may recover it from the grantee. lie is not bound to claim a forfeiture of the land ; although he might do so at his election. And the promise is not void, as being within the statute of frauds — being a promise to pay the debt of another, or con- cerning real estate. Although the consideration is a conveyance of land, it is past and executed, and the promise is a simple obligation to pay money. And the substance of the contract is with the plaintiff, on a consideration 328 THE LAW OF MORTGAGES. [CH. XIII. compelled to pay it. So a subsequent purchaser from him. As between him and the vendor he makes the debt his own. But, the vendor still remaining liable to the mortgagee, the relationship of principal and surety arises between the ven- dor and purchaser, and may be illustrated by the analogous case of an undertaking by one partner to pay the debts of a dissolved partnership. Such debts are thereafter regarded in equity, between the partners, as the debts of the undertaking party ; and the continuing liability of the others is, in the same point of view, a liability for the debt of another.^ So, also, a second grantee, taking the land from such purchaser, and the holder of the other part of the land, may claim an assignment of the mortgage to protect his rights.^ But one purchasing subject to a mortgage may still make any legal defence to a suit thereupon.^ 1 Blyer v. Monholland, 2 Sandf. Cha. drews v. Wolcott, 16 Barb. 21 ; Marsh 478 ; Ferris v. Crawford, 2 Denio, 595 ; v. Pike, 1 Sandf. CIi. 210 ; 10 Paige, 595. Morris v. Oakford, 9 Barr, 499, 500; ^ Halsey v. Reed, 9 Paige, 446. Flagg V. Tliurber, 14 Barb. 196 ; An- '^ Russell v. Kenney, 1 Sandf. Ch. 34. moving from him, to pay his debt, although the performance of it would sat- isfy the debt of another. Moreover, implied promises are not within the statute. Pike v. Brown, 7 Cush. 133. If the grantee signs the deed, he is liable in covenant ; otherwise, in assumpsit. Rawson v. Copeland, 2 Sandf. Ch. 251. The grantor may enforce the liability,' without actually paying the mortgage debt himself. Ibid. It has been recently held in Massachusetts, that the principle of law, by which, in some cases, an action has been maintained by one party, upon a simple contract made by the defendant with another to do an act for the benefit of the plaintiff, does not apply in case of a promise made to the ven- dor by the purchaser of an equity of redemption, to assume and cancel the raortgasre with the mortfra^e note ; and that the mortKaffee cannot maintain an action upon such promise. ]\Ir. Justice JMetcalf reviews the cases in which such a principle has been sanctioned by the Courts, and comes to the conclusion, that they constitute exceptions to the general rule on the sub- ject, none of which embraced the case before the Court. McUen v. Whip- ple, 1 Gray, 317. More especially docs this rule apply, where it docs not appear that the grantor is personally liable for the mortgage debt. King v. Whitely, 10 Paige, 405 ; Stevenson v. Black, Saxt. 338 ; Tichenor v. Dodd, 3 Green, Ch. 454. CH. XIII.] SUCCESSIVE MORTGAGES, ETC. 329 59 a. Where that portion of the land conveyed by the mortgagor is to be only secondarily liable for the mortgage debt, the relation of principal and surety is reversed from that above stated. Thus, A. purchased of B. one of several parcels of mortgaged land. B. became insolvent, and made an assignment of his property, in trust for the payment of his debts, the lands assigned being first chargeable with the payment of the mortgage, but imperfect security therefor, and A.'s parcel being chargeable, in case the land assigned should prove insufficient. Held, A. was, in legal effect, surety for the land assigned ; that, when sold upon fore- closure of the mortgage, it should satisfy the mortgage, and that he had a right to see that the principal fund was not impah-ed by any waste on the part of the assignees.^ 60. In New York, it is held, that if a deficiency exists, on foreclosure, the mortgagee may recover it from the grantee of a part of the land mortgaged.^ 61. Where a mortgagor conveys distinct portions of the land to two successive purchasers, the last of whom reserves enough of the price to pay the mortgage, and expressly for that pm-pose ; and such second purchaser accordingly pays the mortgage debt, taking a quitclaim deed fi:om the mort- gagee ; this is a redemption of the mortgage as to the first purchaser.'^ 61 a. Where a part of land mortgaged is sold, and an agreement to pay the mortgage contained in the deed, a purchaser from such grantee is chargeable with notice of the agreement, and takes subject thereto ; and if such purchaser buy the original mortgage, it is thereby discharged.^ 62. It is said, that a mortgagee, with notice of subsequent liens, has no right to release his mortgage, to the prejudice of such liens.^ Upon this principle it has been held, that if the mortgagee, for a consideration, releases that portion of 1 Johnson v. White, 11 Barb. 194. * Russell v. Pistor, 3 Seld. 171. 2 Halscy r. Ilecd, 9 Paif,'c, 446. & jNIcLean v. Lafayette, &c. 3 McL. 8 Gushing v. Ayer, 25 Maine, 383. 587. 28* 330 THE LAW OF MORTGAGES. [CH. XIII. the land which was primarily liable for the debt, he thereby discharges the other portion.^ So, if two estates be mort- gaged in one deed, and transferred to different persons, and one released by the mortgagee ; the owner of the other, on redeeming, cannot compel contribution, but may claim a deduction from the debt in proportion to the value of the parcel released.^ But, on the other hand, it is said, the rule of charging different parcels of land, subject to a common incumbrance, in the inverse order of their alienation, is a mere rule of equity ; and, as a release to a subsequent pur- chaser, of one parcel of the land, is not a technical discharge of the lands previously conveyed from the incumbrance, it is not an equitable release, except where it ought so to oper- ate upon equitable principles.'^ Thus, where a purchaser of part of land mortgaged paid the price to the mortgagee, taking a release of his land from the mortgage ; held, that parts of the land previously sold were not discharged.* 63. More especially where a mortgagee, whose mortgage covers two parcels of land, subsequently conveyed by the mortgagor to different purchasers, releases the parcel last conveyed from the mortgage, without any notice, actual or constructive, that the other parcel had been previously sold ; he does not thereby discharge the parcel not released.^ 64. If the purchaser of a portion of the land agrees with the mortgagor, that this portion shall remain subject to the lien, and this agreement makes a part of the consideration ; equity will not decree that the portion retained by the mort- gagor shall be first sold ; even in favor of a purchaser from the first purchaser, having notice of the agreement.^ 65. The owner of mortgaged property conveyed a portion of it, received the price, and afterwards sold the remainder for the full value to another person, under an agreement that 1 Tivxton f.lliiriier, 11 rcnn.(l Jones) * l':vcrtson v. Ogdni, 8 Taigc, 275. .312. But .sec llolin.iii v. Hank, &e. ^ 8 Tiiif^'e, 277; Stuyvesant v. Ilall, 12 Ala. .'!G9. 2 15arh. Clia. l.^l. '■^ Parkrnan v. Wckli, 19 Piek. 2.38. '' Kngle v. Haines, 1 Ilalst. Cha. 186; ■* Tatty V. Tease, 8 Taige, 277. Iluss v. Ilaincs, lb. 632. CH. XIII.] SUCCESSIVE MORTGAGES, ETC. 331 the purchase-money should all be applied upon the mort- gage, and the land released therefrom. The mortgagee accordingly released it. Held, such release did not dis- charge the portion first conveyed from the lien of the mort- gage for the balance of the debt.^ 66. A mortgage was made of twenty-seven acres, and another of ten acres, part of the land previously mortgaged. The latter was sold by the second mortgagee, and released by the first. The mortgagor then sold three acres of the re- maining seventeen, by a warranty deed. Held, an assignee of the first mortgage could not sell the three acres, until he had sold the fourteen not released, and then only for the deficiency.^ 67. One mortgage was made upon two lots, a second, to another person, upon one, and a third, to another person, upon the other. Held, the first mortgagee could not be com- pelled by the second to resort first to the lot mortgaged to the thkd ; but should be paid from the proceeds of both lots, in proportion to the amount produced by each.^ 67 a. The recording of his deed by a gi-antee from the mortgagor, is no notice to the mortgagee of the existence of such deed, so as to exempt the land granted from liability for the mortgage debt, by reason of a release of the land pri- marily liable.* 67 b. Searches made by a solicitor, with a view to fore- close a mortgage, which proceeding was abandoned after a bill was prepared, but before it was filed, are not evidence of notice to the mortgagee of the facts which they disclosed.^ 67 c. Where a release of mortgaged premises described a part of the lands released, by reference to a deed to the re- leasee, which bound the land upon " land now or late of W.," and " along said W.'s land ; " held, notice to the mort- gagee, that W. was or had been the owner of such adjoining lands. And, such lands, being a part of the mortgaged 1 Patty I'. Pease, 8 Paige, 277. * Huward, &c. i-. Ilalscy, 4 Sandf. - Mevey, 4 Barr. 80. 565. ^ Green v. Kaniage, 18 Ohio, 428. '° Ibid. 332 THE LAW OP MORTGAGES. [CH. XIII. premises, and having been conveyed by the mortgagor to W., long before the execution of the release ; held, the mort- gagee was chargeable with notice of such conveyance, and must account for the value of the released premises in dis- charge of the mortgage debt, as between himself and W.'s grantees.' 67 d. Where the part last conveyed was equal in value to the debt, and the purchaser bought in the mortgage debt, took an assignment of the mortgage, and foreclosed the same, and then, under a claim of title to the whole tract, released to the purchaser of the first sold portion, his, the as- signee's, right in this portion, upon being paid therefor ; held, the releasee could not, at law, recover back the money, though paid under a belief that the releasor had title to the whole tract. Whatever be the right of the releasee, his rem- edy is at equity alone. 67 e. A. mortgaged certain property to B. and others, to secure debts due them by him, and at the same time A. and his wife C. mortgaged to them property belonging to C. in her own right, from her father's estate, as a further security for A.'s debts to B. C. died before partition of her father's estate, and her portion was attached by the committee of partition to her son D. These mortgages were recorded May 3d, 1837. On February 12, 1839, B. and his co-mort- gagees released a portion of C.'s property covered by the mortgage, but this release was not recorded until January 16, 1840. In February, 1839, A,, as guardian of D., con- veyed to the co-mortgagees with B., but without prejudice to B.'s rights, a part of D.'s estate in satisfaction of their interest in the mortgage ; and, in December, 1840, they re- leased to A. all their title and interest, without prejudice to B.'s rights. July 10, 1839, A. mortgaged, as guardian of D., and by authority properly obtained, a part of D.'s estate to E., which mortgage was recorded July 19, 1839. February 6, 1840, B. bought from A. his equity of redemption in the 1 Howard, &c. v. Ilalscy, 4 Sandf. 5G5. CH. XIII.] SUCCESSIVE MORTGAdES, ETC. 333 estate covered by his first individual mortgage, whereby, as B. admitted in his pleadings, his estate as mortgagee was merged in the fee-simple. B. brought his bill to foreclose his mortgage on the estate of C, which had descended to D. E. filed a cross-bill, to exempt the lot mortgaged to him by A., as guardian of D. from liability to B., and alleged that he had no notice, when he took the mortgage of the release of a part of C.'s property from the mortgage. Held, the record of the second mortgage to E. was not constructive notice to B. and his co-mortgagees, so as to affect their right to proceed against the remainder of the premises, which was left covered by the mortgage after the release of a part to C, but, as C. was to be regarded as a surety for A., in her mortgage with him to B., that he was obliged first to proceed against the primary fund, which in this case was A.'s property, and, as he had purchased A.'s equity of re- demption therein, he must first deduct the price at which he took A.'s property from the mortgage-debt, and then, if there was a balance due, he could proceed against the surety's property. As the mortgage-debt was more than extinguished by A.'s property, B.'s bill was dismissed with costs, and the property was decreed to be sold by a decree under the cross- bill to satisfy E.'s mortgage.' 68. The assignment of a security to the owner of one parcel of land upon which it is an equitable lien, for the purpose of enabling the assignee to obtain payment from another parcel, which in equity is primarily liable ; operates as a merger of the lien in equity only as to the lands prima- rily chargeable.2 68 a. Where a purchaser of one of two mortgaged lots agrees to pay the mortgage ; a subsequent purchaser of the other has a right to the fulfilment of this contract, notwith- standing an agreement between the vendor and the first pur- chaser, subsequent to the second sale, to vary such original bargain.^ 1 Wheelwright v. Loonier, 4^ Edw. - Skcel v. Sprakcr, 8 Paige, 182. Ch. 232. ' 3 Baring v. Moore, 4 Paige, 166. 334 THE LAW OF MORTGAGES. [CH. XIII. 69. Two persons having bought land subject to a mort- gage, which they assumed to pay, one sold his share to the other, who agreed to pay the mortgage, and gave a bond of indemnity against it. Held, the seller might in equity en- force such agreement, or himself pay the debt, take an as- signment of it, and file a bill to foreclose.^ Also that the defendant was estopped to set up a payment made by the plaintiff before he parted with his interest.^ 69 a. If a mortgagor convey one of two parcels included in the mortgage, taking back a mortgage for the price, and, while this is unpaid, convey the other parcel to another purchaser, and then become insolvent ; if the first grantee will not contribute to redeem both parcels from the original mortgage ; the second, upon paying the whole debt, may claim an assignment of that mortgage, and thus enforce contribution.^ 69 b. A mortgagor of two tracts of land conveyed one to the plaintiff and the other to A., who assumed the mortgage- debt. A. failed to pay the debt, but conveyed, by quitclaim, to B., who verbally agreed to pay the mortgage. After pos- session taken for foreclosure, B. took an assignment of the mortgage, three years having expired, and sold the A. tract to C, and the plaintiff's tract to D. ' Without notice, the plaintiff brings a bill in equity against B. and D., praying for a conveyance of the land to him. Held, the bill could not be maintained.* 70. Where real estate, subject to mortgage, is owned by several persons, and the interest of one sold at sheriff's sale, the purchaser is not thereby personally chargeable with a proportion of the mortgage-debt, to one of the original own- ers who paid it after the sale, in the absence of proof that he was permitted to become the purchaser, on the condition of his assuming such responsibility. His mere declarations, made either before or after the sale, that he was bound to 1 Cornell V. Prescott, 2 Barb. 10. ■' Allen v. Clark, 17 Pick. 47. - Ibid. ^ Shaw v. Gray, 2.3 Maine, 174. CH. Xlil.] SUCCESSIVE MORTGAGES, ETC. 335 pay part of the said mortgage debt, are too slight to create such a liability, without proof of consideration for the prom- ise, and especially if made after his interest in the property had ceased, by reason of the sale of the same on a prior mortgage.^ 71. Where mortgaged land is sold on execution against the mortgagor, as between him and the purchaser, it becomes the primary fund for payment of the mortgage.^ In such case, the mortgagor's personal liability becomes separated from the ownership of the land, and from the remedy upon the mortgage against the land. And a judgment in favor of the mortgagor, in a suit brought upon the bond after such sale, could not be pleaded by the purchaser of the mortgaged premises, by way of estoppel, in bar of a suit for foreclosure.-^ 71 a. In Gill v. Lyon,^ the defendant was a purchaser from the mortgagor of part of the land mortgaged, and had paid the full value of the land, and took a deed with cove- nants of seizin and freedom from incumbrances. After this conveyance, the plaintiff bought the rest of the land, at a sale on a judgment against the mortgagor. Held, the de- fendant was not bound to contribute towards redeeming the mortgage, because the parties were not an an equal footing in equity. 72. So where there are two mortgages upon the same property, and the holder of the prior mortgage forecloses, and purchases in the property, the presumption is, that he bids only to the value of the equity of redemption ; and thenceforth the land becomes the primary fund for payment of the debt secured by the senior mortgage.-^ {m) 1 Wager v. Chew, 15^enn. 323. * Johns. Ch. 447. 2 Weaver v. Toogoodn Barb. 238. & Mathews v. Aikin, 1 Comst. 595. ■^ Heyer r. Pruyn, 7 Paige, 465. {m) A mortgage was made of an interest in certain mills, to secure 84,000, and a conveyance of other land to the mortgagee, absolute in form, but in fact, as security for SG.OOO. The mortgagee assigned the mortgage and conveyed the land to the same person, with notice of the prior transaction. 336 THE LAW OF MORTGAGES. [CH. XIII. 73. So where a mortgagee recovers judgment on the debt, and the mortgagor afterwards conveys land not included in the mortgage, and subject to the lien of the judgment ; the grantee may in equity oblige the mortgagee to apply the mortgaged premises first to his debt. ^ (n) 73 a. It has been held in Vermont, if several parcels are mortgaged for one debt, and a third person becomes inter- ested in one of them, from necessity, or otherwise than in the way of voluntary speculation ; he may either require of the mortgagee an equitable apportionment of the debt, or an assignment of the mortgage on payment of it ; in either case, reference being had to such property only as was equi- tably chargeable, where he became interested in the property.^ But this rule has been since questioned, and it has been held that, in case of mortgages of several tracts, the mort- gage is to be apportioned upon the land according to value, 1 Weaver v. Toogood, 1 Barb. 238. - Honic v. Chittenden, 1 Verm. 28. The grantee foreclosed the mortgage, and upon the sale purchased the mills, and afterwards mortgaged the whole property to the first mortgagee for Si 0,000. Held, the last mortgage was an equitable lien on the land only for S6,000 and interest, deducting the rents and profits. Williams v. Thorn, 11 Paige, 459. (n) Upon this subject, the following points have been recently settled in Kentucky. Where land and slaves are included in a mortgage, and parts of the property sold to different persons ; in equalizing the burden among the purchasers, the equitable course is to apportion it according to the val- ues at the time of foreclosure ; but not to take into consideration improve- ments hand fide made by the purchasers. Dickey v. Thompson, 8 B. Mon. 312. Where a mortgagor sells part of the properly, agreeing to pay the mortgage; it sliall first be paid from the part whicl^^ie retains, if any, be- fore calling upon the purchaser of another part. lb. ; ace. Gumming v. Gumming, 3 Kelly, (Ga.) 4G0. Where parcels of land, belonging to differ- ent purcha.sers, are charged with an incumbrance, each should bear its pro- portion thereof, according to its value, if each purchaser paid a full price, expected to hold the land clear, and made no engagement to pay the in- cumbrance. The burden cannot be thrown wholly upon the purchaser of the last lot. lb. CH. XIII.] SUCCESSIVE MORTGAGES, ETC. 337 and each owner to have a certain time for redeeming his part, or to be foreclosed. If one only redeems, he must also redeem the other part, or forfeit the whole. K he redeems the whole, he takes it himself^ 74. Where some of the defendants in their answers insist that the estates of others shall be first charged with the debt, and the latter are defaulted ; the Court will not deter- mine the order of sale, but direct the master to sell in inverse order, and conformably to equity .^ 74 a. A mortgagor of several lots sold one of them. The assignees of the mortgage brought a bill to foreclose, making all incumbrancers parties except the purchaser of this lot. A sale was decreed, and the lot was sold, and bought by one of the assignees, and the price nearly satisfied the mort- gage. The assignee brings ejectment for the lot, and recov- ers judgment. The purchaser of the lot then brings a bill to redeem, in payment of the balance of the mortgage. Held, he must also pay the price paid for the lot.^ 75, The following case illustrates the several points above considered, as to the respective rights of the various parties interested in a mortgaged estate. January 1, 1817, a mort- gage was made by one of the defendants to the plaintiff to secure a note for §1,116. The other defendant purchased the right of redemption, and filed a bill, setting forth that the mortgage included two lots of land, of very different values ; that lot No. 1, being the less valuable one, had been sold to him in November, 1821, upon an execution upon the other defendant and himself, as security for the other defend- ant, for $175 ; and praying that the mortgage debt due to the plaintiff* might be apportioned between the lots according to their comparative values, and lot No. 1 discharged from the mortgage upon payment of the amount thus charged upon it ; or that the plaintiff" might be decreed to accept his debt from the purchaser, and assign the mortgage to him. 1 Gates V. Adams, 24 Verm. 70. s Gliddon v. Andrews. 14 Ala. 783. 2 Ilathbonc v. Clark, 9 Paige, 648. VOL. I. 29 338 THE LAW OF MORTGAGES. [CH. XIII. It appeared that in July, 1821, the mortgagor sold No. 2, the plaintiff verbally promising to release it from the mortgage. In February, 1822, after the purchase of No. 1, the plaintiff, without consideration, accordingly made a release. Upon a bill in equity to foreclose, brought by the mortgagee against the mortgagor and purchaser, held, the case was not one where the purchaser, as a party interested in one of two mortgaged estates, might by the aid of a court of equity throw the burden upon the other, because the plaintiff's in- terest would be thereby affected ; but that the purchaser was entitled to relief, either by paying the mortgagee his debt, and taking a conveyance of all the property subject to the incumbrance ; or by paying such proportion of the debt, as the value of his purchase bore to that of the whole property ; that the Court were bound to regard the equitable situation of the property at the time of the purchase, taking into view the mortgagee's verbal agreement to release a part of it, as any other course would be punishing him for the benevolent act of relinquishing a part of his security ; and that the pur- chaser, not being a mere speculator or volunteer, but having purchased by reason of having been bail for the mortgagor, was entitled to the privilege, which the mortgagee would otherwise have had, of electing between the two modes of relief above specified.^ 76. It has been recently held, that where one person has two mortgages from different persons on different estates, and another person has a mortgage on only one of them, equity will not compel the former to resort first to the fund on which the latter has no claim.^ 76 a. Mortgages, successively to A., B. and C, on the same land, except seventy-five acres not included in B.'s deed. Held, as against A. and C, B. had a right to have A.'s mort- gage satisfied from that part of the land, and that C. could not call on B. to contribute pi-o raid to payment of A.'s mortgage.^ 1 Cl)ittcndcn v. 15arncy, 1 Verm. 28. " Conrad v. Harrison, 3 Leigh, 532. - Woollen V. Ilillcn, 9 Gill, 18.'). CH. XIV. 1 FUND FOR PAYMENT, ETC. 339 CHAPTER XIV. FROM WHAT FUND A MORTGAGE SHALL BE PAID, UPON THE DEATH OF THE MORTGAGOR. 1. General nature of the subject. 2. General rules as to the fund for payment of a mortgage. 7. Decided cases. 33. Miscellaneous points and decis- ions. 1. Having treated, in the several preceding chapters, of the respective titles and interests of mortgagor and mortgagee, and more particularly with reference to the question whether those interests come under the head of real or personal estate ; the natural succession of topics leads us to consider the dis- position which the law makes of a mortgagor's property after his death, in relation to payment of the mortgage debt ; or, in other words, the fund from which that debt shall be paid. This will be the subject of the present chapter. It is of far less importance in the United States than in England, be- cause in this country the law makes substantially the same disposition of the real and personal property of one deceased. Consequently, very few cases, comparatively, are to be found in the American Reports, where questions of this nature have arisen. They have, however, occasionally occurred, and any view of the American law of mortgages would be incomplete, without containing a general view of this partic- ular topic. 2. The general principles relating to this subject may be thus stated. It is a rule in equity, that where one dies leaving a variety of funds, and a debt which must be paid from them ; pay- ment shall be made from that fund tvhich had the benefit of the money. Hence a mortgage upon real estate, in the hands 340 THE LAAV OF MORTGAGES. [CH. XIV. of the heir or of a devisee, shall be paid out of the personal estate in the hands of the executor ; because the latter was increased by the money for which the mortgage was made, (a) (rt) The rule in question is to some extent predicated upon the theory and definition heretofore alluded to, (p. 1.) which makes borrowed money au essential element of a mortgage. In addition to the exceptions which will be presently stated, it would seem that the rule ought not to apply in any case where the mortgagor's personal estate is not augmented by making the mortgage, as in the common case of buying land, paying part of the price, and mortgaging back for the rest; the whole of which operation, taken to- gether, diminishes, instead of increasing the personalty. Upon a sale by the mortgagee for the purpose of foreclosing ; if in the lifetime of the mortgagor, the surplus, after satisfying incumbrances, is per- sonal estate ; if after his death, it belongs with the equity of redemption, to the heir. Wright v. Rose, 2 Sim. & St. 323. During the mortgagor's life, the land is said to be the primary fund for payment. Gilbert v. Averill, 15 Barb. 20. So where a mortgagor conveys the land, subject to the payment of the mortgage by the purchaser, the land is the primary fund therefor, and is not discharged by a release from the mortgagee to the mortgagor of his personal liability. Tripp v. Vincent, 3 Barb. Ch. 613. The purchaser of land, subject to the payment of a mortgage, must rely on the land for payment, and cannot make a personal claim against the mortgagor. Cherry v. Monro, 2 Barb. Ch. 618. Land was conveyed to two persons, who gave back a joint bond and mort- gage for the price. One of them afterwards conveyed to the other his moiety, subject to the mortgage, the latter agreeing to pay the bond and mortgage, and giving the former a bond of indemnity against it. The latter then conveyed the whole to another person, by a warranty deed ; and sub- sequently became insolvent, and failed to pay the bond and mortgage. The mortgagee being about to foreclose, the last purchaser induced him to bring an action against the joint mortgagor, who had transferred his interest to the other, upon the bond. A rule nisi for judgment having been obtained against the defendant in that suit, he tendered to the plaintiff the amount due, Avith interest and costs, and demanded an assignment of the bond and paortgagc to a third person, that he might enforce them upon the land. The plaintiff", in collusion with the purchaser, refused to receive the money and make the assignment. The defendant thereupon files the present bill in Chancery against both these parties. Held, he might in equity require the mortgagee to resort to the land for payment, and to be subrogated in the place of the mortgagee to his remedy against the land. lb. CH. XIV.] FUND FOR PAYMENT, ETC. 341 And this principle is adopted, though the land be devised subject to the incumbrance, or the personal estate bequeathed, or the land expressly charged with debts, or the real estate limited in trust, either in fee or for a term, for payment of debts. So -where an equity is sold on execution, the land is the primary fund. 2 Cruise, 146. A mortgage debt must be paid out of the personal estate of the mortgagor, and, if that is not adequate, then the balance should be paid out of that por- tion of the real estate contained in the mortgage. Goodburn v. Stevens, 1 Maryland Ch. Decis. 420. A mortgagee may resort to the mortgaged property, after the death of the mortgagor, without going into an account of the j^ersonal assets. Patton v. Page, 4 Hen. & Mun. 449. An administrator, after representing the estate insolvent, sold real estate, under a license, and applied the proceeds in full payment of a debt secured by mortgage of such estate, ■which "was duly recorded, but previously un- known to him and the purchaser ; charging himself in his account with only the balance. Held, he was justified in so doing ; inasmuch as he could not make a good title to the estate, without extinguishing the mortgage, the estate itself being sold, and not a mere equity of redemption. The mort- gagee was not bound to relinquish his security and receive a mere dividend, but could hold it till paid in full. Church r. Savage, 7 Cush. 440. Demise of the A. estate, subject to debts, &c., to the wife for life, remain- ders over; and of the B. estate, subject, &c., to her absolutely. The testator afterwards mortgaged the former estate. The personal property being de- ficient, held, the two estates should contribute ratably to the payment of the mortgage. Middleton v. Middleton, 21 Eng. Law & Eq. 542. Where notes are secured by mortgage, and the mortgagor devises part of the premises and sells the rest, and dies ; the holder of the notes loses no rights under the mortgage by failure to present them to the executor for payment within the time required by law, in order to hold the executor ; and there is no distinction between the case of a mortgagee in possession and that of one out of possession of the mortgaged premises. Inge v. Board- man, 2 Ala. 331. In Xew Hampshire, an administrator must redeem a mortgage, unless licensed to sell subject thereto. Kev. Sts. 318. In Missouri, the Court may order redemption with the personal assets. If the will makes no provision therefor, and It will be beneficial to the estate, and not injurious to creditors ; otherwise, the Court may order a sale of the equity. Missouri Sts. 29* 342 THE LAW OF MORTGAGES. [CH. XIV. 3. If the personal estate is deficient, a mortgage shall be discharged from the proceeds of land devised for payment of debts. And where one estate descends and another subject to mortgage is devised, the mortgage shall be paid from the former, (b) (b) It is said, there are four classes of estates to be applied in discharge of mortgage debts ; first, the general personal estate, unless specially ex- empted or specifically bequeathed ; secondly, real estates particularly devised for payment of debts, which may be so devised as to form a mixed fund with the first ; thirdly, real estates descended, whether purchased before or after the date of the will ; fourthly, real estates specifically devised, charged with payment of debts. Coote, 547. The devisee of an estate in mortgage may call on an estate devised for payment of debts, to indemnify him. So upon estates devised, and charged with payment of debts. So although the estate is devised subject to incum- brances, lb. 544. So the descended estate shall exonerate the mortgaged estate devised. And the like will be the case, if the personal estate is ex- empted from payment of debts, and the mortgaged estates devised subject to incumbrances, and other parts of the real estate suffered to descend to the heir. After the personal estate is exhausted, estates expressly devised for pay- ment of debts will be next applicable. This rule however will not apply to estates specifically devised charged with payment of debts.- lb. 545. If the owner of several leasehold estates mortgage one of them, and then bequeath them separately to different legatees, and direct payment of his debts from his residuary personal estate, which proves iusuflicient for that purpose ; the legatee of the mortgaged estate takes it, cum onere, and cannot call for a contribution from the others. IlalliwcU v. Tanner, 1 Kuss. & My. 633. But where several estates, separately mortgaged, were specifically devised to different persons, with directions that the mortgages should be paid from the personal estate, which proved insufficient to pay the mortgage and other debts ; a decree was passed, that the mortgage and other specialty debts should first be paid from the personal assets pi'o rata, the residue of the mort- gage debts borne by the respective estates on which they were charged, and the deficiency of the other specialty debts, and the simple contract debts, borne by the several devised estates and specific legacies pro rata. Symons V. James, 2 Y. & Coil. 301, N. S. In New York, under the Ileviscd Statutes, upon the death of a mortgagor, the real estate is primarily chargeable in the hands of the heir or devisee. CH. XIV.] FUND FOR PAYMENT, ETC. 343 4. If, however, the will either expressly provide, or contain provisions from which a clear intent may be inferred, that the mortgage debt shall fall upon the real instead of the per- sonal estate ; the law will carry it into effect. So the specific bequest of a chattel will exempt it from application to a mortgage debt. 5. The rule above stated, (§ 2,) being founded on the con- sideration that the debt was originally a personal one, and the charge on the land only collateral, does not apply, where the mortgage debt was contracted by one person, and the land descends to another, who also dies, leaving it a part of his estate. Thus if a grandfather make a mortgage, with a covenant to pay the money, and the land descend to his son, who dies without paying the mortgage, leaving personal estate and a son ; the mortgage shall not be paid from the father's personal estate. So where one covenants to pay the debt of another, which is secm-ed by mortgage, the personal estate of the former will not be applied in the first instance to payment of the mortgage. And even though one expressly charge his real and personal estate with his debts, the latter unless the ■will make provision for another mode of payment. Halsey v. Eeed, 9 Paige, 446 ; N. Y. Rev. Sts. 749. In 1824, the intestate gave a bond, secured by mortgage. The land was sold subject to payment of the mortgage, and conveyed to a trustee for the benefit of the wife of the intes- tate. After his death, the cestui que trust, being legal owner under the Revised Statutes, administered upon the estate. Held, in equity, the land "was the primary fund for the payment of the mortgage, and the administra- trix, owning subject thereto, was not allowed for a payment of the mort- gage. Jumel V. Jumel, 7 Paige, 591. In Pennsylvania, where land is mortgaged for the payment of the widow's share of the valuation of the property of an intestate, under an inquest from the Orphans' Court ; the mortgagee may resort to the mortgagor's personal property, and is not restricted to the land. Mansell, &c. 1 Parsons, 371. In Maryland, the devisees of mortgaged property have a right to call on the executor to redeem, to the extent of the excess; where the personal property is more than sufficient to pay debts. But they have no such equity, as against devisees of other property. Gibson v. McCormick, 10 G. & J. 66. 344 THE LAW OF MORTGAGES. [CH. XIV. will not be liable to the payment of a mortgage made by another. 6. So where one purchases land subject to mortgage, his personal estate will not go to pay it, even though he have expressly covenanted for its payment, unless an intention be proved to make the debt his own. If husband and wife join in mortgaging her land, and he has the benefit of the money ; it shall be first repaid from his personal estate. But where money is borrowed on her estate, partly for his use and partly to pay her debts ; he is not bound to indemnify her estate against any part of it. Nor will his personal estate be liable, if it appear not to have been her intention to stand as a cred- itor for the mortgage-money.^ 7. The following cases illustrate the principles above stated.- 8. A testator, having purchased an annuity out of lands mortgaged, and for his own protection taken an assignment of the mortgage ; directed in his will that the mortgage debt should be paid from the personal estate ; and it was decreed accordingly ; " chiefly for that Packley (the testator) by his will, which were the words of a dying man, had declared it to he his debt, and appointed it to be paid out of his personal estate." ^ 9. A person having a life-estate, with power to settle a jointure upon his wife, covenanted to make such settlement, but died without doing it. Upon a bill brought against his heir for a specific execution, it was held, that the assets of the deceased should not be applied to relieve the estate set- tled, because the debt did not originally charge the person- alty. The covenant remained as a real lien on the estate, and the personal estate could not be applied, because there was no debt from which this estate was to be relieved.* 1 2 Cruise, 14G-175. truther, lOBciiv.453 ; Symons v. James, '^ Sec 1 Hill, on R. P. 431-433 ; Ma- 2 Y. & C. N. K. 301 ; Hewett v. Snare, son, &c., 1 Parsons, 132; Mansell, &c. 1 IJc Gcx & Sm. 333. lb. 370; Driver v. Fcrrand, 1 11. & My. " Pocidey v. Poddcy, 1 Vern. 36. 081 ; Kirkc v. Kirke, 4 Riiss. 43.'j ; Jones "^ Coventry v. Coventry, 9 Mtfd. 12 ; V. Jiruce, 11 Sim. 221; Ouscley v. Ans- 2 P. Wms. 222; Str. 596. CH. XIV.] FUND FOR PAYMENT, ETC. 345 10. A person having died after making a mortgage of his estate, his daughter and heir married, and her husband set- tled the estate by fine on himself and his wife, joined in an assignment of the mortgage, and covenanted to pay the money. After his death, held, his personal estate should not be applied to pay the mortgage, as the covenant was not intended to change the nature of the debt, but only as an additional security to the mortgagee.^ 11. A father having made a mortgage, his son covenanted with an assignee of the mortgage to pay the debt. Upon the death of the father, the son by a settlement succeeded to the estate. The latter having died intestate, held, the debt should not be paid from his personal ^ssets, because the debt was still that of the father, and the covenant of the son was a mere security .^ 12. In the case of Parsons v. Freeman,^ it was said by Lord Hardwicke, that where an ancestor has not personally charged himself with the mortgage debt, the heir shall take cum onere. So if one purchase the equity of redemption, with usual covenants to pay the mortgage, he was inclined to the opinion, though he knew of no case which decided the point, that the heir could not claim to .have the land relieved. But where, as in that case, the purchaser agreed with the seller to pay a part of the price to him, and the rest to the mortgagee, this made the debt his own, and it should be first paid from the personal estate, (c) 1 Bagot V. Oughton, 1 P. Wras. 347. See Ancastcr v. Mayer, 1 Bro. 454 ; Le- 2 Evelyn v. Evelyn, 2 P. Wms. 650. man v. Newnham, T Ves. 51. 3 Arabl. 115; 2 P. Wms. 664, n. (c) It is supposed by Chancellor Kent, (Cumberland v. Codrington, 3 Jolins. Cha. 266-267, a case of extraordinary learning and value,) that this case is imperfectly reported, no facts being stated, and a very brief note of the opinion. He remarks, that as it stands it is repugnant to most of the cases before and after it, and even to another decision of Lord Hardwicke himself, made soon afterwards. Thus in Lewis v. Nangle, (Amb. 150, 2 P Wms. 664, n.,) an estate subject to mortgage having come to a married 846 THE LAW_ OF MORTGAGES. [CH. XIV. 13. In the case of Forrester v, Leigh,^ a testator had pur- chased several mortgaged estates, and covenanted to pay one of the mortgage debts. He pm-chased a part of another of the estates, and he and his co-purchaser covenanted to pay their several shares, and to indemnify each other. Held, by Lord Hardwicke, as between legatees and devisees of the testator, the debt should be paid from the land. 14. A mortgagor conveyed the estate with warranty, ex- cept as against the mortgage, providing also that the mort- gage debt should be paid by the purchaser from the purchase- money. An indorsement acknowledged payment of a part of the price on perfection of the deed, and the rest allowed on account of the mortgage. The purchaser by will gave a large personal estate to his wife, and also devised to her the mortgaged land for life, then to his Oldest son George in fee, subject to debts and legacies, declaring that his wife should hold, free from incumbrance, and that George should pay the interest of the mortgage debt from other lands devised to him. After some legacies, he bequeathed the rest of his per- sonal property, after payment of all his just debts, and aU his real estate, to George, whom he appointed his executor. George paid the interest, but not the principal, of the mort- gage debt. His mother also released her interest in the land to him. He made a will, giving small annuities to his younger sons ; the mortgaged land, according to his estate therein, to his youngest son, William ; and the principal part of his estate, which was very large, to his eldest son, Robert. After the death of George, Robert refused to pay the princi- 1 Ambl. 171 ; 2 P. Wms. G64, n. woman, tlie busbaud borrowed money upon a bond and mortgage, in which she joined, and the money was applied partly to pay her debts and partly for his use. There was a covenant by the husband to pay the whole debt. Lord Hardwicke held, that, according to the presumed intention of the par- ties, the land was the primary fund for payment, and the husband was not bound to relieve it. CH. XIV.] FUND FOR PAYMENT, ETC. 347 pal or interest of the mortgage debt, and, William being unable to pay it, the mortgage was sold, and afterwards the estate also, under a decree. William then filed a bill against Ihe executors of the father (Robert being one) and of the grandfather, to have the mortgage debt paid from the per- sonal assets, in relief of the land. Lord Chancellor LifFord decreed, that the mortgage debt was the debt of the grand- father at his death ; and that his personal estate, which came first to the son and afterwards to the grandson, should be applied to pay it. This decree was affirmed in the House of Lords.i (f/) 15. A mortgage was made to the plaintiff of a certain lot of land, and the mortgagor then devised all his estate, including many other lots, to the same devisee. The devisee devised the land mortgaged to one person, and the rest of her estate to her executors. The plaintiff having recovered judg- ment upon the bond secured by the mortgage, a motion was made, that the debt should be levied upon the land mort- gaged, and the rest of the estate discharged. Held, all the lands of the mortgagor should contribute, according to their respective values ; that the will of the first devisee showed no intention that the devisee of that will should take the estate cum o)iere, and therefore the mortgage debt should be satis- fied equally from this and the other lands ; and that as the latter devise was specific, to charge this devisee with the whole debt would plainly defeat the intention of the devisor, while charging the lands held by the residuary legatees would have no such effect.^ 1 Earl of Belvedere v. Eochford, 5 '- Morris v. McConnaughy, 2 Dall. Bro. Pari. 299. 189. (d) Chancellor Kent (3 Johns. Cha. 270, 271, 272) questions the binding authority of this decision. He remarks, that it has been disregarded or rejected by Lords Thurlow, Alvanley, and Eldon, and by Sir William Grant ; and also that no precise account is given of the reasons upon -Nvhich it proceeds ; and that it may perhaps be considered as turning upon the construction of a will and its very special provisions. 848 THE LAW OF MOKTGAGES. [CH. XIV. 16. A mortgagor having died, after devising the land, the devisee covenanted with the holder of the mortgage, that the land should remain bound for the debt and interest, with an addition of one per cent, of interest. After the death of the devisee, the question arose, whether the debt and interest, or at least the arrears of interest, with the additional one per cent., should be paid from his personal estate. Held, both the principal, the regular and the additional interest, should be primarily charged upon the land.^ 17. In Tankerville v. Fawcet,^ Lord Kenyon declared, that where an estate comes to a person, subject to a mortgage, although the mortgage is afterwards assigned, and the party covenants to pay'the money, his personal estate is not bound. And, a devisee having voluntarily charged a simple contract debt of the testator upon the land devised, and died ; held, the debt was not the proper debt of the devisee, and his personal estate was not liable. 18. A purchaser of a mortgaged estate agreed with the mortgagor, as part of the consideration, to pay the debt to the son and heir of the mortgagee', and the rest of the price to the mortgagor. He also covenanted with the mortgagor to this effect, and that he would indemnify him from the mortgage. The purchaser having died, leaving a will, the devisee brings a bill in equity to have the mortgage dis- charged from the personal estate. Held, the bill could not be maintained ; that the personal estate is never chargeable in equity, unless it is chargeable in law ; that the pm-chaser took the estate subject to the charge, but the debt, as to him, was real, not personal ; and that his contract with the mort- gagor was a mere contract of indemnity, which the law would have implied, though not expressly madc.-^ 19. An estate lield by a lease for lives, subject to a charge of £2,200 to one A., was conveyed subject to this charge, and 1 SiKifto V. Shafto, 2 r. Wms. 6G4, » Tweddell v. Twcddcll, 2 Bro. 101, n. 1. 152. - 2 Bro. 57. CH. XIY.] FUND FOR PAYMENT, ETC. 349 to another of <£900 to B., by an indenture to which A. was a party, and in which the purchaser covenanted to pay both charges. The purchaser paid the debt to B., and afterwards gave bond to pay A. the interest of her claim for her life, and the principal at his death. The lease having been repeatedly renewed, the purchaser died, having devised the estate to two of the defendants, and appointed two others of the defend- ants his executors. The charge being called in, and paid to a legatee of A. by the executors, the defendants were called on by the plaintiffs' pecuniary legatees, who were unpaid, to have the £2,200 replaced by the devisees of the land, and paid over to them. Held, notwithstanding the covenant by the purchaser to pay the debt, contained in an instrument to which A., the holder of the debt, was a party, and the subse- quent bond, changing and extending the original time of payment, the nature of the debt was not altered, but it con- tinued primarily a charge upon the land ; that, though the purchaser became personally liable, this did not subject his personal estate, because no such intention appeared ; and the defendants were decreed to pay over the money.^ 20. It seems, to charge the personal estate, the assumption of the debt must be accompanied with evidence of an inten- tion to assume it as a personal debt, detached, as it were, from the land.^ 21. In the case of Mattheson v. Hardwicke,'^ there was a devise to two persons, charged with debts and legacies. One of the devisees paid the whole except one legacy, for which he gave his note. It appeared that he had paid off the other incumbrances, in order to relieve the land from them entirely. The devisee having died, held, the note was merely collateral security, and the land the primary fund for payment of the legacy. 22. The question in many of the cases seems to be, not whether the party acquiring the estate mortgaged or charged 1 Billin^hurst v. Walker, 2 Bro. 604. 3 2 r. Wms. 664, n. 2 3 Johiis. Ch. 256. VOL. I. 30 350 THE LAW OF MORTGAGES. [CH. XIV. has made himself personally liable for the debt, but whether the land or the personal estate shall be treated as the primary fund for payment. The distinction is, that where land is mortgaged as security for the mortgagor's own debt, the debt is the principal and the mortgage merely collateral. But the purchaser of a mortgaged estate, though he personally assume and covenant to pay the debt, is treated as a debtor only in respect to the land, and his promise is considered as made on account of the land, which therefore is the primary fund for payment. The cases establishing each of these propositions are said to be equally numerous and decisive.^ 23. The owner of land, having mortgaged it to raise money for his son, conveyed the land, subject to the mortgage, to the use of the son, who joined with his father in a covenant to pay the money. The land was afterwards reconveyed to the father, who covenanted to discharge the mortgage, and afterwards borrowed a further sum from the mortgagee, and made a new mortgage for the whole debt. A question aris- ing between the heir and personal representative of the mort- gagor, which should pay the debt ; Lord Alvanley, Master of the Rolls, held, that though the debt belonged to the son pri- marily in equity, and to the father and son together at law, the father had made it his own; and that it was as strong a case as could exist without an express declaration. He was careful not to contradict in any degree the principle estab- lished in the case of Tweddell v. Tweddell, which was a very governing case. In that case there was no communication with the mortgagee, but only a covenant of indemnity, and the purchaser did not thereby personally assume the debt.2 24. In Butler v. Butler,^ the purchaser of a mortgaged estate agreed with the vendor to pay the mortgage debt, and a further sum to the vendor, but there was no communication with the mortgagee. The authority of Tweddell v. Twed- 1 3 Johns. Ch. 250, 257. 8 5 Ves. 534. '•' Woods V. Iluntingfoni, 3 Vcs. 128. CH. XIV.] FUND FOR PAYMENT, ETC. 361 dell, was recognized, to show that the debt was primarily chargeable upon the land, and did not become the debt of the purchaser, as a personal liability. Lord Alvanley col- lected from the decisions that the purchaser of land, charged with a debt, by a mere covenant to indemnify the vendor, does not make the debt his own, except in respect to the estate ; and the estate, and not his personal property, must bear it. The purchaser might be circuitously liable to the vendor for his indemnity, but in such case the decree would have been for a sale of the land. 25. In the case of Waring i\ Ward,^ the purchaser of an estate mortgaged, borrowed a further sum, for which he gave a new bond and mortgage. After his decease, held, the debt should be paid from the personal estate, because the personal contract was primary, and the real contract only secondary. Lord Eldon, in giving judgment, remarked, that in general the personal estate was primarily liable, because the contract was primarily a personal one, and the land bound only in aid of the personal obligation ; that Lord Thurlow carried the doctrine so far as to hold, that if the purchaser of an equity of redemption covenants to pay the mortgage debt, and also to raise the interest from four to five per cent., yet, as between his real and personal representatives, even the additional interest is not primarily a charge upon the personal estate, being incident to the charge ; that, even without any express covenant, the purchaser of an equity is bound to indemnify the vendor against any personal obligation, and pay a debt charged upon the land ; that the case of Tweddell v. Twed- dell proceeded upon the ground, that the debt due the mort- gagee was never a debt directly from the purchaser ; that if Lord Thurlow was right upon the fact, the case was a clear authority, that the purchase of an equity will not make the mortgage debt the debt of the purchaser, and in his hands it is the debt of the estate^ and a mortgage interest, as between his representatives. 1 5 Ves. 670 ; 7. 332. 352 THE LAW OF MORTGAGES. [CH. XIV. 26. In the case of the Earl of Oxford v. Lady Rodney,^ the testator purchased an estate subject to mortgage, paid the surplus of the price to the vendor, and then covenanted with the mortgagee to pay him the mortgage debt. After his death, upon the question whether the personal estate should go to pay the debt, Sir William Grant, Master of the Rolls, remarked, that it was not very easy to reconcile the case of Tweddell v. Tweddell with the decision of Lord Hardwicke in Parsons v. Freeman, that where the mortgage- money is taken as part of the price, the charge becomes a debt from the purchaser. But he admits the correctness of Lord Thurlow's principle, where the contract of the pur- chaser gives the mortgagee no direct and immediate right against himself, but is a mere contract of indemnity, (e) 27. From this series of cases Chancellor Kent deduces the general principle, that a covenant by the purchaser of an equity of redemption, to indemnify the vendor against the mortgage, does not make the debt his own, so as to charge it primarily upon his personal assets. To have this effect, there must be a direct communication and contract with the mortgagee, and some decided evidence of an intent prima- rily to charge the personal estate ; as where the original con- tract is essentially changed, and lost or merged in the new and distinct engagement with the mortgagee ; and the party shows, that he meant to assume the debt, absolutely and at all events, as his own personal liability.^ 28. The following are the most recent English cases upon the subject under consideration. 29. A testator, by his marriage settlement, after reciting 1 14 Ves. 417. 2 3 Johns. Clia. 261, 2G2. ((?) Upon these observations Chanccller Kent remarks, (3 Johns. Cha. 260, '2G1,) that the mortgage debt is always /jo ?7 of the price, unless the ven- dor agrees to remove the incumbrance. By liis covenant of indemnity, the purchaser takes the land cum onere, and the value of the incumbrance is of course deducted from the value of the land. CH. XIV.] FUND FOR PAYMENT, ETC. 863 that he was seized in fee of certain estates, subject to mort- gage debts, the amount of which was mentioned, and which he had contracted, settled the estates, subject expressly to the debts, on himself for life, remainder to secure a jointure for the wife, remainder to the first and other sons of the marriage in tail male, remainder to himself in fee, and cove- nanted for the title, excepting the debts ; and he reserved to himself the power of raising .£10,000 by mortgage, to be made redeemable by the person for the time being entitled to the freehold or inheritance. The testator exercised the power, reserving the equity of redemption to himself, his heirs, executors, &c., or the person for the time being enti- tled, as aforesaid, and covenanted to pay the mortgage debt. He then died without issue, having by his will charged his real and personal estate with his debts, and bequeathed the residue of his personal estate after payment of his debts, and devised his remainder in fee expectant on the failure of his issue male to his brother and his brother's sons in strict set- tlement. Held, they were not entitled to have his personal estate applied to exonerate the devised estates from any of the mortgage debts.' Shadwell, V. C, says:^—" The diffi- culty in this case is, that if you claim the benefit of the com- mon rule, then you will have the personal estate of the set- tlor applied to exonerate the whole inheritance ; and there- fore it will be applied contrary to the intention of the settlor. For his widow is still alive, and therefore the effect will be to exonerate the settled estates in her favor. As the settle- ment was made so as to manifest an intention, on the part of the settlor, that the whole inheritance should bear the mort- gages, I think that that intention, having been once plainly manifested, must be considered as existing until it is shown to have been altered. And as there is nothing in this case which shows that thaf intention was ever changed, my opin- ion is that the common rule does not apply." 30. A testator gave to his wife certaiii. specific articles of 1 Ibbetson v. Ibbetson, 12 Sim. 206. - lb. 216, 217. 30* 354 THE LAW OP MORTGAGES. [CH. XIV. personal property, and certain portions of real estate free from the mortgages thereon, and the benefit of certain con- tracts for the purchase of other lands. He devised the rest of his real estates, in trust to the devisee to sell, and from the proceeds pay, first, his funeral and testamentary expenses, his debts due on the mortgages of the estates devised to his wife, the sums due on the contracts, and all his other debts ; and in the next place, he directed certain sums to be paid from the proceeds to different persons, and gave the residue to another legatee, and appointed his wife sole executrix. Held, the personal estate was exonerated from the debts.^ 31. A testator, having mortgaged an estate for £4,460, devised it in fee, the devisee " paying the mortgage thereon;" and devised his residuary real and personal estates to trus- tees for payment of debts, and gave to the mortgagee, through his executors, .£2,000 to exonerate the estate. Held, if he had simply devised " the estate," or " the estate subject to the mortgage thereon," the mortgage would have been pay- able from his general estate. But the words, " he paying," &c., imposed a duty on the devisee, and constituted a direc- tion or condition that he should pay the mortgage, or take the estate subject to the mortgage, over and above the £2,000.2 32. A mortgagee made a sub-mortgage of the estate, and then devised it, and bequeathed to the sub-mortgagee, through his executors, a certain sum, to clear the estate in part. After his death, the sub-mortgagee foreclosed. Held, the devisee was entitled to the sum bequeathed.^ 33. " If an estate descend to the heir, subject to a mort- gage, and he become a party to an assignment of the mortgage, and, by bond or covenant, contract with the as- signee to pay the amount due, he does not thereby make it his personal debt, as between his heir and executor. As between those parties, the mortgaged estate remains the 1 Blount V. Hipkins, 7 Sim. 4.1. ^ Hjjd. ^ Lockluirt V. Hardy, 9 Bctvv. .379. CH. XIV.] FUND FOR PAYMENT, ETC. 355 primary fund for the payment of the mortgage debt ; and the bond or covenant of the heir of the mortgagor is consid- ered merely as an auxiliary security to the assignee." ^ • 34. If one, having several leaseholds, mortgage one of them, and then bequeathe them separately to different parties, and direct his debts to be paid from his residuary personal estate, which proves insufficient for the purpose ; the legatee of the estate mortgaged must take it cum onere, and cannot claim contribution from the other legatees.^ 35. But where several estates, subject to distinct mort- gages, were specifically devised to different persons, with a direction that the mortgages should be discharged from the personal estate, so that the devisees might hold the estates, freed therefrom ; and the personal assets proved deficient for payment of the mortgage and other debts ; a decree was made, that the mortgage and other specialty debts should first be paid from the personal assets pj'o rata, that the resi- due of the mortgage debts should be borne by the respective estates to which they belonged, and the deficiency of the other specialty debts and the simple contract debts, by the several devised estates and the specifi« legacies, pro rata.^ 36. In general, on a deficiency of other assets for payment of mortgage debts, each devisee takes his estate cum onere. But where different mortgaged estates form part of a general mass of property, which is devised charged with debts, these estates, on failure of other assets, shall contribute, in propor- tion to their respective values, to pay off the mortgages, as well as the other remaining debts."* 37. A mortgagor, by his will, ordered payment of his debts, and devised his residuary lands, including the land mort- gaged and all his residuary personal property, to his oldest son, who was the executor. The son dies intestate, the mortgage not being paid. The father and son leave suffi- 1 Per Leach, M. R., Biirliam v. Tha- ^ Svmons v. James, 2 Y. & Coll. (N. net, 3 My. & K. 622. S.) 3U1. 2 Ilalliwell 1-. Tanner, 1 Russ. & Mv. * Coote, 548. 633. 356 THE LAW OF MORTGAGES. [CH. XIV. cient personal property to pay the mortgage. Held, as be- tween the heir and administrator of the son, the mortgaged estate was the primary fund for payment.^ 38. Personal estate will not be primarily applied to the prejudice of legatees, except residuary legatees, or of credi- tors. So the paraphernalia of the widow are exempted.^ 39. A specific devisee of mortgaged estate shall have the estate exonerated from the debt, as against a residuary lega- tee, though such estate, and the residue, are both given freed from debt ; if the fund provided by will for the payment of debts proves insufficient.^ 40. The administrator of an insolvent estate is neither requked nor allowed to apply the personal assets to the redemption of a mortgage made by the intestate.* 41. In the case of Haven v. Foster,^ Morton, J., remarked : " By the common law, the heir is entitled to the aid of the personal property of the mortgagor in paying off mortgages ; but if the heir, without making application for aid in redeem- ing, disposes of the mortgaged estate, he cannot afterwards come upon the personal estate for assistance. And no authority was cited ox has been found, which requires the administrator in England to redeem mortgaged estates in foreign countries. But, on the contrary, it is very clear, that such administrator would have no power to do any act, as such, out of the kingdom. So an executor or administrator, appointed in this State, has no authority beyond its limits. He would have no power to make a tender in any other State, nor could he resort to any legal process, to compel the mortgagee to accept a satisfaction of the debt or discharge the mortgage. The law imputes negligence to no man for not doing that which he has no legal power to do. It is true, that if the mortgagee had chosen, he might not only have compelled the administratrix to pay out of the estate here, 1 Clarendon v. Barham, 1 Y. & Coll. ^ Brooke v. Warwick, 1 Ilall & Tw. 688. 142. ^ Coote, 540. ■* Gil>son v. Crehorc, .5 Pick. 14G. 6 9 rick. 133, 134. en. XIV.] FUND FOR PAYMENT, ETC. 357 but he might voluntarily have accepted payment of her, and given her a valid discharge. But he could not have been compelled to do either. He had the power, at his own elec- tion, either to commence process upon the mortgage itself, or to take out administration in the State where the mortgaged land was, and in the one way or the other to obtain satisfac- tion of the debt from the estate itself. As the administratrix had not the power to prevent him from adopting either of these courses, so her omission to do it, or to attempt to do it, did not amount to waste." 358 THE LAW OF MORTGAGES. [CH. XV. CHAPTER XV. EQUITY OF REDEMPTION. 1. Definition and nature of an equity I 38. And liable to legal process, of redemption. j 42. But it is not thus liable, in a suit 3. Distinction between an equity of upon the mortgage debt; cases and dis- redemption and a trust. 13. Who may redeem a mortgage. 25. Against whom redemption may be claimed. 28. Redemption in case of the death- of the mortgagor. 31. Redemption by a party having a partial interest in the property ; claim for reimbursement. 37. An equity of redemption is assets. tinctions upon this subject. 5G. Whether the indorsee of a mort- gage note may levy upon the equity of redemption. 60. Curtesy in an equity of redemp- tion. , 61. Whether subject to dower; Eng- lish and American law upon this' subject. 88. On what terms the widow may redeem. 1. In the previous chapters, treating of the respective estates of mortgagor and mortgagee, it has of course been found necessary to explain the nature of that title which the law denominates an equity of redetnption. We propose now, however, to consider the subject in more minute detail, and distinctly point out the qualities, rights, and obligations inci- dent to this somewhat anomalous interest in real property. 2. It is said,^ an equity of redemption can be more appro- priately illustrated than defined or described. While some learned judges have called it, in the eye of a court of equity, the fee-simple of the land, others have spoken of it as nothing' at all in the eye of the law? (a) 1 1 Pow. 250 ?., n. A. ^ Sec Burgess v. Wheate, 1 W. Bi. 145 ; Preston v. Christmas, 2 Wils. 86. (r/) It is said, an equity is an estate or interest in the land, reserved or retained by the tenant. Viscount, &c. v. Morris, 3 Hare, 407. So, in an earlier case, that an equity is an estule ; it may be devised, granted, or entailed with remainders, ■which may be barred by fine and re- covery ; not a mere right. It is a seizin; the mortgagor is owner — the CH. XV.] EQUITY OP REDEMPTION. 359 3. An equity of redemption, being, as the name imports, an estate fully recognized only by Courts of Equity, has of course many qualities in common with a trust, which is also peculiarly a subject of the same jurisdiction. The mortgagee is called a trustee for the mortgagor, subject to the security.^ So it has been said,^ that a mortgagee, after receiving his debt, is considered as a trustee of the estate for the mort- gagor till a reconveyance. So a mortgage and a conveyance in trust by waij of security are said to be alike in this respect, and in being redeemable at any time before sale, but not after.^ The following points of distinction have been sug- gested between these respective titles. 4. An equity of redemption is a title in equity, not merely a trust ; * although, as is said, this title cannot be asserted except by suhpcEiial^ 5. A mortgage does not -per se create a trust, more especially before condition broken. It conveys the estate, subject to a condition. It is founded on contract. The mort- gagee is not accountable to any one, until he enters, takes possession, and receives the rents and profits ; in which case he may, in some sense, be considered as trustee, for he is to 1 Silvester v. Jarman, 10 Price, 84. Little v. Brown, 2 Leigh, 353; Belly. See Coates v. Woodworth, 13 111. 654 King V. Tlie Merchants, &c., 1 Seld 547 ; Cliarles v. Clagett, 3 Md. 82 Hammond, lb. 416. ^ Reading of Judge Trowbridge, 8 Mass. 411. Chowning v. Cox, 1 Rand. 306 ; Mor- ^ Hogan v. Lepretre, 1 Port. 392. gan V. Morgan, 10 Geo. 297. As to * 1 Sand. Uses, 203; 1 Ed. 206. See the respective rights and duties of the Dobson v. Land, 14 Jur. 288. parties, growing out of a mortgage and ^ Viscount, &c. v. Morris, 3 Hare, conveyance in trust of the same land, see 402. mortgage personal estate, which -will not pass by a devise of lands, tene- ments, and hereditaments. Casborne v. Scarfe, 1 Atk. 605, 606. It descends to the heir. Asay v. Hoover, 5 Barr, 21. In Ellithorp v. Dewing, (1 Chipm. 143,) it was held, that a release of the equity of redemption by mortgagor to mortgagee, made while a third person was in possession, claiming adversely to both, was not within the act to prevent fraudulent speculations and sales of choses in action. So an assignment by the mortgagor of his interest is not champerty, though the mortgagee be in possession. Borst v. Boyd, 3 Sandf. Cha. 501. But see King v. The State, &c., 7 Cush. 7. . 360 THE LAW OF MOKTGAGES. [CH. XV. render an account ; but this must be done in the manner and fox the pm'poses provided in the several statutes for redeem- ing mortgages, and he is not trustee in any other light. Hence, under the statute giving equity jurisdiction of trusts to the Supreme Court in Massachusetts, the assignee of a mortgagor cannot maintain a bill for injunction against the mortgagee, who is proceeding to recover possession at law ; and for a decree, that the mortgage be cancelled.^ So a mortgagee, iiotwithstanding his relation to the mortgagor, may buy the land, under a mortgage sale, at a low price,^ which a trustee would not be permitted to do. The princi- ples applicable to dealings between trustees and cesluis que trust, that such dealings are not prohibited, but are watched by the Court with great jealousy, and that the burden is on the trustee to show that they were fair and reasonable, do not apply to the case of mortgagor and mortgagee. Depend- ence, and the duty of protection, are not involved in then- relation ; t)ut it is a circumstance which always creates sus- picion.^ 6. In regard to the distinction between a mortgage and a trust ah-eady referred to, that a mortgagee may enforce his right by adverse suit, in invitum, against the mortgagor, it is further said, that a trustee cannot claim against the cestui, because these parties have always an identity and unity of interest, and are never opposed in contest to each other. In general, a trustee is not allowed to deprive his cestui que trust of the possession ; but chancery never interposes to prevent the mortgagee from taking possession ; and, when he obtains possession, he acts, not as a trustee, but independently and adversely, for his own use and benefit. Equity stops a trus- tee from dispossessing his cestui, because it would be a breach of trust, whereas, in the case of a mortgagee, this pro- ceeding is in strict conformity to his contraqt, and any im- 1 Hunt V. Mavnanl, Tick. 489. Sec Tostcr, 8 Met. 19 ; King v. The State, Ilammonils v. Hopkins, 3 Ycrg. r^lS; &c., 7 Cush. 7, 8, 15. Clarke v. Siblev, L'l Met. 21. '5; rutnain ^ Mott v. Walklcy, 3 Edw. 590. V. I'utnam, 4 Tick. 139; Ea.stiuan v. =' Chapman v. Mull, 7 Ired. Eq. 292. CH. XV.] EQUITY OF REDEMPTION. 361 pediment to it would be a direct violation of such contract. So also chancery does not impede, but assist, the mortgagee, in obtaining an absolute title by foreclosure.^ 7. In the case of Pawlett v. The Attorney- General,^ Hale, Chief Baron, said : — r" There is a diversity betwixt a trust and a power of redemption, for a trust is created by the contract of the party, and he may direct it as he pleaseth ; and he may provide for the execution of it, and therefore one that comes in in the post shall not be liable to it without express mention made by the party. But a power of redemp- tion is an equitable right inherent in the land, and binds all persons in the post or otherwise. Because it is an ancient right, which the party is entitled to in equity. And although by the escheat the tenure is extinguished, that will be nothing to the purpose, because the party may be recompensed for that by the Court, by a decree for rent, or by part of the land itself, or some other satisfaction. And it is of such consider- ation in the eye of the law, that the law takes notice, of it, and makes it assignable and devisable." 8. So, it is said, the relation of mortgagor and mortgagee stands upon grounds peculiar to itself. It is not the case of an ordinary express trust, nor to be governed by the same rules. The mortgagee has a right to the possession of the property. He holds it for himself from the first, and not for the mortgagor. The mortgagor's right to redeem does not depend upon the mortgagee's possession. He may file his bill to redeem, as well if he have possession of the property himself, as if the mortgagee possess it.^ 8 a. Conformably to the principles above stated, a convey- ance in trust to pay debts, and to seU the premises, if neces- sary, to pay the debts, and, after the debts are paid, in trust for one of the grantors, is not a mortgage, and, it seems, need not be registered, as against a subsequent assignment of the 1 2 Story's Eq. 278, n. 3. s Pd- Green, J., Wood v. Jones, Meigs, 2 Hardies, 469 ; Tucker v. Thurstan, 517. 17 Ves. 133; Benzein r. Lenoir, I Dcv. ^ , Ch. 225 ; V. Bennett, lb. 444. VOL. I. 31 362 THE LAAV OF MORTGAGES. [CH. XV. grantors, under the bankrupt law.^ And, on the other hand, under the laws of Georgia, a mortgage is not a conveyance in trust, but an incumbrance created to pay a debt ; neither is it an assignment, conveyance, or transfer, under the act of 1818, and does not come within the provisions of that act.^ 9. Conveyance, in trust that the estate stand chargeable with a certain sum and interest, and subject thereto in trust for a third person, with a power of sale by the purchaser upon non-payment after notice. Held, this was not a mortgage, upon which a bill for foreclosure could be maintained, though the Court would aid in effecting a sale of the property.^ 10. But a covenant, signed by both parties to a deed, at the same time with the deed, and reciting " an understanding and agreement that the grantee should, as soon as possible, sell the land for the best possible price, retain a sum due to him from the grantor, and pay him the residue," constitutes, with the deed, a conveyance in trust, in the nature of a mort- gage.^ (b) And if the grantee violate his covenant to sell the land, the grantor may recover the actual damages by a suit on the covenant or compel performance by a bill in equity ; but cannot elect to recover the value of the land, deducting the debt, thus converting a conditional into an absolute con- veyance.^ 11. Deed to A., to be held to his own use until he should be paid a certain sum, advanced by him for B., the purchaser, after which he was to stand seized to the use of B., as if the title had been made directly to B. A. brought ejectment 1 M. Menomy v. Murray, 3 Johns. Ch. ^ Sampson r. Pattison, 1 Hare, 533. 435. * 0olIcs v. Cliauncey, 8 Conn. 389. (h) The mortgagee cannot be compelled to receive payment or reconvey the property, or enjoined from bringing a suit, before the day named in the mortgage. lirown c. Cole, 14 Sim. 427; ace. 2 Greenl. Cruise, 123, n.; 9 Jur. 290; Abbe v. Goodwin, 7 Conn. 377. So the purchaser of a part of the land cannot require the mortgagee to receive such payment, though the mortgagor is insolvent. Iloag y. Uathbun, 1 Clark, 12. CH. XVII.] PAYMENT, RELEASE, ETC. 449 not merely for any particular evidence of debt, the general rule is, that nothing but actual payment of the debt or an express release will operate as a discharge of the mortgage. The lien lasts as long as the debt} (c) 5. Various applications of this principle are found in the books. Thus, in general, a mortgage made to secure a promissory note will remain security for any new note given in payment of the former one,^ [d) unless there is an inten- tion to the contrary.^ 1 Morse v. Clayton, 13 Sm. & M. 373 ; Bank, &c. v. Finch, 3 Barb. Ch. 293 ; 1 Freem. Ch. 307 ; Burton v. Pressly, 1 Heard v. Evans, Freem. Ch. 79. Chev. 2(1 part. 3 Hadlock v. Bulfinch, 31 Maine, 246. ^Burdett v. Clay, 8 B. Monr. 287; (c) A mortgage debt may be extinguished, as a personal claim against the mortgagor, and the land still remain liable for the amount of such debt. And whether the debt or the mere personal liability was meant to be dis- charged, is a question of fact, depending on the circumstances of the case, or the construction of the release. Tripp v. Vincent, 3 Barb. Cha. 614. Whether a cliancje of mortgages shall be regarded as payment in respect to an intervening attachment, see Buswell v. Davis, 10 N. H. 424. Mortgage to secure a bond but not expressly referring to it. The bond ■was avoided by a fraudulent alteration. Held, the mortgage M'as still valid, and evidence of the debt. Gillett r. Powell, Spears, Ch. 142. Where a mortgagee released the mortgagor from all the debts and liabilities secured by the mortgage, the land was held to be discharged. Armitage v. Wick- lifle, 12 B. Mon. 488. Where land mortgaged is taken for j)ubUc uses, the damages awarded become a substitute for the land, and subject to the lien thereof Astor i'. Miller, 2 Paige, G8. Especially, where the residue of the mortgaged premises are released from the incumbrance. Astor v. Hoyt, 5 Wend. 603. A sale on credit of mortgaged property, under a power given in the mortgage, and the taking of the purchaser's twelve months' bond for the purchase-money, does not, by the laws of Louisiana, operate as a novation or extinguishment of the mortgage debt. Union Bank, &c. v. Staf- ford, 12 How. U. S. 327. (d) Taking a second mortgage is no waiver of a prior one made for the same debt. Burdett v. Clay, 8 B. Mon. 287. So taking personal security for a mortgage debt is no waiver of the mortgage. lb. The retaining of an old note and mortgage, as security for a new note, which is given for the amount remaining due on such note and mortgage ; will not render the n^w note invalid for want of consideration. Langley v. Bartlett, 33 Maine, 477. 38* 450 THE LAW OF MORTGAGES. [CH. XVII. 6. In the case of Watkins v. Hill,' it was held, that although a negotiable note is in Massachusetts, primd facie, payment of the debt for which it was given ; yet a new note, given in place of an old one which is secured by mortgage, to an assignee of the mortgage, is subject to the same security as the former note, unless intended as payment ; as between the mortgagee and mortgagor or their respective representa- tives ; however it might be in reference to a purchaser of the equity of redemption. 7. In the case of Pomroy v. Rice,^ the qualication above suggested was rejected by the same Court, and the rule adopted without exception, that where a mortgage and note are given to secure the payment of a sum of money, the re- newal of the note does not operate as a discharge of the mortgage. This was an action upon a mortgage made October 25, 1825, to one of the plaintiffs, who were husband and wife, before marriage, to secure two notes for $200 each, one payable in three, the other in seven years, from April 1, 1826. About April 1, 1828, the mortgagee gave up these notes and took two new ones for $200 each, payable like the others ; also a separate note for the interest, which was paid. The object of this renewal was to obtain the interest. In July, 1828, the plaintiffs intermarried, and the wife deliv- ered the notes to the same person who procured the former renewal, and requested him to renew them in the husband's name. On or about April 1, 1829, he did so, taking two negotiable notes in the husband's name, each for $212, being the principal and one year's interest, one payable on demand, the other in four years. At these several renewals, nothing was said of the mortgage. The note payable on demand was paid. April 26, 1829, the mortgagor conveyed to the defendant with warranty. The defendant pleaded accord and satisfaction, upon which issue was joined. In giving the opinion of the Court in favor of the demandant, Mr. JuS' J 8 Pick. 522; liiuik, &c. ?.'. Uo?c, 1 Hi Verm. G.^O ; Eollcs v. Cluiunccy, 8 Strol). Eq. 257 ; Duuslicc v. Parniclcc, Conn. .'589. • 19 Vcrm. 172 ; M'Donald v. M'Donald, - IG Tick. 22. CH. XVII.] PAYMENT, RELEASE, ETC. 451 tice Wilde remarked : ^ "It has been argued, that taking the new notes is prima facie evidence of the payment of the old. But if it were, the circumstances, under which the notes were renewed, are abundantly sufficient to rebut any presumptive evidence that the mortgage debt was paid. Tidd was re- quested to have the notes renewed, which ex vi termini rebuts the presumption of payment." 8. So it has been held, that where a mortgage is made to secure the accommodation indorser of a note, which is to be discounted at a bank, and the usage of the bank is to renew such notes ; the security will cover each renewal, whether so expressed in the mortgage or not.^ So the mortgage secu- rity will apply to a note given in renewal of a former one, although the former note was made jointly with another person, and the latter by the mortgagor alone.^ So where a mortgage was given to secure the indorser of certain notes, which at maturity were renewed by giving others with differ- ent names, but the mortgagee still remained liable as at first, no new credit was given, and he finally paid the new notes ; held, the mortgage was still valid.* So the amount of the note may be increased or diminished.^ So if the mortgagee indorse the note and afterwards pay it, this does not dis- charge the mortgage.*^ So a renewal does not affect the security, even if there is no express agreement as to its con- tinuance.' So although it was originally stipulated that a note should be renewed only to a certain time, and it was renewed for three years afterwards ; the bank may still hold, as against a subsequent mortgagee.^ So a new note will be secured by the mortgage, though differing from the old one, in being made payable at a particular place. So .a mort- gage, given by one of several holders of land, for his ratable 1 16 Pick. 24. * Pond v. Clarke, U Conn. .-534, (over- 2Enston v. Friday, 2 Ricli. (8. C.) nilinf? Peters r. Goodrich, 3 Conn. 146.) 427, n.; Handy v. Commercial, &c., 10 ^ i^pi^i^cj-ijoff ^, Lgn^jing^ 4 Johns. Ch. B. Mon. 98; Smith v. Prin.cc, 14 Conn. 65. 472. « IJogers r. Traders'. &c., 6 Paifrc, .')83. '^ New Hampshire, &c. v. Willard, ' Cnllum v. Branch, >.<:c.. 23 Ala. 797. 10 N. H. 210. s Farmers', &c. v. Mutual, &c., 3 Leigh, 69. 452 THE LAW OF MORTGAGES. [CH. XVII. proportion of a debt secured by a mortgage upon the whole, is a continuation of the lien acquired under the original mortgage.! 9. A note may be extended by the extension of the mort- gage which secures it. Thus, a mortgage being conditioned for the payment of two notes at different times, it was agreed to " extend the mortgage fifteen or twenty days." Held, the payment of each note was hereby extended twenty days be- yond its maturity, but no further.^ 10. A purchaser of lands executed to the seller notes and mortgages of the lands for thevprice. On the same day, the notes were given up, and a written agreement made between the parties, that the mortgagor would pay the amount of them upon certain notes from the mortgagee to a third per- son, given for the same lands, and that such payments should be applied on, and be a discharge of, the mortgages. The mortgagee assigned the mortgages and the agreement, and the assignee also assigned them. Upon a bill by the second assignee to foreclose ; held, the mortgages were still in force, and the bill was maintained.^ The Court say : * — "It was certainly competent for the parties, by their agreement, to change the mode, or particular terms of payment, or even amount, and still retain the mortgage as security for the sum due, if they thought proper. Such an agreement was not immoral, and it violated no law ; and it would be hard to assign any reason why parties capable of contracting might not enter into such an agreement." 11. One owing a debt of $2,000 assigned to the creditor two notes of $1,000 each, and also gave him a mortgage of real estate. The debt, except $1,100, being afterwards paid, the creditor gave up the notes, and took the debtor's notes for this sum. Held, the mortgage remained as security for the last-named notes.^ 1 Wliittiiker v. Dick, 5 How. (Miss.) ^ IIiij;uniii v. Starkwcatlier, 5 Gilm. 290; Lcc V. Porter, 5 Johns. CIi. 208. 492. ^ Flanders v. Uarstow, G SFiejjl. 357. * 5 Gilni. 497. 6 M(C:oriiiiek v. Digby, 8 Biaekf. 99. CH. XVII.] PAYMENT, RELEASE, ETC. 453 11 a. If a guardian give a mortgage of indemnity to his surety, who joins him in a new bond ; the mortgage is secu- rity for such bond.^ 11 h. A bond secured by mortgage was paid by a check, and a note, payable on time, which were indorsed on the bond, and the bond given up. The note was paid when due. Held, the mortgage was not extinguished.- 12. Mortgage to secure £10,000, with interest. Before any default, the mortgagor paid £7,000, by check, and gave two bills of exchange drawn by himself and company upon himself, and accepted by him, for the balance, taking from the mortgagee the following memorandum : " Received, &c., (describing the securities,) which are in full of principal and interest due to me upon a mortgage, &c., and I do hereby undertake, whenever required, to execute a conveyance of the said property." The title and mortgage deed of the premises were delivered to the mortgagor. The check was paid, but the bills were dishonored. The mortgagor con- veyed to a trustee for benefit of creditors, and then became bankrupt, and the mortgagee never reconveyed the premises. The mortgagee brings a bill in equity against the mortgagor, his trustee, and his assignee in bankruptcy. Held, the above transactions did not discharge the mortgage, but the plaintiff was entitled to a decree against all the defendants for a restoration of the deeds and a foreclosure.^ The Vice-Chan- cellor says : * — "If I were satisfied that the agreement be- tween them was understood and intended by them to be, that the mortgaged estate should be absolutely discharged, whether the bills were honored or dishonored, productive or waste paper, however unusual or improvident I might con- sider such an agreement, I might very possibly have thought it right to give effect to such a contract clearly proved. It is contended that" the transactions above stated " amount to clear proof of such an agreement. I am not however satis- 1 Bol)bitt V. Flowers, 1 Swan, 511. 3 Teed v. Carruthurs, 2 Y. & Coll. 2 Maryland, &o. v. Wingert, 8 Gill, (Clia.) 31. 170. * Ibid. pp. 39, 40. 454 THE LAW OF MORTGAGES. [CH. XVII. .fied that this as between themselves, was intended by them ; the form of the receipt and the facts to which I have referred, being, in my judgment, neither conclusive on the point, nor of themselves sufficient to establish so immobable a state of things. I think the case also capable, if necessary, of being viewed in a manner analogous to that in which questions of lien between vendors and purchasers of real estate are con- sidered. Generally, where a vendor receiving bills for the purchase-money signs a receipt for the amount as cash, and actually conveys the estate as upon payment, he retains, as between him and the purchaser, a lien on the estate for the money in the event of the bills being dishonored, unless the purchaser can show an agreement to the contrary. Why should a mortgagee reconveying to the mortgagor, on receiv- ing payment in the shape of bills, be in a worse situation than a vendor having or not having a binding contract prior to the conveyance ? In the present case a reconveyance has not taken place ; but probably if it had, (though it is not necessary to decide this point,) it would, in my judgment, have made no difference." 13. Substantially the same principle has been applied in various cases, where an extinguishment of the debt, in terms secured by mortgage, has been set up on other grounds than actual payment of money. 14. In the case of Gary v. Prentiss,^ it appeared that the defendant made a mortgage to the plaintiff to secure a note not negotiable ; and subsequently, a creditor of the plaintiff summoned the defendant in a trustee process against the plaintirt", recovered judgment against the defendant, and com- mitted him on execution, but afterwards gave him a release of the judgment. In an ejectment upon the mortgage, held, the facts above stated were no defence to the action. 14 a. And the sam.e principle has been applied, even where the mortgagor has paid the amount of the mortgage debt under the trustee process, but as due to a third person, the mortgagee not being party to the suit. 1 7 Mass. 63. CH. XVII.] PAYMENT, RELEASE, ETC. 455 14 b. A. brought his bill against B., to foreclose a mort- gage. Pending the proceeding, B. was garnisheed as the debtor of C, and judgment rendered against him as garnishee of the mortgage debt, on the ground that C. was in fact the owner of the mortgage, and that it was held by A. in fraud of the creditors of C. B. paid the judgment. Held, such payment was no defence, as the Court had no authority to render such judgment against him as garnishee, A. not being a party to the proceeding, and having no opportunity to defend his rights.^ 15. So the commitment of the mortgagor by the mortgagee himself, in a suit upon the debt, does not extinguish the mortgage.2 16. In the case of Davis v. Maynard,^ a mortgage was made to secure a note. After the mortgagor's equity of redemption had been taken and sold on execution, the mort- gagee received from him a recognizance acknowledged before a Justice of the Peace for the sum due on the note, which was thereupon left with the Justice, who afterwards, without any direction from the mortgagee, delivered it to the maker. It was held, that the taking of the recognizance in lieu of the note did not discharge the mortgage. The Court say : * — " The mortgage and the note were two distinct securities. Nothing but payment of the debt ivill discharge the mortgage. This position is grounded on the words of the conditions of the mortgage, which always are, that if the money be paid, then the note or bond as well as the mortgage deed shall be void, and otherwise both shall remain in full force. By the terms of the contract, .nothing but payment is to avoid it." 17. We have seen that proceedings against the person of the mortgagor do not discharge the mortgage. The question often arises, whether legal and judicial proceedings in reference to the mortgaged property itself, either between the parties, or in connection with third persons, operate as a constructive 1 Lawrence v. Lane, 4 Gilman, 354. ^ 9 Mass. 242. '^ Davis V. Battine, 2 W. & My. 76. * lb. 247. 456 THE LAW OF MORTGAGES. [cH. XVII. extinguishment. Upon this subject it has been held, that in general, the release of a judgment recovered for the mort- gage debt discharges the mortgage.^ But where a mortgagee recovers judgment upon the mortgage debt, takes out execu- tion, and gives a receipt, acknowledging full satisfaction there- upon ; these facts do not show conclusively a payment and discharge of the mortgage. Thus, where the debtor, the day before taking such receipt, conveyed his estate to a third person, who, on the following day, transferred it to the mort- gagee ; held, the satisfaction of the judgment must be con- strued as designed merely to confirm the mortgagee's title ; the supposition of any payment of money involving the absurdity, that either the mortgagor or his grantee released all title to the land, at the very moment when the money to redeem the land was paid to the party taking the release.^ 17 a. In Pennsylvania, since the statute of April 11, 1835, a mortgage which is the first incumbrance on the premises is not discharged by a sheriff's sale, under a judgment for taxes subsequently assessed.^ 18. A mortgage is not extinguished by the mortgagee's making the mortgagor his executor,* nor by the appointment of the mortgagor as administrator of the mortgagee. Thus, in the case of Kinney v. Ensign,-^ certain land having been twice mortgaged, after breach of condition, the mortgagor was appointed administrator of the second mortgagee, and returned an inventory, including his own debt. An assignee of the prior mortgage purchased the mortgagor's right of redemption. Held, in a bill to redeem, brought by the mort- gagor against such assignee, that the taking out of adminis- tration was not, in reference to the defendant, a payment and extinguishment of the second mortgage, but the plaintitf was entitled to redeem. Chief Justice Sliaw remarked : ^ — " The taking of administration by the debtor is not in fact or in law, to all purposes, payment of the debt. As between the 1 Porter V. Perkins, 5 Muss. 237. ■» Miller v. Donaldson, 17 Ohio, 2G4. '^ I'erkins v. Pitts, 11 Muss. 125. ^ 18 Pick. 2;i2. '^ Perry v. Brintoii, 1 Ilarr. 202. « Ih. 230, 237. CH. XVII.] PAYMENT, RELEASE, ETC. 457 administrator himself, and those beneficially interested in the estate, he is held to account for it as a debt paid, from con- venience and necessity, because the administrator cannot sue himself, and cannot collect his own debt in any other mode than by crediting it in his administration account. The complainant is 'in a situation to do just what any other administrator would do, as if he were not himself the original mortgagor. On redemption, he will be put into possession of the estate ; but he will hold in autre droit ; his seisin and possession will be according to his title, and that will be, and will appear by the record to be, in his representative capacity. Then there are express statute provisions, that the estate recovered shall be held to the use of the heirs of the intestate mortgagee, and the administrator shall have a license to sell, if necessary for the payment of debts." 18 a. A. conveyed land to his children, and afterwards, but before registration of the deed, mortgaged it to B., to secure a note, and died intestate, leaving personal estate, after satis- faction of the widow, not equal to the note. C, one of the children, became administrator, paid the note from his own money, and took an assignment of it, with a conveyance of the land. He afterwards transferred the note and the property to D., who brings a bill to foreclose against the heirs of A. Held, the transaction was not a payment by C, as adminis- trator, but a purchase of the mortgage debt by him, on his own account, and the plaintiff was therefore entitled to fore- close.^ 19. One Squires, having made a note to Lothrop, gave him a mortgage as security, having previously made a deed to his children, which was not recorded till after the mortgage. Under this conveyance, the defendants claimed a portion of the land mortgaged. -The plaintiff, as assignee of the mort- gage, brings a bill to foreclose. It appeared that his title was derived in part through a son of the mortgagor, who, at the time of paying the debt, and taking an assignment of the 1 De Forest v. Hough, 13 Conn. 472. VOL. I. 39 458 THE LAW OF MORTGAGES. [CH. XVII. mortgage, was also an administrator upon the estate of the mortgagor, deceased ; but the payment was made from the administrator's own funds, and the land transferred to him by the mortgagee. Held, the plaintiff might maintain a bill for foreclosure against the other children of the mortgagor, the mortgage not being extinguished by the payment and transfer above stated.^ 20. The question sometimes arises, whether a deposit of the amount of the mortgage debt will operate as payment. Thus, a mortgagor sold the land, received therefor the purchaser's note, and agreed to extinguish the mortgage. He then delivered the note to the mortgagee, with an agreement that the proceeds, when received, should go in payment of the mortgage. He also deposited with the mortgagee the amount of the mortgage debt, in order to stop the interest, but with an agreement that it should not go to pay the mortgage. The mortgagee gave a receipt for the money, and retained the mortgage and the purchaser's note. This note was not paid. Held, the facts above stated did not show a payment of the mortgage, inasmuch as it was agreed by the parties, at the time the money was deposited, that it should not dis- charge the mortgage.^ 21. The solicitor of a mortgagee refused to receive from the mortgagor a partial payment on the mortgage, as a pay- ment to stop interest, but consented to receive it as a deposit, with the understanding, that if the mortgagee would take it as payment and allow interest, it should be indorsed on the mortgage. The mortgagee refused to receive the money, unless the whole debt was paid ; but the solicitor afterwards handed it to him, with the understanding that he was not to allow interest, till payment of the balance, of which the mort- gagor had notice, and assented thereto. The mortgagee, on receiving the money, used it as his own. Held, the money should be appli(!d as payment, at the time it was received and used by the mortgagee.^ 1 Hough V. Dc Forest, 13 Conn. 473. ^ Toll v. Ililler, 11 Taigc, 228. 2 Howe V. Lewis, 14 Pick. 329. CH. XVII.] PAYMENT, RELEASE, ETC. 459 21 a. A mortgagor, after the mortgage debt became due, delivered to the mortgagee $1,000, which, after being retained for a few days, was retm-ned to the mortgagor at his solicita- tion, and not indorsed upon the mortgage. Held, a payment on the mortgage ; and the redelivery did not, as against creditors, revive the mortgage.^ 21 h. Where a mortgagee takes the assignment of a note, giving a receipt therefor, with the agreement to release the mortgage on payment of the note ; the mortgage continues in force till such payment, nor is he bound to bring a suit on the note.2 21 c. In a real action by a mortgagee against the mort- gagor, it is not a good plea, that the mortgagee agreed puis darrein continuance to accept in payment of the debt property to be appraised ; that it was accordingly appraised for more than the debt, and that the mortgagor had tendered a con- veyance, which was refused.^ 22. A surrender of the mortgage note to the mortgagor, in consideration of a release of the equity of redemption, will not necessarily operate as a payment of such note in reference to a second mortgagee. 23. A mortgagor released his equity of redemption to the former of two mortgagees, who in consideration thereof gave up his mortgage note. Held, the second mortgagee could not foreclose the first, without paying the first mortgage.* Swift, C. J., says,° (three Judges dissenting,) " The operation of this transaction is merely the taking of the pledge for the debt. This is no more than adjusting the claims between the first mortgagee and the man who has the ultimate equity of redemption ; it is only relinquishing the legal remedy on the note ; it is no payment of it. There must be a payment of the debt by something besides the thing pledged to secure it ; otherwise there is no satisfaction of the mortgage." 1 Marvin v. Vedder, 5 Cow. 671. * Baldwin r. Norton, 2 Conn. 161. 2 Hynes v. Kogcns, 6 Litt. 229. 5 jb. p. 163. ^ Rochester v. Whitehouse, 1.5 X. H. 468. 460 THE LAW OF MORTGAGES. [CH. XVII. 23 a. A mortgagee consented to a sale by the mortgagor. The purchaser gave his notes for the purchase-money, secured by a mortgage upon the premises, and the first mortgagee received an assignment of a part of such notes in payment of his debt. Held, the rights of the first morl^age were not simply those of an assignee of the second mortgage notes, and in receiving them, he did not relinquish his right to prior satisfaction out of the property.^ 23 b. Where a mortgagor suffers the mortgaged premises to be sold for taxes, and buys them in, he does not thereby defeat the lien of the mortgage, but his purchase is merely a payment of the taxes by him.^ 24. In qualification of the general rule, that a mortgage will be extinguished only by payment, not by mere change of the evidence of debt, it is to be remarked, that, where the particular facts of the case indicate the intention and under- standing of the parties, that the substitution of a new secu- rity shall operate as payment of the old debt ; the mortgage is held to be discharged. So where any other transaction between the parties indicates a similar purpose, and there is no useful or equitable object to be effected by an opposite construction ; the mortgage will be held extinguished, though not in form discharged or cancelled. It is said, that the mortgage is extinguished by payment /yow^/ie debtor's funds. ^ So, where the mortgage debt is paid, the mortgage cannot be kept alive by a parol agreement, as security for another debt.4 25. In the case of Fowler v. Bush,^ a note payable by in- stalments was secured by mortgage. After the first instal- ment became due, the holder, being an assignee of the mort- gage, demanded payment, saying that if that instalment were paid, he could sell the securities. The mortgagor there- upon gave him a note on time, payable to order, for the sum due, which the holder proposed to have discounted at a bank ; . 1 Bank,&c. v. Tarlcton, 23 Miss. 173. * Mead v. York, 2 Sckl. 449. 2 Frve V. Bank, &c. 1 1 Illin. .'567. ^ 21 Pick. 230. 8 Kinley v. Hill, 4 Watts & S. 426. CH. XVII.] PAYMENT, RELEASE, ETC. 461 and at the same time indorsed on the former note — " Re- ceived the first instalment on the within," naming the sum. In an action upon the mortgage by a subsequent assignee against the mortgagor, it was held, that these facts consti- tuted a payment of the first instalment, and not merely a change of security, and that the mortgage was -pro tanto discharged. 26. One Temple mortgaged land to Bailey, the defendant, to secure several notes payable at different times, and after- wards mortgaged the same land to Holman, the plaintiff. Subsequently, and before maturity of either of the notes, Temple gave the defendant a warranty deed of the premises, in full satisfaction and discharge of these notes and another one. The notes were given up, but the mortgage was not discharged. Upon a bill in equity to redeem, brought by Holman against Bailey, it was held, that payment of the notes before maturity was as effectual to defeat the defend- ant's mortgage, as if made at the time they became due ; that if the plaintiff's mortgage was valid, he had a complete and adequate remedy at law against the defendant, by writ of entiy ; and that the bill could not be sustained.' 27. In the case of Abbott v. Upton,- Upton gave to Brigham a mortgage, dated December 20, 1832, conditioned to secm-e a note for $400, payable to Smith, signed by Upton as principal, and Brigham as surety, or indemnify Brigham therefrom. On the 6th of February, 1834, the plaintiff, with one Day, at the request of Upton, took up the note, and gave a new one for $404, signed by Upton, Day, and the plaintiff, payable to Smith in one year, with interest. At the same time, Brigham, by a writing not mider seal, assigned the mortgage to Day and the plaintiff, and the mortgage and the note secured by it, w^hich appeared to be cancelled, were passed to the plaintiff. August 11, 1836, Brigham duly assigned the mortgage to Day and the plaintiff, and on the 27th of August, Day assigned his interest therein to the 1 Holman v. Bailey, 3 Met. 55. 2 19 pick. 434. 39* 462 ' THE LAW OF MOETaAGES. [CH, XVII. plaintiff. On the 6th of February, 1834, Upton gave to Day and the plaintiff a mortgage of personal property, to se- cure them against their liability on the note signed by them. After this became absolute, Day and the plaintiff took pos- session of the property, which, in the opinion of Upton, was worth from $500 to $600. July 8, 1834, Upton conveyed the demanded premises to the defendant. A verdict was taken for the plaintiff, subject to the opinion of the Court. The plaintiff offered to discharge the personal property, upon satisfaction of the judgment in this case, if he should prevaij. It was held by the Court, that when the note to Smith was paid and discharged, Brigham was fully indem- nified, and the condition of the mortgage saved ; and that when J. Upton gave a new note, for a different sum, with other sureties, and other security to indemnify them, Brigham's interest in the land ceased, and nothing remained to pass by his assignment. 27 a. A. gave a mortgage to B., to indemnify B., in case he should have to pay the debt of A., conditioned that if A. should pay and satisfy his note, by renewal or otherwise, then to be void. A. renewed his note with different securi- ties, and B. assigned the mortgage to them. Held, the assignment did not cut off the intervening rights of other mortgagees, and the rights of B. ceased upon the renewal, a transfer to others not having existed in contemplation of the parties, at the time o£ the execution of the mortgage.^ 28. On September 15, 1813, a mortgage was given as se- curity for the indorsement of a note dated July 27, 1813, for $400, payable ninety days after date at the Middletown Bank, and there discounted for the maker's accommodation. When that note fell due, it was taken up, the indorser pay- ing $83, and a new note, with the same names, given for the balance. September 3, 1814, the land was mortgaged to another person. September 6, 1814, the first mortgagee indorsed a note for $110, part of the original debt of $400 1 Bonham v. Galloway, 13 111. G8. CH. XVII.] PAYMENT, RELEASE, ETC. . 463 at the bank, which he was afterwards obliged to pay. Held, the indemnity secured by the first mortgage being precisely coextensive with the liability of the mortgagee as indorser, his lien extended only to the first note, and, as to subsequent advancements, he was only a general creditor.' Hosmer, C. J. says :^ — " The condition provided, that, ' if the said Curtiss should pay the said note, and indemnify the said Goodrich from his said indorsement, the deed should be void.' The specific contract referred alone to a note dated the 27th of July, 1813. By the non-payment of this note Goodrich might be damnified, and precisely coextensive with the possible damage was the contract of indemnity. The debt he never guaranteed, except through his indorsement ; which contract would be extinguished so soon as the note was paid, or another, with the consent of the holder, was substituted for it. When Goodrich indorsed the above note, he had no idea of indorsing another, or of continuing his responsibiUty beyond his actual contract. The indorsement of the subsequent notes therefore, was the result of a subse- quent contract." On the other hand. Chapman, J. (dissent- ing) says : 2 — " Nothing but a strict performance of this condition could prevent the legal estate from vesting in the defendant. It is admitted that the condition was not per- formed. The legal title is in the defendant, and the object of this bill is to divest him of it. This the plaintiff is en- titled to do, provided he can show that the defendant has been indemnified. The mortgagor agrees to indemnify the defendant in all respects. Has the mortgagor ever paid the note of $400 ? No. Has he indemnified the first mort- gagee ? No ; but the first mortgagee has indorsed a second note, which was given for a part of the original note, and therefore in equity he has lost his lien. The whole argu- ment proceeds upon a fallacy. The note is but evidence of the debt. The renewal of a note is no payment of the debt. 1 Peters v. Goodricb, 3 Conn. 14G, - lb. 150. CovciTuled in 14 Conn. 334 ; see supra, ^ ib_ 154. s. 8.) 464 . THE LAW OF MORTGAGES. [CH. XVII. It is an unvarying rule in a Court of Chancery, never to divest one of a legal estate, so long as he can show an equi- table lien on it. Should the first mortgagee, after forfeiture, receive payment in counterfeit money and give a receipt in full for it, the second mortgagee could not redeem, without paying the whole debt, unless the first mortgagee had re- leased. The same rule applies to any mistakes in a settle- ment." Brainard, J., concurred. 29. If the mortgagee takes, for the amount due on the mortgage, the note of an assignee of the mortgagor, includ- ing annual interest, and gives up to the assignee the mort- gagor's notes ; this is not, unexplained, a mere renewal, but the substitution of a new security, and such a payment as discharges the mortgage.' 29 a. Purchase of land by three persons, each giving a bond for his share of the price, secured by a joint mortgage. The vendor afterwards gave up one of the bonds, without the consent of the other obligors, taking a different security. Held, the others were mere sureties for this obligor, and were discharged, as to him, by this proceeding.^ 29 h. A mortgage may be extinguished by the laches of the mortgagee in enforcing a new or substituted security. 29 c. A mortgagor sold the land, agreeing to remove the incumbrance. It was also agreed between him and the mortgagee, that the latter should take a new note and another mortgage for his debt, and not enforce the former mortgage, if the property included in the latter was suffi- cient to pay the debt. The property was thus sufficient, but, in consequence of the mortgagee's delaying for sixteen months to record the new mortgage, it was lost to him by other deeds and mortgages from the mortgagor. Held, the first mortgage was discharged.*'^ 29 d. Mortgage to secure the mortgagee for an indorse- ment of the mortgagor's note. The note was paid when due, 1 Ilaillock V. Uulfinch, 31 Maine, 240. « Tcaff y. Ross, 1 Ohio, (State) 409. '^ Van Kcnssclaer v. Akin, 22 Wend. 549. CH. XVII.] PAYMENT, RELEASE, ETC. 465 but the mortgage afterwards assigned, for valuable consid- eration, with the assent of the mortgagor. Previous to the assignment, the mortgagor made another mortgage, which was also assigned, and the mortgage and assignment recorded before the assignment of the former mortgage. Held, after satisfaction of the first mortgage, the parties might revive the security as between themselves, and also as against themselves in the hands of an assignee, but not as against third persons ; and, as the second mortgage and the assign- ment of it were both recorded before the assignment of the first ; the holder of the first was affected by notice, and was not entitled to protection, as against a latent equity. ^ 29 e. One of two mortgagors, having assumed the mort- gage debt, executed a new mortgage to secure it, and an individual debt of his own, the mortgagee holding the old mortgage as collateral security. The mortgagor assigned his property, afterwards, for benefit of creditors, and the premises were sold by his assignees, free from all incum- brances. The purchaser and the mortgagee arranged with the assignees, so that the purchaser secured the money due on the second mortgage to the mortgagee, who assigned the old mortgage to the purchaser, who brings a bill for fore- closure. Held, the securing of the debt by the pm'chaser was a satisfaction of the mortgage, which became functus fficio, and incapable of transfer as a subsisting security .^ 29/, A. having given a mortgage to B., A. and B.'s agent agreed to convey to C, on his securing the mortgage debt. C. gave to a succeeding agent of B. a deed of trust of slaves, to secure the mortgage and other debts. Held, the mort- gage was discharged.^ 29 0-. A. conveyed to B. and C, taking back a bond of defeasance. Afterwards, for the purpose of enabling A. to pay B. and C, A. surrendered to them their bond, and they conveyed to D., to whom A. also conveyed his remaining 1 Purser v. Anderson, 4 Ed. Ch. 17. 3 Towler v. Buchannans, 1 Call, 187. 2 McGiven v. Wlieelock, 7 Barb. 22. 466 THE LAW OF MORTGAGES. [CII. XVII. interest ; and thereupon D. advanced a certain sum, in satis- faction of the amount mutually estimated by A. and B. and C, to be due to the latter, and D. at the same time, executed a bond of defeasance to A. Held, although this amount was less than the sum actually due to B. and C, yet their mortgage was discharged.^ 29 h. So, a mortgage may be extinguished by the relative position of the mortgagor or mortgagee, and the represent- atives of one or the other of these parties, after his death ; and by the legal proceedings connected therewith. 30. A mortgage was made to the father of the mortgagor, as security for a bond. Before breach of condition, the mortgagee died, having appointed his son to be his executor. The son then mortgaged anew, with the usual covenants against incumbrances and for warranty, and the second mortgagee assigned his mortgage. Subsequently, the son, as executor, assigned the mortgage of his father, with the bond. The assignee of these securities recovered possession in a suit against the son as mortgagor ; and the former as- signee brings the present action for the land against the plaintiff in the other suit. It was held, that the action should be maintained, because, whether the appointment of the son as executor extinguished the mortgage given by him or not, it was certainly extinguished by his second mortgage, which conveyed the land as discharged of all incumbrances.^ 31. Mortgage to secure a bond. The mortgagee having died, the mortgagor was appointed his administrator, and returned an inventory, including the bond debt. He after- wards settled his first account, charging himself with the amount of personal estate returned in the inventory ; and a second account, charging himself with the balance of the first. Thereupon the Probate Court passed a decree, order- ing a distribution of the balance among the heirs. Held, by these proceedings the bond debt was paid, and no title to ^ Ilodgman v. Hitchcock, 15 Verm, - Ivitchic i'. Williams, 11 Muss. 50. 374. CH. XVII.] PAYMENT, RELEASE, ETC. 467 the land passed by a subsequent assignment of the bond and mortgage by the administrator.' 31 a. A sale, under order of the Orphans' Court, for pay- ment of debts of an intestate, of lands mortgaged by a former owner, on which the intestate paid the interest, discharges the mortgage.^ 32. Where a mortgage debt is discharged by a bond of the heirs, who are also assignees of the mortgage, to prevent a sale of the land ; the mortgage is also discharged.-^ 33. Where the owner of land, subject to mortgage given in trust for certain heirs, is appointed trustee of the heirs, thereby acquiring a legal title to the mortgage ; the mortgage is not thereby merged. But if he afterwards convey with warranty, he will be estopped by his covenants to enforce the mortgage against the purchaser for his own benefit, though nothing but actual payment can deprive the heirs of their right in the mortgage. Such payment will extinguish the mortgage, both in law and equity, unless the trustee mis- apply the money with the grantee's knowledge and consent. And unless it have been thus misapplied, the law will apply it to the mortgage. If the conveyance, made subject to the mortgage in trust, contains an agreement on the part of the grantor to pay all incumbrances, and a part of the price is retained to await such payment ; the grantor, subsequently becoming trustee and thus entitled to the mortgage, is bound to apply the money thus retained to the mortgage.^ 33 a. A decree enforcing a mortgage is a destruction or satisfaction of the mortgage.'^ 33 h. If property mortgaged is sold on execution against the mortgagee, and bought by him at a nominal price, the mortgage debt is extinguished.'^ 34. It is held in Pennsylvania, that a sheriff's sale of mort- gaged premises, upon a judgment for interest due on the • 1 Ipswich, &c. V. Story, 5 Met. 310. * Hadlev v. Chapin, 11 Paige, 245. - Aloore v. Slmltz, 13 Penn. 98. & Manigault v. Deas, 1 Bai. Cli. 2S3. • ^ Robinson v. Leavitt, 7 N. 11. 73 ; s Schnell v. Schrocder, 1 Bai. Ch. Eichardson, Cli. J., dissenting. 334. 468 THE LAW OF MORTGAGES. [CH. XVII. mortgage debt, the debt not being due, operates as a fore- closure, extinguishes the equity of redemption, transfers the mortgagor's legal estate, and divests the lien of the mort- gage. The proceeds are brought into court, subject to such lien, and belong to the mortgagee to the extent of the debt and interest, in preference of creditors whose liens intervene between the mortgage and the judgment.^ 35. A mortgage was made' to secure three bonds, payable at different times. Judgment was recovered upon the first, and the mortgaged premises sold on execution, the last bond not being due. Held, the mortgage was discharged.^ 36. An equity of redemption, sold on execution, was con- veyed, by consent of the purchaser, to a third person, he agreeing to pay the purchase-money, and the purchaser to pay the mortgage. The latter took an assignment of the mortgage, with the note, from the holder, who wrote satisfied upon the* face of the mortgage. The holder of the note then brings an action upon it against the mortgagor. Held, the action could not be maintained.^ (e) 37. A debtor, whose estate was subject to an attachment, mortgaged it for $3,200. A part of the estate was after- wards set off on execution, in completion of the attachment, and the mortgagor thereupon gave the mortgagee his note for $1,200, secured by a mortgage of personal property. The mortgagee afterwards assigned the former mortgage for $2,000, and the assignee paid the amount of the execution, taking a conveyance from the judgment creditor. The pur- 1 West Branch, &c. v. Chester, 11 2 Ucrpjer r. Hiester, 6 Whart. 210. Penn. (1 Jones,) 282. See Kinnaraan ■^ Waddle v. Cureton, 2 Speers, 53. V. Ilcnny, 2 Ilalst. Ch. 90, G2G. (e) A mortgagee covenanted with a third person* to foreclose the mort- gage and gi%'fi liim the benefit of the decree. The equity of redemption was afterwards sold on execution, and the covenantee became the owner of it, and the mortgagee released to him his title. Held, an extinguishment of the covenant. Savage v. Carter, 2 13. Mon. 512. en. XVII.] PAYMENT, RELEASE, ETC. 469 chaser of the equity of redemption brings a bill to redeem against the assignee of the mortgage. Held, the giving of the note and second mortgage wa^ a payment of the first to the amount of $1,200, and the plaintiff should be allowed to redeem for $2,000 with interest from the time of assign- ment.^ 38. With regard to the application or appropriation of payments made by the mortgagor to the mortgagee ; it has been held, that the law presumes such payment to be made on account of the mortgage, and tlurows the burden of proof upon those who allege the contrary.^ Thus, if a creditor, holding several claims against his debtor, takes from him a mortgage made to the debtor by a third person, as security for one of the claims, which mortgage it is agreed that the debtor shall pay ; and he afterwards makes a payment, to be applied to the debt thus secured ; such payment is pro tanto a discharge of the mortgage, and the creditor cannot after- wards apply it to the other claims, and enforce the mortgage in full against the mortgagor.'^ But, after such payment, the creditor having procured from the debtor other security for the debts generally, but less than the amount of his debts, without that secured by mortgage, and the debtor having absconded, held, the mortagor could not claim to have this security applied to his mortgage, in preference to the other debts.4 38 a. Where a mortgage had been foreclosed, and the mortgagee had two executions in his favor, one upon the mortgage, the other upon a general judgment for the same debt, and ordered the whole property to be sold upon the latter ; held, the proceeds of the sale should be applied upon the mortgage debt.^ 38 b. Where funds were put in the hands of a person, by one of several interested in procuring the discharge of a 1 Boston Iron Co. r. Kiny, 2 Cush. ^ Xcw York Life, &c. v. Howard, 2 400. Sandf. Cha. 183. - Tharp r. Feltz, 6 B. Mon. 6. See ■* Ibid. 183. Williams v. Tliurlow, 31 Maine, 392. 5 Winter v. Garrard, 7 Geo. 183. VOL. I. 40 470 THE LAW OF MORTGAGES. [CH. XVII. mortgage, to be applied to that purpose, and he agreed so to apply them, the others agreeing to furnish him with the re- mainder of the necessary funds, but failing to do so; held, those failing to perform, on their part, could not, by a bill in equity, compel such person to apply the funds belonging to others to the discharge of such mortgage.^ 38 c. Mortgage, without any accompanying obligation, for the payment of a sum of money in ten years, with interest in three instalments, to be paid in three, six, and nine years, each instalment to be one year's interest of the whole sum. It was also provided, that the mortgagor might pay, at any time within the ten years, such portions of the mortgage money as he shall see fit. A payment having been made generally, more than two years before the first instalment of interest became due, and exceeding the first instalment; held, it must be applied to the principal.^ 39. Mortgage to a banking company, to secure sums then due and all sums thereafter to become due from the mort- gagor to them, on any banking or other account, " so as the whole amount of principal moneys to be ultimately recov- ered or recoverable by virtue of that security, should not ex- ceed the sum of £5,800, together with interest," with the addition of a power of sale. The mortgagor built three houses upon the land, which were successively sold to dif- ferent purchasers, and the prices paid to the company, who credited the mortgagor with them in his account. Held, these sums were recovered by the company by virtue of the mortgage security, and, so far as they were applicable as principal moneys, must be considered as received in dis- charge of the sum of j£ 5,800, and not on general account.^ 40. Mortgage to secure $3,000, part of a debt of $10,000. The mortgagor made sundry payments, which were credited in account, generally, neither party having directed any spe- cific application of them. The equity of redemption was 1 Iloldcn V. Pike, 24 Maine, 427. » Johnson v. Bourne, 2 Y. & Coll. 2 Davis V. Fargo, 1 Ciari<, 470. 268. CH. XVII.] PAYMENT, RELEASE, ETC. 471 seized on execution, appraised at $1, and set off to the judg- ment creditor, subject to the mortgage. Upon a bill for foreclosure, brought by the mortgagee, the creditor claimed that the payments should be applied to the mortgage, and not the other part of the plaintiff's debt. Held, no such ap- plication should be made, as the effect would be to give the premises to the creditor discharged of the mortgage to the extent of the payment, leaving the execution in full force.^ 41. A mortgagee refused to receive a partial payment on the mortgage, but consented to take the sum offered, and hold it till payment of the balance, and then apply the whole to the mortgage ; but really applied the sum paid to his own use. Held, on a bill to foreclose, this sum should be applied to the mortgage, as of the time when it was received and used.2 42. Two persons held a mortgage, as trustees, upon an undivided half of certain real estate, and one of them, in his own right, a subsequent mortgage upon the same half. In a suit for partition between the owners, a sale was ordered and made ; neither the order nor the conditions of sale re- ferring to any incumbrance. The second mortgagee was present at the sale, agreed that the property should be sold free from incumbrance, knew that the purchaser had notice of this agreement, and that the mortgage was to be cancelled, and received one half the proceeds, being the mortgagor's share. He applied a part of the money to the payment of the second mortgage in full, and the balance to the first, leaving a portion of it due. The amount received by him would have paid the first mortgage in full, and a part of the second. Held, parol evidence was admissible of the facts above stated, and the first mortgage was satisfied.^ 43. In a suit to foreclose a mortgage, brought after the mortgagee's death, the mortgagor cannot rely upon debts due him from the mortgagee, as payments on the mortgage.^ 1 Chester v. Wiicelwright, 15 Conn. ^ Rogers v. Rogers, 1 Halst. Ch. 32. 562. * Green v. Storm, 3 Sandf. Cha. 305. ^ Toll V. Hillcr, 11 Paige, 228. 472 THE LAW OF MORTGAGES. [CH. XVII. So it has been held, that the devisee of an estate in mort- gage cannot set off an arrear of interest, due at the death of the mortgagor, against the arrears of interest due upon a legacy from the mortgagee to the mortgagor for life, and not received by the mortgagor, who was an executor of the mort- gagee. This decision was made upon the grounds, that the case was to be regarded as it stood at the death of the mort- gagor, that the mortgage debt still subsisted, and an adjust- ment could take place only by a process in court ; that, until such adjustment, the debts might be separately assigned ; and if the mortgagor had sold the estate, subject to the mort- gage, the purchaser could not have claimed such a set-ofF.' 44. If the owner of the equity delivers to the owner of the mortgage specific articles, to be applied in payment, but afterwards settles the account, takes a note for the property delivered, and negotiates it ; the agreement thus to apply the property is hereby rescinded.^ 45. The plaintiff was the holder of four notes, amounting to $1,115, indorsed by the defendant for the accommodation of the maker. The notes being due and the maker indebted to the plaintiff on other accounts, amounting in the whole to $6,137, he gave the plaintiff a new note secured by mort- gage, but the original demands were not extinguished, nor the old notes and evidences of debt given up ; and it was agreed that they should not be cancelled, except upon cer- tain conditions which were never fulfilled. The defendant having become absolutely liable, the plaintiff called upon him for payment of the notes indorsed by him, and the de- fendant thereupon gave the plaintiff a mortgage as additional security for the notes. Tlie mortgage given by the maker was then foreclosed, and the premises sold, yielding, after payment of costs, only $2,818. The plaintiff applied this sum to other debts secured by the mortgage, and not to the indorsed notes. The plaintiff then brings a bill of fore- closure for the notes against the defendant. Held, the plain- 1 Tcttat V. Ellis, 9 Vcs. 563. ^ Doming v. Comings, 11 N. II. 474. CH. XVII.] PAYMENT, RELEASE, ETC. 473 tiff had a right thus to apply the moneys received, and the defendant could not claim to have them applied pro rata^ upon all the debts which made up the note and mortgage of $6,137; and that the defendant was not entitled to a de- duction from the amount due on his mortgage to the plain- tiff, on account of the moneys received by the plaintiff.^ 46. Payment of a mortgage may be proved or disproved by facts and circumstances, as well as by direct evidence. It is said: — "A mortgage, being considered and treated merely as a security for the payment of money, or the performance of some other act, is simply a chose in action extinguish able by a parol release, which equity will execute as an agreement not to sue, or by turning the mortgagee into a trustee for the mortgagor ; provided it proceeds upon a sufficient considera- tion. Such a release or agreement may be established pre- sumptively, by showing declarations and acts of the parties inconsistent with an averment of the continued existence of the mortgage, and repugnant to the rights and liabilities created by it, as well as by express proof. It is for a jury under proper directions to determine the degree of weight that ought to be accorded to the facts proved." ^ Thus in an action for foreclosure, the tenant, for the purpose of proving payment of the mortgage debt, offered evidence to show, that for several years after the date of the mortgage the mortgagor occasionally worked for the demandant. Held, for the pur- pose of rebutting this evidence, the demandant might prove that the mortgagor was poor, and dependent on his earnings for the support of himself and his family, and that the demandant was accustomed to pay all his laborers at short and stated periods.^ So, if a mortgagor deliver to the mort- gagee specific articles, to be applied in discharge of the debt ; it may be shown that he afterwards settled the account, took a negotiable note for the balance due, and negotiated it, and thereby rescinded the contract, so as to preclude himself from 1 The Stamford, &c. v. Benedict, 15 ^ Waugli v. Rilev, 8 Met. 290; Mor- Conn. 437. gan i-. Davis, 2 Har. & McU. 17, 18. - Per Bell, J., Ackla r. Ackla, 6 Barr, 230,231. 40* 474 THE LAW OF MORTGAGES. [CH. XVII. setting it up in defence to a suit on the mortgage, as a redemption or payment.^ 46 a. The retaining of mortgaged property after the law- day has passed does not authorize a presumption of pay- ment.2 47. Where a mortgage itself shows no payment of interest, the presumption is, that none has been made.^ 48. The fact, that advances by a father-in-law to his son-in- law had been made for a long time, and were not evidenced by any writing, might authorize a jury to presume that they were not meant to be repaid, and therefore no consideration for a mortgage ; but do not raise a presumption of law that the mortgage had been satisfied.* 49. If a tenant in fee simple or fee tail pay off a charge on the estate, the payment is primd facie presumed to be for the benefit of the estate. If a tenant for life does it, he is primd facie entitled to the charge for his own benefit. But in either case the presumption may be rebutted.^ 49 a. The possession, by the mortgagor, of the notes secured by the mortgage, is prima facie evidence that they have been paid by him. But the presumption may be rebutted by evidence that the mortgagee, supposing erroneously that the mortgage was foreclosed, and that the mortgagor was entitled to them, delivered them to him without payment ; this not being a mistake of laivJ" So, the presumption, arising from such possession by the mortgagor or those claiming under him, is a presumption of fact and not of law, and will be rebut- ted by any other evidence. Thus, in a suit by the assignee of the mortgage against a mortgagor in possession, the pro- duction of the mortgage notes by the tenant does not raise such presumption, no discharge being shown, and the facts strongly tending to prove that the notes could not have been paid to a lawful holder, and an assignee of the mortgage.'^ 1 Deining v. Comings, 11 N. II. 474. ^> Cootc, 4G4. 'Scc Brooks v. Har- 2 Steele V. A(liirn.s, 21 Ala. 534. wood, 8 Tick. 497. 8 Olmsted V. Elder, 2 Sandf. Hiij.. .32.'). '' Smith v. Smijli, 15 N. II. 55. * Melsuacs v. llobbs, 8 Dana, 2G8. ' Croekcr r. Thompson, 3 Met. 224. CH. XVII.] PAYMENT, RELEASE, ETC. 475 49 b. If a suit for foreclosure has been commenced, and dismissed for want of prosecution, and the dismissal long acquiesced in, satisfaction of the mortgage will be presumed.^ 50. Both in law and equity, parol evidence is admissible of the discharge of a mortgage debt, and thereby of the mort- gage itself.2 It is held, that the provision of the statute of frauds, requiring a writing to pass any interest in real estate, does not apply to conditional estates, held by way of security, which are merely incident to the debts secured, and foUow as a matter of course any discharge of such debts. In law, the interest in the land is thereby defeated ; in equity, a trust arises for the mortgagor, which also, being implied, is within the exception of the statute of frauds. Payment of the debt is held a good defence to an ejectment upon the mortgage, more especially in the case of ancient mortgages. The law allows proof of any declarations, acts, or circumstances, inconsistent with a continuance of the lien. So, where an action is brought upon a mortgage against one who is not a party to it, and certain indorsements appear upon the mort- gage note, the plaintiff may offer parol evidence to explain them, or to show that they were made by mistake, unless at the time of purchasing the property the defendant had notice of such indorsements, or made inquiry of the plaintiff as to the amount due on the mortgage. Such indorsements are mere receipts.^ 51. A mortgagor went to the mortgagee's house with a box containing the bond and mortgage, and offered them to him ; but he put back the deeds, saying, " take back your writings, I freely forgive you the debt," and then, speaking to the mortgagor's mother who was present, said : " I always told you I would be kind to your son ; now I am as good as my word." Held, this evidence was competent to prove a discharge of the mortgage.'' 1 Nelson v. Lee, 10 B. Mon. 495. v. Davis, 2 H. & McH. 9 ; Ackla v. 2 RiclKirds V. Tims, Barn. 90 ; 1 Tow. Ackla, 6 Barr, 228. 143 a; Wcntz v. Dohaven, 1 S. & R. ^ i^icUanicls v. Lapliam, 21 Verm. 312; Den v. Spinnings, 1 Halst. 471; 222. Harrison v. EWiidgc, 2, 407; Morgan * llicliards f. Syms, Biirnaril. 90. 476 THE LAW OF MORTGAGES. [CH. XVII. 52. It has been a subject of much discussion, what is the precise remedy of the mortgagor to regain his estate, where the debt is paid after condition broken, and consequently the legal title absolutely forfeited. (/) 53. Where the debt is paid after breach of condition, it was early held in Massachusetts,^ that the only remedy of the mortgagor, to regain possession, was a bill in equity, and an action at law would not lie. A statute of that State provided for the discharge of a mortgage, after payment, upon the record ; thus implying that the mortgagee still retained the legal title. Moreover, a bill in equity is regarded as an ade- quate and convenient remedy, and well adapted to do justice to all parties ; at once securing the rights of the mortgagee, and moderating the rigor of the common law for the benefit of the mortgagor. It is as beneficial to the mortgagor as a suit at law, and may sometimes be more so ; because, in case of a want of evidence of payment, the mortgagee may be put upon his oath. It is certainly more beneficial to the mort- gagee. In case of an action at law against him, he could obtain no allowance for repairs^ which depends either upon express statute or the rules of equity. The common law recognizes no such claim, but considers the mortgagee as absolute owner. 54. The same doctrine has been recognized in Massachu- setts in the late case of Cutler v. Lincoln.^ So in an action for possession by a mortgagee, the tenant cannot plead a tender after breach of condition, but before suit brought. Nor a promise by the mortgagee, that he should hold the land 1 Ilill ". Payson, 3 Mass. 5G0 ; Par- 23 Cugij. 128. sons V. Welles, 17 Mass. 419; Sherman V. Abbot, 18 Pick. 448. (/) By St. 7 Geo. 2, cli. 20, a mortgagee cannot maintain ejectment after payment or tender of llie debt and cost ; but is required to reassign, and give up all deeds, &c. 1 Tow. 1G8. After discharge of a debt secured by mortgage, the mortgagee becomes a trustee for the mortgagor, and a court of equity will enforce a reconveyance. Upham v. Brooks, 2 W. & M. 407. CH. XVII.] PAYMENT, RELEASE, ETC. 477 free of the mortgage.' So it is held in Connecticut,^ that where payment is made after the law-day^ neither the mort- gagor nor his assignee can maintain ejectment against the mortgagee, without obtaining the legal title ; nor can the mortgagor defend against an ejectment by the mortgagee or his assignee, [g) So it is held in New York,^ that tender of the debt after breach of condition does not operate as a dis- charge of the mortgage ; [h) although, where a mortgagee has received an equitable satisfaction, if he afterwards attempt to set up the mortgage as a subsisting lien, satisfaction may be decreed, so that it may be cancelled on the record."^ 55. So in Mississippi, where there has been a payment, but no satisfaction on record, or other extinguishment of the mortgage, a sale upon execution of the mortgagor's estate will pass only an equitable title, to be enforced in a court of equity, but not by ejectment.^ 1 Maynard v. Hunt, 5 Pick. 240. * Kellogg i?. Wood, 4 Paige, 578. See ^ Doton V. Russell, 17 Conn. 146; Jackson v. Craft, 18 Johns. 110. Cross I'. Robinson, 21 Conn. 379. ^ Wolfe v. Dowcll, 13 Sm. & M. 103. ' Post I'. Arnot, 2 Denio, 344. Mer- ritt V. Lanabert, 7 Paige, 374. (^) In Connecticut, in the case of Smith v. Vincent, 15 Conn. 13, Wil- liams, C. J., adverts to the New York decisions, but considers the rule as established the other way by the cases of Phelps v. Sage, 2 Day, 151, and Roath V. Smith, 5 Conn. 136, which are not controlled by Porter v. Seeley, 13 Conn. 564. This last case he considers as merely deciding, that one with- out shadow of title in the debt or the land, a mere stranger, cannot protect himself by a satisfied mortgage. Hence It was decided, that the title of a mortgagee, under a mortgage, satisfied after forfeiture, may be set up as a defence to an action of ejectment. -In Sage v. Phelps, 2 Day, 151, above referred to, it appeared that the plaintiff, in an action of ejectment, claimed under a mortgage, and the defendant under a subsequent absolute deed, from the same person. The defendant offered to prove, that, after the expi- ration of the law-day, the whole mortgage-money was paid to the plaintiff's satisfaction. Held, the evidence was inadmissible. (A) In The Farmers', &c. v. Edwards, 26 Wend. 541, it was held, that a tender of the debt after the day of payment removes the lien of the mortgage as effectually as a tender before that day ; and the mortgagee if in posses- sion may be ousted by the mortgagor. So payment, though after the day, revests the title. Rogers v, De Forest, 7 Paige, 272. 478 THE LAW OF MORTGAGES. [cH. XVII. 56. In New Hampshire, in a very recent case, it is decided that payment of the debt, or performance of the duty, se- cured by the mortgage, discharges the interest of the mort- gagee, and revests the estate fully in the mortgagor.' So, in Maryland, in the case of Morgan v. Davis,^ it was held, that full payment of the principal and interest due upon a mort- gage, and the receipt thereof in satisfaction by the mortgagee, though after the day of payment mentioned in the mortgage, discharged the mortgage, and defeated the estate of the mortgagee in law and equity ; so that no title under the mortgage could afterwards be set up as a defence to an ejectment for the land. So, in Paxon v. Paul,^ which was ejectment by a mortgagee against an assignee of the mort- gagor ; it appeared, that the debt and interest had been paid in continental bills, which were received by the mortgagee in discharge of the mortgage, and that the original mort- gage and bond were delivered up, with a receipt in full thereon ; but that no release of the lands had been executed. Judgment for the defendant. 56 a. Mortgage, to secure repayment of a legacy, if the payment should prove invalid, judgment being rendered in favor of such payment ; held, the mortgage was functus officio, and could not be enforced by an assignee.'^ 57. The same general doctrine is held by the Court in Ohio, with reference to the discharge or extinguishment of a mortgage : " If we look at the true nature of the -contract, and view the mortgage as it really is, a mere security for a debt ; if the debt is the principal and the mortgage the inci- dent ; there certainly, as it appears to me, can be no good reason why a discharge of the debt should not be held to- be a discharge of the mortgage, and put an end to the interest of the mortgagee in the land. Such was said by this Court to be the case in Hill v. West, 8 Ohio, 222, and we are dis- posed to adhere to the opinion therein expressed. We are 1 Furl)ush V. Goodwin, Law Hep. ^ 3 Ilarr. & McII. 399. 1855, Marc!i, p. 650. * llickard v. Talbird, Ivicc, Ch. 158. ■^ 2 liar. & McII. 17. CH. XVII.] PAYMENT, RELEASE, ETC. 479 aware that this is contrary to the old doctrine upon the sub- ject, but we believe it is in conformity with reason, and with modern decisions. 4 Kent Com. 193. Nor does this opinion conflict with the statute of the 22d of February, 1831, pointing out the manner in which satisfaction of a mortgage may be entered." ^ So, in Kentucky, in the case of Breckenridge v. Ormsby,^ Eobertson, J., says :• — "A pay- ment of the mortgage debt extinguishes the mortgage, at law, as well as in equity. It is not doubted that a payment of the debt, before forfeiture, extinguishes the mortgage at law. But there are many learned Judges who doubt whether a payment after forfeiture will have the same effect. On this point there is great diversity in the cases reported, as well as in the " auctoritas 'prudentumP But ever since the days of Hardwick, the opinion has grown more and more prevalent, that a payment, at any time before the title has been passed to the mortgagee by a decree or sale, will per se at law, as it will in equity, divest the mortgagee of all title." 58. In the case of Hill v. Payson,-^ above cited, it seemed to be conceded by the Court, as an inference from the doc- trine therein established, or as the converse of that doctrine ; that after payment the mortgagee rryght recover the land by an action at law from the mortgagor ; notwithstanding the apparent hardship and injustice of such a proceeding. But in the much later case of Wade v. Howard, the Court re- mark,* that this concession was inadvertently made, and distinctly decide, that the mortgagee cannot thus recover, because the only judgment, whidi the law in such case would authorize, is a conditional one, that a writ of posses- sion shall issue, unless the debt is paid within a certain time ; which under the circumstances would be absurd ; it having been already paid. 1 Per Hitchcock, J., Perkins v. Dib- * 11 Pick. 297 ; ace. Hadlock v. Bul- ble, 10 Ohio, 440. finch, 31 Maine, 246; Webb v. Flan- - 1 Mar. 257, 258. ders, 32, 175. 3 3 Mass. 560. 480 THE LAW OF MORTGAGES. [CH. XVII. 58 a. So, in Maine, no action can be sustained on a mort- gage, after the mortgage debt has been paid.^ 59. Judge Story says : ^ — " Unless the mortgagor can resist a recovery by the mortgagee at law, he may be turned out of possession when nothing is due on the mortgage, against the plainest principles of justice, and be driven by a circuity of action to -enforce his acknowledged rights. If a cent only be due on the mortgage, the mortgagee can obtain no judgment at law in his suit, but a conditional one, and no possession at all if that cent is paid ; and yet, if nothing is due, his rights are absolute, and he is entitled to an un- conditional surrender of the possession. I confess I do not understand the reasoning upon which such a distinction can be maintained." (i) 60. It has been held, however, in Massachusetts, that an action iox forcible detainer may be maintained upon a mort- gage, which was paid after condition broken.^ 61. A mortgage may be extinguished, not only by pay- ment of the debt, but by a subsequent direct transfer of the estate itself from one to the other of the parties. Of course, this result follows from an express relinquishment of title by the mortgagee ; but it ijiay equally be produced, by a con- veyance or release from the mortgagor to the mortgagee, the effect of which is to vest in the latter an interest inconsistent with, or repugnant to, his claim under the mortgage. Thus the mortgagor may convey his estate to the mortgagee, after maturity of the debt, in satisfaction thereof, unless the trans- 1 Williams v. Tliurlow, 31 Maine, '^ Gray v. Jonks, 3 Mas. 527. 392. 3 Uoward v. Howard, 3 Met. 557. (/) The docti-ine of the text is said to be adopted in Maine, Massachu- setts, Marjlaiid, New York, Vermont, New Jersey, Pennsylvania, and Ohio. But it is lu'ld otherwise in Connecticut, Kentucky, and Virginia. 2 Greenl. Cruise, 122, n. CH. XVII.] PAYMENT, RELEASE, ETC. 481 action be fraudulent.^ But, it is said, that equity looks with suspicion on such a transaction, in reference to an extin- guishment of the mortgage.'-^ 62. A quitclaim deed from mortgagor to mortgagee is held to be a merger of the mortgage ; unless intention, inca- pacity to elect, or interest in the mortgagee to keep the ^^- curity alive, prevent such result." A quitclaim deed of part of the mortgaged premises to the mortgagee or his assignee, does not wholly extinguish it, but at most for only a propor- tional part of the debt.* So, although the assignee's title to the half in question was derived from one who had purchased it from the mortgagor, and given back an agreement to pay off the mortgage ; especially if the assignee had no notice of the agreement.^ So, a mortgagee, by the purchase of a- part of the mortgaged premises in payment of a debt not secured thereby, does not prejudice his mortgage in respect to the residue.^ 62 a. Two tenants in common mortgaged to two other persons, and their equity of redemption was afterwards sold on execution. The mortgagees recovered a judgment for possession, and subsequently one of them transferred all his title to the execution purchaser, who conveyed one half of the right in equity, sold on execution, to another person. Subsequently, possession was delivered to the mortgagees upon their execution. Afterwards, the execution purchaser conveyed to the mortgagee, who had not parted with his interest, all his title, thus uniting in the latter the rights of mortgagor and mortgagee of half the land. This convey- ance was treated by the grantee of the execution purchaser as payment of half the debt ; and, having tendered the bal- ance, he brings a bill in equity to redeem against the mort- gagee last referred to. Held, as the defendant purchased 1 Sliclton I'. Hampton, 6 Ired. 216; * Klock v. Kronkhite, 1 Hill, 107; Harrison v. .The Trustees, &c., 12 Mass. James v. MoreV, 2 Cow. 246. 465. s Ibid. 2 Hitchcock V. U. S. &c., 7 Ala. 386. ^ Stover v. Harrington, 7 Ala. 142. 8 Waugh V. IJilcy, 8 Met. 290. VOL. I. 41 482 THE LAW OF MORTGAGES. [CH. XVII. only a moiety of the equity of redemption, only a moiety of the mortgage was extinguished ; that the recovery of a judgment upon the mortgage by the mortgagees, being pre- vious to the defendant's acquiring any title to the equity, did not indicate* his intention as to an extinguishment or otherwise ; and, as the defendant would gain nothing by keeping alive a moiety of the mortgage, it was held to be extinguished.^ 62 b. A devisee in trust, with power to sell, for valuable consideration paid by a mortgagee, " devised and forever quitclaimed all the estate, right, title, &c., at law as well as in equity, in possession as well as in expectancy," describing the premises. The condition had been broken. Held, the equity of redemption passed.^ 62 c. But it was further held, that the mortgagee might still maintain a bill to foreclose, in order to quiet his title.3 63. Where the heirs of a mortgagee were in possession of an ancient deed, releasing the equity of redemption, such deed, even though not recorded, was held to preclude a re- demption by a subsequent purchaser.* 64. Where a mortgagee purchases and takes a deed of the mortgaged premises, paying a part of the consideration by the mortgage note ; such mortgage is thereby paid off and extinguished, in law and equity, although uncancelled on the record.^ Spalding, J., dissenting. 65. A conveyance from the mortgagor to the mortgagee may enure to the benefit of a previous grantee of the former. Thus a mortgagor, having conveyed the land to a third per- son, afterwards conveyed it to the mortgagee, who entered satisfaction of the mortgage. Held, the former grantee thus gained the absolute legal title.^ 66. A mortgage will not be extinguished by the mort- 1 rrccman v. raul, 3 Grccnl. 2G0. * Mallory v. Aspinwall, 2 Day, 280. 2 Hitchcock V. U. S. &c., 7 Ala. .'586. ^ Jennings, &c. v. Wood, 20 Ohio, ** lb. contra, Ormsby v. Phillips, 4 261. Dana, 2;J2. « White v. Todd, 10 Mis. 189. CH. XVII.] PAYMENT, KELEASE, ETC. 483 gagee's receiving an absolute conveyance, unless the two titles become thereby united in him at the same time. 67. In 1821, Reuben Sherman conveyed the demanded premises to Reuben Sherman, junior, taking back a mort- gage for the whole or a part of the price. August 25, 1828, the mortgagor conveyed to the demandant ; the deed being recorded on the 30th of August. Before this conveyance, Sherman, senior, mortgaged to the tenant, but the mortgage was not recorded till after registration of the demandant's deed. Subsequently, the tenant and Sherman, senior, con- veyed to Samuel Sherman, and Samuel to the tenant. Held, as the mortgage from Sherman, junior, to Sherman, senior, was recorded before the conveyance to the demand- ant, this conveyance passed to him only the equity of re- demption ; that the conveyance from the tenant and Sher- man, senior, to Samuel, did not operate as an extinguishment of the mortgage from Sherman, junior, because Samuel did not have his title as mortgagor, which was then vested in the demandant. And if this conveyance to Samuel did ex- tinguish the mortgage from Sherman, senior, to the tenant, it was immaterial, for then Samuel took the legal estate from the other grantor, and the tenant then derived the legal estate from Samuel, and therefore this action could not be maintained, the demandant acquiring, by payment of the debt, a mere equitable title.^ 68. In Pratt v. Bank, &c.,^ Whiton mortgaged to Hins- dell, who assigned to the plaintiffs. Afterwards the mort- gagor, by a qiftitclaim deed, released to the mortgagee, and the mortgagee mortgaged to the defendants. Upon a bill for foreclosure, held, the mortgage title, by these transactions, had not merged in the fee. There can be no merger, unless the two estates unite in one and the same person, and in the same right. Upon the assignment of the mortgage to the plaintiffs, they became mortgagees, and Whiton mortgagor, and Hinsdell had no estate of any kind in the land. When 1 Sherman v. Abbot, 18 Tick. 448. - 10 Verm. 293. 484 THE LAW OF MORTGAGES. [CH. XVII. the mortgagor assigned his equity to Hinsdell, the latter acquired his rights, the plaintiffs having those of the mort- gagee. As the assignment by the mortgagee to the plain- tiffs was prior to the release by the mortgagor to him, the estates of the mortgagee and mortgagor never became united in the mortgagee, and, not subsisting at any time in one per- son, could never unite and merge in the fee. 69. A mere conveyance to the mortgagee will not affect the mortgage, without evidence of a delivery and a claim under such conveyance, nor without the mortgagee's assent thereto.^ 70. Mortgage, from an inhabitant of New Jersey to an inhabitant of New York, of lands in the former State, as security for a bond. Subsequently, the mortgagor for his own purposes executed and caused to be recorded, in New Jersey, a deed of the land to the mortgagee, to which the latter never assented. The mortgagee having assigned the bond and mortgage, with all his other property, for the bene- fit of his creditors ; a creditor attached the land. Held, the deed did not extinguish the mortgage, and the latter should prevail over the attach ment.^ 71. A. sold to B. with covenants for quiet enjoyment and against incumbrances, and took a mortgage back for the purchase-money. At the same time there was a judgment against A., which was a lien on the premises, and under which they were sold and ultimately conveyed to C. C, on the same day that he took a deed frbm the sheriff, executed a deed of release and quitclaim to B., being at the same time the holder of the mortgage. Held, C. could not foreclose the mortgage.-^ 72. If a debt is secured by a mortgage and also by a surety, the mortgage will not be extinguished by the mort- gagee's purchasing the equity of redemption, with the bond fide purpose of benefiting the surety.* 1 Wau;4li v. llilcy, 8 Met. 2'.) ; 1 llalst. - Lon;;strcct v. Sliipinan, 1 Halst. Ch. Ch. 4;i. " ' -IIJ. ■• Woodlniry i'. Aikiii. V-l 111. 039. ' Culluin u. Emanuel, 1 Ala. (N.S.) 23. CH. XVII.] PAYMENT, KELEASE, ETC. 485 73. A mortgage will of course be extinguished by a direct release or discharge, which may be in the form of a separate deed, or, as is more commonly the case, written upon the back of the mortgage deed itself, and ackno\yledged and recorded like other transfers of real estate. 74. A receipt in full of the mortgage debt is an equitable release of the mortgage.^ 75. So a mortgage, though under seal, may be released by a parol agreement, without payment.^ 75 a. But where two mortgagees gave to the mortgagor a release, reciting payment in full of the debt ; and the same day, the latter gave a mortgage to one of the mortgagees ; held, the release could not be explained by parol evidence, and that an incumbrance between these two mortgages should have priority .3 So where a mortgagee executes an instru- ment in these words: — "This mortgage is discharged, a second mortgage having been given of other lands to secure the same debt;" such instrument cannot, affect the mort- gagee's rights, unless he be chargeable with fraud, which is affirmatively proved against him.^ 76. A conveyance from the mortgagee to the purchaser of the equity of redemption concluded thus, — " meaning hereby to convey all the right, title, and interest now vested in me, by virtue of any and all conveyances heretofore made to me by " the mortgagors. Held, these words showed no intention to discharge the mortgage, but the reverse;^ But, in general, a quitclaim deed from the mortgagee or his assignee to a purchaser of the equity of redemption extinguishes the mort- gage.'^ 77. A release executed by A., a cestui que trust, to B., of all claims or demands of every nature which C, the trustee, who is in possession of the legal estate, has against B., on account of a mortgage executed by B. to the trustees, is not a conveyance of the estate of C, and is not therefore a com- 1 Marriott v. Handy, 8 Gill, 31. * Gates v. Adams, 24 Verm. 70. 2 AVallis r. Lonjr, 16 Ala. 738. ^ jjqoI v. Hathaway, 9 Shepl. 85. ^ Wuollen r. Ilillcr, 9 Gill, 185. • '^ Jerome v. Seymour, Harring.Ch.357. 41* 486 THE LAW OF MORTGAGES. [CH. XVII. pliance with an agreement to convey the interest of C, the trustee.' 78. The grantee of a mortgagor, being about to sell, pro- cured from the mortgagee to the purchaser, a bond, condi- tioned that the grantee should save the purchaser harmless from all cost and damage in consequence of any previous incumbrance. Held, the effect was to release the land from the mortgage.^ 79. A. mortgaged land to B., and then conveyed the land, subject to the mortgage, to C. C. conveyed the land, with warranty, to D., and D. with similar covenants, to E., having first procured B. to execute a bond to E., conditioned that D. should save E. harmless from any incumbrance, the parties understanding and intending that this would discharge the land from the mortgage, but would leave B. the right to pur- sue his remedy against A. for his debt, and also to hold C. and D. upon their warranty, and to prosecute suits thereon in the name of E., but for his own benefit. Held, the bond dis- charged the incumbrance, and consequently released C. and D. from their covenants, so far as the mortgage was con- cerned, and that chancery could grant no relief.^ 80. Where the purchaser of part of a lot of land, subject to a mortgage, paid the purchase-money to the mortgagee, and took a release of his land from the mortgage ; held, that portions of the land, previously sold, were not thereby dis- charged.* 81. A., holding a mortgage upon several lots of land be- longing to B., to secure a debt of $900, executed a release to B. of all claims and demands whatever, in consideration of the conveyance of a lot of land valued at $200 ; but the mortgage debt was not due at the time, and the mortgage was not delivered up or cancelled. Held, the mortgage debt was not afibctcd by the release.^ 1 Simonton v. Gandolfo, 4 Florida, * Evcrtson v. Ogdcn, 8 Paige, 275. 209. ^ Mclntyrc v. Williamson, I Edw. Cb. •■^ I'roctor V. TJirall, 22 Verm. 2G2. 34. •' Ibid. • • CH. XVII.] PAYMENT, RELEASE, ETC. 487 82. Where a release of a mortgage is made to distinct parties, it will take effect according to their respective inter- ests in the land, independent of the mortgage. Thus, in the case of Baylies v. Bussey,^ a mortgagor and mortgagee joined in a second mortgage. The second mortgagee took possession for breach of condition, but, before the expiration of three years, tendered a release of his mortgage, which the parties refused to receive, till after the lapse of five years. The release was held to reinstate the mortgagor and first mortgagee in the same relative position as if the second mortgage had not been made. 82 a. Where a creditor agreed to discharge his debtor, upon the fulfilment of a certain agreement by him, oinder which the debtor's goods were to be surrendered to the cred- itor, &c., but all remedies on a certain mortgage, given by the debtor and others to secure the debt, were expressly re- served by the same agreement ; held, the other mortgagors were not discharged from their liability as sureties.^ 83. In most of the States, a summary method of releasing or discharging mortgages has been provided by statute ; which is, an entry upon the margin of the record in the Registry of Deeds. This mode has probably to some extent superseded the more technical forms of discharge, {j) 1 5 Greenl. 153. 2 Clagett v. Salmon, 5 Gill & J. 314. (y) In Massachusetts, New Hampshire, Maine, Rhode Island, Vermont, Delaware, New Jersey, Pennsylvania, Alabama, South Carolina, Missouri, Illinois, Indiana, Michigan, Arkansas, Mississippi, Wisconsin, (the discharge to be attested by the register,) it is provided by statute, that mortgages may be discharged upon the margin of the public record. In Pennsylvania, Missouri, Illinois, Mississippi, and Alabama, the mortgagee shall enter the discharge in three months after demand, (or in Missouri give a release,) under penalty of forfeiting a sum not exceeding the debt. In South Caro- lina, in three months from demand of any one interested in the estate, under penalty of one half of the debt. In Massachusetts and Wisconsin, seven days from demand ; in Vermont, New Hampshire, and Rhode Island, ten days ; in Arkansas, sixty days, under a penalty not exceeding the debt ; in 488 THE LAW OF MORTGAGES. [CH. XVII. 84. Equity may revive a mortgage, the discharge of which has been procured by fraud of the mortgagor.^ 1 Barnes v. Camack, 1 Barb. 392. Delaware, sixty days, under penalty of paying all damage or a fixed sum ; Avith treble costs in Rhode Island. The same provision is made in the last- named State, for refusal to execute a release. But the statute is not to im- pair the effect of any other legal discharge, payment, satisfaction, or release. In New Hampshire, after payment or tender, the Court may decree a dis- charge, and a copy of the decree shall be recorded. In Michigan, the mort- gagee, before such discharge upon the record, is to give a certificate, which shall be acknowledged, &c., like a deed. Mass. Rev. Sts. 408 ; 1 Verm. L. 194, 195, (see lb. 1837, 6) ; Verm. Rev. Sts. 31G ; N. H. Rev. Sts. 245, 246 ; Purd. Dig. 196; Penn. Sts. 1849, 527; Aik. 94; Hutchinson, (Miss.) 611; Wis. Rev. Sts. 330, 331; N. J. Rev. Sts. 659; S. C. St. Dec. 1817, 26 ; Ind. Rev. L. 272; 111. Rev. L. 510; Del. Rev. L. 1829, 92; R. I. L. 205, 206; Mis. St. 409, 410; Mich. St. 1839, 219 ; Ark. L. 748. It seems, an action lies to cancel a paid mortgage, in order to remove a cloud from the plaintiff's title. But whether this is so, where the mortgage is stale, or not asserted, qu. Wofford v. Thompson, 8 Tex. 222. In Illinois, a release by deed, attested by one witness, and legally acknowl- edged, is also provided. Sts. 1838, 1839, 197. In Indiana and Wisconsin, the register of deeds may discharge a mort- gage, upon the exhibition of a certificate of payment or satisfaction, signed by the mortgagor (mortgagee) or his representative, and attached to the mortgage ; which shall be recorded. A like provision is made in New York. Ind. St. 1836, 64 ; 1 N. Y. Rev. Sts. 761 ; Wis. St. supra. The following points have been decided in New York, in reference to the power of dcr/iS in chancery to discharge mortgages, which have been made for moneys deposited in that court. Where moneys deposited in the Court of Chancery, in a suit for the par- tition of lands, have been invested by the clerk upon bond and mortgage executed to him in his oflicial character ; such clerk has no power to dis- charge the mortgage without order of Court. The Fai'mers', &c. v. Wal- worth, 1 Comst. 433. It seems, where the clerk executes such discharge without actual payment and without order of Court, it is void even as against bond fide purchasers of the property incumbered by the mortgage. lb. But the unauthorized act of the clerk may be ratified by the owners of the fund secured by the mortgage. lb. A clerk in chancery loaned upon bond and mortgage a large sum, which had been paid into court to secure a widow's dower, in pursuance of a decree in partition. Afterwards, the borrowers CH. XYII.] PAYMENT, RELEASE, ETC. 489 85. Having made two mortgages of the same land, the mortgagor procured a 'discharge of the first by fraudulent executed to the clerk another bond for the same sum, and another mort- gage upon different property. These securities were meant as a substitute for the former ones, and so received by the clerk, who thereupon, without direction from the Court, executed a satisfaction of the first mortgage, which was entered of record. The owners of the fund, after the death of the widow, with notice of all the facts, foreclosed the second mortgage in the name of the clerk, and had the property sold. Held, though the discharge of the first mortgage was void, and might have been so treated, the election of the owners of the fund to proceed upon the second was a ratification of the acts of the clerk, and therefore that a bill did not lie to foreclose the first mortgage, for the purpose of collecting the balance not realized by the first foreclosure. lb, Money was paid into court in a partition suit, and loaned by the clerk on mortgage to A. and others. The lands mortgaged were sold by A. and his co-mortsasors to B., who had notice of the mortjiage, and that it was Tiven to the clerk officially, and who reserved on that account a part of the pur- chase-money, until the mortgagors should procure a discharge of the mort- gage. The mortgage was discharged by the clerk, without an order of the Court, on the giving of a new mortgage by A. and others on other and less valuable lands. A certificate of the discharge was given to B. by the regis- ter of deeds where it was recorded. B. paid A. and others the reserved portion of the purchase-money. The clerk having died, his successor fore- closed the second mortgage, and, on a sale of the premises, there was a large deficiency, to supply which, the clerk filed a bill to foreclose the first mort- gage. Held, the clerk had no power to discharge the mortgage without an order of the Court ; that notice of the mortgage being given to B., and the mortgage being given to the clerk, the purchaser was thereby put upon inquiry, from what fund the investment was made, and whether the clerk had power to discharge the mortgage ; and that the taking of the second mortgage was no payment of the first. As the premises were laid out in city lots, and worth much more than the mortgage debt and costs, the owners of the equity of redemption were permitted by the decree for foreclosure to direct in what order the lots should be sold. Walworth v. Farmers', &c., 4 Sandf Ch. 51. In Massachusetts, (St. 184 7, ch. 195,) where the state treasurer is author- ized to discliarge a mortgage, he may assign it, with the same effect as in other cases of assignment ; but the State shall thereby incur no liability, express or implied. In the same State (St. 1848, ch. 151, § 2,) where an execution for possession has issued, and is afterwards satisfied by payment of debt and 490 THE LAW OF MORTGAGES. [CH. XVII. representations, and gave a new mortgage, the mortgagee beiner ignorant of the second incumbrance, but the second mortgagee not being party to the fraud. Held, upon a bill in equity by the first mortgagee, the discharge should be de- clared void, and a foreclosure decreed.' 86. So where the release of a mortgage is effected by com- promise, if the consideration is avoided, the release will be avoided also.^ 87. The cancellation of a mortgage upon the record may be declared void, where it is made in violation of the rights of third persons. 88. A mortgagor, having conveyed a part of the premises, joined with the purchaser in procuring a loan to take up the mortgage, the purchaser agreeing to take an assignment of the mortgage for the lender's security, as against that part of the land which had not been conveyed. The purchaser ostensibly advanced half the money, and procured the as- signment, but soon after, without the lender's knowledge or assent, cancelled it of record. Held, as against the lender the cancellation was void, and that he might still foreclose upon the portion not conveyed, and as against a second mortgagee, whose mortgage was made before such cancella- tion.^ 88 a. In equity, the cancellation of a mortgage on the record is on\y primd facie evidence of its discharge. It may be proved to have been made by accident, mistake, or fraud, and the mortgage wUl then be established, even against sub- sequent mortgagees without notice.* 1 Barnes v. Camack, 1 TJarb. 392. " Ilciglnvayv.Pendlcton, 15 0hio, 735. 3Kin<,'i'. IMcVickar, 3Sandf. Ch. 192; * Kobiiison v. Sampson. 23 Maine, McLean v. Lafayette, &.C., 3 MeLcan, 388; Trenton, &c.!;. Woodruff, 1 Green, 587. Ch. 117. costs ; the mortgagee, his executors, &e., shall, at the expense of the mort- , gagor, enter on the margin of the record of the execution an acknowledg- ment of satisfaction, or execute a deed of release, ■which shall be recorded, ■with proper notes of reference to the execution. CH.^XVII.] PAYMENT, RELEASE, ETC. 491 88 b. A trustee of the separate estate of a married woman, having become seized in his own right of the greater part of the premises covered by a mortgage for $20,000, belong- ing to his cestui que trusty acknowledged satisfaction of such mortgage, and caused it to be cancelled of record ; and soon afterward conveyed to his brother one third of the premises, and took back from him his -bond for $20,000, with a mort- gage upon the part so conveyed to him, payable at the time of payment of the original bond and mortgage. This new mortgage the trustee substituted in lieu of the cancelled mortgage, and executed a declaration of trust, declaring that he held the same in trust for the separate use of his cestui que trfist ; but the property covered by the substituted mort- gage turned out to be an inadequate security for the $20,000. On a bill filed by the cestui que trust, alleging that the orig- inal bond and mortgage had never been satisfied or paid, that the cancelment of that mortgage was without her knowl- edge or assent, and a breach of trust ; held, the satisfaction of the first mortgage which was produced in evidence, was primd facie proof of its discharge ; that the complainant had not shown that the second mortgage was not substituted with her assent, but that a sale should take place of so much of the premises as were included in the second mortgage.^ 89. Equity will also interfere in behalf of a creditor, where the debtor unfanly seeks to avail himself of the discharge of a mortgage, in avoiding payment of the debt secured. 90. ■ Bill of discovery. The bill alleged, that the plaintiff, holding a note, made by the defendant, secured by mortgage, in order to enable the defendant to procure a loan on a first mortgage of the land, at his request, and with the under- standing and upon the promise that the plaintiff should be paid from the money thus obtained, executed a release of the mortgage ; that the plaintiff afterwards brought a suit on the note, against which the defence of payment had been set up by way of specification ; that the defendant had often stated 1 Stuart V. Kissam, 11 Barb. 271. 492 THE LAW OF MORTGAGES. [CH. XVII. his intention to prove such payment by the release of the mortgage ; and that the plaintifl' had no means of proving these facts, and was advised that he could not safely proceed to trial without a discovery. Held, the plaintiff w^as entitled to a discovery.^ 91. So in case of a note against two persons, secured by mortgage, if the payee acknowledges payment from the promisors upon the margin of the record, and discharges the morto^age ; evidence is admissible to control such acknowl- edament, of the acts and declarations of one of the promisors, in an action upon the note against the other.^ 1 Haskell V. Haskell, 3 Cush. 540. '^ Patch v. King, 29 MaiUi, 448. en. XVIII.] ASSIGNMENT. 498 CHAPTER XVIII. ASSIGNMENT OF A MORTGAGE. 1. What constitutes an assignment, and what a discliarije, of a raortp-age. 24. Mortgage of indtmnit;/ ; when the law implies an assignment of such mort- gage. 27. Conditional assignment of a mort- gage, whether itself a mortgage. 33. Form of assignment. 3.5. What passes by an assignment ; whether a mortgagee, after assignment, can release or bring an action. 46. Whether he shall be party to a suit for redemption or foreclosure. 48. Consideration paid by the as- signee, whether material. 49. For what amount the mortgagor is liable to the assignee. Whether the latter is bound by previous payments, set-offs, &c. 57. Guaranty by the mortgagee. 59. Effect of the mortgagor's joining in the assignment. 62. Recording of an assignment. How far an assignee's title may be afiected by fraud or notice. 1. In speaking of the natur? of a mortgagee's interest in the land, as connected with the personal obligation or liability which the mortgage is made to secure, it has been incident- ally stated that mortgages are assignahle. The question has been considered at length, (ch. 11,) how far a transfer of the debt has the effect of passing the mortgage. It now remains to speak more specifically of the express assignment of the mortgage itself, and of implied assignments, growing out of transfers and relations between the parties, which, in form or name, do not import to involve any direct substitution of one party for another, but are invested \\dth this effect by opera- tion of law. The latter branch of the subject, as being more immediately connected with that of discharge or extinguish- ment^ which was treated in the last chapter, will be first con- sidered. 2. Usually, where a claim secured by mortgage is trans- ferred, the mortgage is expressly assigned, as part of the same transaction, and, under these circumstances, the rights of the parties are simple and well defined. Thus, it is held in gen- eral, that when a mortgagee makes a deed of assignment VOL. I. 42 494 THE LAW OF MORTGAGES. [CH. XVIII. upon the back of the mortgage deed, or by a separate instru- ment referring to it, the assignee is put in the place of the mortgagee, to all intents and purposes, unless a different intention is apparent from the contract.' (a) Most of the questions upon the subject, as has been suggested, grow out of contracts or conveyances, which are claimed to operate as implied assignments, or assignments b?/ operation of law. It will be seen, that the inquiry usually arising in this class of cases is, whether a certain transaction shall operate as an assignment or a discharge of the mortgage ; and that the intention or interest of the parties, so far as such intention was an innocent one, or more generally the interest and rights of third persons, connected in relation to the land with one or both of them, will control the literal import of the words used ; more especially, where there is any fraud in the case.^ It is said, " Equity will sometimes keep alive a mortgage which has been substantially^atisfied ; but it is always for the advancement of justice, and never to aid in the perpe- tration of a fraud, through the forms of law." ^ It is also said,* " Where there is no direct proof of the intention, it may be derived from various circumstances, and one of those is the interest of the party to merge his security, or to keep it alive. But that is only one circumstance, and it may be repelled by others. The party may intend to merge, upon a 1 Hills V. Eliot, 16 Mass. 30-1. Simonds, 14 Pick. 104 ; Ilolden r.Pike, ^ See Wells v. Morse, U Verm. 17 Robinson v. Lc.ivitt, 7 N. H. 100 Campbell v. Knights, 11 Shepl. 332 llatrh V. Kimball, 2 Shepl. 9; 4, 14G 24 Maine, 427. 3 Per Gridlcy, J., McGiven v. Whcc- loek, 7 Barb. 29 ; Hinchraan v. Emans, Saxton, 100. Ilcliiiliold )'. Man, 4 Wharf. 410 ; Slo- ^ Loonier v. Whcclright, 3 Sandf. Ch. cum V. Cutlin, 22 Verm. 137 ; Eaton v. 157. (a) One lidding two mortgages from the same i^erson, ujion the same land, and executed at the same time, assigned one of them for good consid- eration. Held, the other was thereby pcstponed, even in the hands of a subsequent assignee. Van Rensselaer v. Stad'ord, llopk. 5G9. The assignee of a mortgage is not estopped to deny tlie mortgagor's title. Great Falls, &e. V. Worster, 15 N. 11.412. CH. XVIII.] ASSIGNMENT. . 495 mistaken view of his interest. He may judge erroneously when he knows all the facts ; and he may err exceedingly in regard to the law as applicable to what he is doing. But I am not aware of any principle upon which he can be saved from the consequences of a merger, where his intent is clear, although, by a mistake of the law, he supposes he will obtain advantages, which the law, correctly applied, entirely cuts off." 3. In New York, a warranty deed of the land has been held not to pass the mortgagee's title. Thus, a mortgagee may foreclose, though he have conveyed the whole mortgaged premises in fee, with warranty, because his interest in the mortgage does not pass by such conveyance. So, if he have thus conveyed only a part of the premises, he may foreclose for the whole under a power of sale, and may himself become the purchaser.' But it has since been held in the same State, that although a sale made by a mortgagee is irregular, his deed operates as an assignment of the mortgage.^ The Court say,'^ " The deed was sufficient, at least, to transfer to the defendant the money due upon the mortgage. The interest on the mortgage was in arrear, and the mortgagees were entitled to foreclose, or to sell under the statute. The defendant therefore occupies the position of a mortgagee in possession of the premises mortgaged ; the money secured being due and unpaid. Although since the revised statutes a mortgagee cannot obtain possession at law, on default of payment, there is no doubt that he may retain the possession until redemption, if he succeed in procuring it by the mort- gagor's consent, or in any lawful mode." 3 a. The assignment of a mortgage contained words of conveyance in fee, habendum as fully as the mortgagee might hold under the mortgage. Held, the title passed, except such as might be acquired under the mortgage.* 3 b. Where a mortgage is accompanied by no personal 1 Wilson r. Troup, 2 Cow. 195. 3 ji, p 307. 2 Olmsted v. Elder, 2 Sandf. Sup. * James v. Morey, 2 Cow. 246. 325. 496 THE LAW OP MORTGAGES. [CH. XVIII. obligation, a quitclaim deed from the mortgagee to a third person operates as an assignment.' (b) 3 c. In the case of Hunt v. Hunt,^ the mortgagor, remain- ing in possession, conveyed the land, and afterwards conveyed it a second time. Subsequently the mortgagee, who, before the second deed of the mortgagor, had recovered judgment and taken possession under his mortgage, in an action against the mortgagor, conveyed to the second purchaser by a quit- claim deed in the usual form, with a warranty against him- self and all claiming under him. Held, this conveyance did not operate as an extinguishment of the mortgage, thereby giving priority of title to the first purchaser from the mort- gagor, but as an assignment of the mortgage. Shaw, C. J., remarked : ^ — "If this had been a deed in the usual form of words, ' give, grant, sell and convey, release and quitclaim,' and if it is apparent that it was the intention of the releasor to transfer, and of the releasee to receive, the legal seizin, title and interest in the estate, and not to cancel and extinguish the mortgage, the deed would so have operated, to pass the mortgagee's legal title. And we are of opinion that such is the effect of the deed in the present case." He further remarks,* upon the point of extinguishment : — " The mort- gagee had a perfect right and legal power to assign his mort- gage, if he thought fit, and to give to his assignee the same right which he held himself, that is, to receive the amount secm'cd by the mortgage, from any person entitled by con- 1 Dorkrey v. Noble, 8 Greenl. 278. ^ 14 pick. 380. See Macomber v. 2 14 Pick. S74; Crooker v. Jewell, Mutual, &c., 8 Gush. 136, 137. 31 Maine, 306. * 14 Pick. 383, 384, 385. (/>) So wlicrc tlic mortgagee assigns the mortgage, and afterwards takes a quitclaim deed from the mortgagor, the mortgage title does not merge in the fee ; but the mortgagee becomes mortgagor and the assignee mortgagee. Pratt V. Bank, &c., 10 Verm. 293. If, after such transfer, the mortgagee mortgage the premises, the assignee having omitted to record the assignment, the title of the assignee willi^rovail lb. CH. XVIII.] ASSIGNMENT. 497 tract orby operation of law to redeem, and to h old the legal estate in security of the debt till it should be so paid. And we can see no reason why a purchaser of the equity of re- demption, whether of a part or the whole of the mortgaged premises, is in any respect disabled from becoming such assignee. He may consider his equity of redemption of no value or of small value, or the title to it invalid or doubtful ; and can there be any reason in law, why he who has the most urgent occasion for making such a purchase to protect his own interest, should be disabled from doing so, and be placed, in this respect, in a worse condition than a stranger ? In order to effect a mergei^at law, the right previously exist- ing in an individual, and the right subsequently acquired, in order to coalesce and merge, must be precisely coextensive, must be acquired and held in the same right, and there must be no right outstanding in a third person, to intervene between the right held and the right acquired. The case we are con- sidering supposes that a third person has, by operation of law, by purchase or by attachment, acquired certain rights or claims to the equity of redemption, which do not extend to the mortgage. When, therefore, the equity of redemption by purchase, and the mortgage by assignment, vest in the same individual, they do not coalesce or merge, if there be in a third person a right of dower, a right acquired by purchase, or a real lien by attachment, intervening between the mort- gage and the equity. We think the present case is entirely within these principles. It is apparent from the form of the deed of quitclaim, from the qualified covenant against incum- brances, and from the manifest object of the parties, that it was the intent of the mortgagee, not to discharge the mort- gage, but to seU and transfer his legal title in the mortgaged premises, by the species of conveyance long known and used in this Commonwealth, when the intent is to pass an estate without warranty." 4. After attachment of an equity of redemption, the mort- gage debt was paid by a stranger, to whom the mortgagee, 42* 498 THE LAW OF MORTGAGES. [CH. XVIII. with the mortgagor's consent, gave a quitclaim deed of the land. The attaching creditor recovered judgment, and levied his execution upon the land, as upon unincumbered real estate. In a writ of entry by the heirs of the judgment cred- itor, against one claiming under the grantee of the mortgagee, it was held, that the deed operated not as an extinguishment, but a transfer, of the legal title ; that the judgment creditor by his levy did not acquire such title, but, at most, only an equity of redemption, which might be the foundation of a bill to redeem ; but that this action could not be maintained.^ 5. Two of the plaintiffs, who were purchasers of an equity of redemption, contracted with one Richardson to sell him the land for |5,000, he providing for the redemption and for payment of the mortgage debt, which was about $3,000, and securing the surplus to the plaintiffs ; the defendants, the mortgagees, having agreed to convey the land to Rich- ardson, if not redeemed, and to pay him the amount due for redemption, if it should be seasonably demanded. The de- fendants gave a bond to Richardson, to secure their agree- ment, and he paid them the mortgage debt. The induce- ment to the foregoing transaction was, that the third plain- tiff was absent at sea, and therefore no title could be made to Richardson except through the defendants ; and also an apprehension by the defendants, that the mortgagors might have a right to redeem without the plaintiffs' consent. Hence it was agreed, that Richardson should take his title from the defendants after a foreclosure of their mortgage. Held, the intention and effect of the transaction was, that the defendants assigned the mortgage to Richardson, sub- ject to the remaining equity, the plaintiffs releasing their equity of redemption on being paid or secured their shares of the surplus over the mortgage debt; that the bargain between two of the plaintiffs and Richardson did not depend upon the consent of the other plaintiff, as the title was to come through the defendants ; that Richardson's payment to 1 Freeman v. McGaw, 15 Tick. 82. CH. XVIII.] ASSIGNMENT. 499 the defendants must be considered as made for himself, upon a purchase of the land, not in discharge of the mort- gage, which would defeat the object ; that although the ab- sent plaintiif had no opportunity to assent to the bargain or otherwise, yet, as the other plaintiffs were unable to redeem, the transaction was the best that could be done for him in preventing a foreclosure ; and that the plaintiffs could not maintain a bill for redemption.' 5 a. Where a part of land mortgaged is conveyed, the purchaser agreeing in the deed to pay the mortgage, and he resells, and the second pm-chaser buys the mortgage ; this is a discharge of the mortgage.^ 5 b. But a mortgagor who is compelled to pay the mort- gage debt, after selling the estate subject to the mortgage, becomes an equitable assignee of the mortgage.^ 5 c. A mortgagee may preserve the mortgage, by taking a conveyance of the equity of redemption to a trustee, declar- ing such to be his piu-pose.* 5 d. After an execution sale of an equity of redemption, the mortgagee entered under a judgment and writ of pos- session for condition broken, and before foreclosure conveyed all his interest in the land to the mortgagor. In an action by the heirs of the mortgagor against parties claiming under the execution purchaser, held, the transfer by the mortgagee was an assignment, not an extinguishment of the mortgage ; the sale of the equity by the sheriff being equivalent, with reference to the rights of the parties to this suit, to an abso- lute sale by the mortgagor himself.^ 6. A. gave to B. a bond and mortgage, and afterwards a mortgage of the same land to C. D., a relative of A., paid or handed to B. two several sums, at different times, taking loose receipts therefor, on account of the bond, and after- wards a further sum for the balance due, whereupon the tlu"ee sums were credited on the bond, as above stated. Held, 1 Howard v. Agry, 9 Mass. 179. * Bailey v. Richardson, 15 Eng. L. 2 Russell r. Piston, 3 Scld. 171. & Eq. 218. 3 Kinnear v. Lowell, 34 Maine, 299. ^ liarkcr v. Parker, 4 Pick. 505. 500 THE LAW OF MORTGAGES. [CH. XVIII. the bond and mortgage in the hands of D. should have prior- ity over the mortgage to C 6 a. Writ of entry. The demandant claimed under a mortgage from Blanchard to the Hingham Institution for Savings, dated September 23, 1837, to secure a note for $2,000, and assigned by the mortgagee to the plaintiff, August 27, 1841. Blanchard, on the 6th of May, 1839, leased a part of the premises to the defendants for five years, they agreeing to pay him so much per annum as rent, to lend him $500 on his note, and to take payment of the note by annually indorsing the rent thereon. June 12, 1839, Blanchard, for the consideration of $2,000, conveyed the premises to the demandant "subject to a mortgage of $2,000 to the Hingham, &c. and the store occupied by (ihe defend- ants) being under lease to them of five years, and $500 hav- ing been already paid to said Blanchard on the lease ; " the demandants giving back a bond to reconvey upon payment of $2,000 in three years, with interest annually. Neither party understood this transaction as a mortgage, but as a sale for the full value of the premises. Previously to the assignment- of the mortgage to the demandant, one of the defendants offered the mortgagees to pay and take an as- signment of the mortgage, but the latter refused the offer. Held, the action was maintainable. The Court remark: — " The question is, whether, upon the facts reported, the mort- gage was extinguished by the said assignment. And we are all of opinion that it was not. When the demandant took the assignment, he held the same premises by virtue of a subsequent mortgage to him from the said Blanchard ; and he had the right to pay off the previous mortgage and to extinguish the same, or to take an assignment of it, and to keep up the incumbrance for his own benefit, and to pro- tect himself against intervening incumbrances. The general rule is, that where the legal title by the mortgage becomes united with the equitable title, — the mortgage is merged ' Lambert v. Ildl, 3 Ilalst. Ch. 410, 651. en. XVIII.] ASSIGNMENT. 501 and extinguished. But if the owner of the legal and equi- table titles has an interest in keeping those titles distinct, he has a right so to keep them, and the mortgage will not be extinguished. This action may be well maintained, the de- mandant having the legal title. But the tenants have a right by virtue of their lease to redeem the prior mortgage, and they will be entitled to have a conditional judgment entered." ^ 7. The same doctrine has been held by the same Court in a later case.^ Shaw, C. J., says : — " Whether a given transaction shall be held, in legal effect, to operate as a pay- ment and discharge, which extinguishes the mortgage, or as an assignment, which preserves and keeps it on foot, does not so much depend upon the form of words used, as upon the relation subsisting between the parties advancing the money, and the party executing the transfer or release, and their relative duties. If the money is advanced by one whose duty it is, by contract or otherwise, to pay and can- cel the mortgage, and relieve the mortgaged premises of the lien, a duty in the proper performance of which others have an interest, it shall be held to be a release, and not an as- signment, although in form it purports to be an assign- ment, (c) When no such controlling obligation or duty exists, such an assignment shall be held to constitute an extinguishment or an assignment, according to the intent of the parties ; and their respective interests in the subject will have a strong bearing upon the question of such intent." 7 a. So, it is said, " the spirit of the cases seems to be this ; that where the tenant in possession enters by vntue of a purchase from the mortgagor, then the subsequent pur- chase of the mortgage by him is an extinguishment." ^ 1 Loud V. Lane, 8 Met. 517. 28 ; Knickeibacker r. Boutwell, 2 Sandf. '•^ Brown v. Lapliam, .3 Cusli. 5.54, Ch. 319; Cutler v. Lincoln, 3 Cush. 555; Tyler r. Lake, 4 Sim. 351 ; Aid- 125 ; Kinley v. Hill, 4 Watts & S. 426. ridge v. Westhrook, 5 Eeav. 188 ; Coote, '^ Per Savage, C. J., Coates v. Chce- 464; Vanderkcuip v. Shcltou, H Paige, ver, 1 Cow. 460. (c) See Garwood r. Eldridge, 1 Green. Ch. 145. 502 THE LAW OF MORTGAGES. [CH. XVIII. 7 b. So, it i§ held, that when a mortgagor redeems, it should always be construed as a payment, he being person- ally liable for the debt. But when his vendee redeems, who is not personally liable, and there is an intervening mortgage between the one redeemed by him and his equity of redemp- tion, the same rule should prevail as in the case of a redemp- tion by a subsequent mortgagor.' 7 c. So, where a mortgagor borrows money to pay off a mortgage, and gives a second mortgage therefor, and the first is cancelled ; the second mortgagee has no equity to revive, and be subrogated to the former mortgage, in order to overreach an intervening lien.^ 7 d. A. levied an execution on mortgaged land after a decree for foreclosure, but before the time limited by the de- cree for redemption, and caused so much thereof to be set out as would, in the opinion of the appraisers, amount to the sum levied for and the mortgage money. He then pro- cured from the mortgagee an assignment of his interest, which he caused to be recorded after the equity of redemp- tion had expired. Held, that he was not under such obliga- tion to redeem, that the assignment must operate as an extinguishment of the mortgage, and that he might hold the whole of the land against the mortgagor.^ 8. So, where dower was claimed in a mortgaged estate,^ upon the ground that the mortgage had been assigned to the owner of the equity, and thereby extinguished, it was said by the Court, " When any right, estate or interest intervenes between the particular and the general estate, which are thus united, no coalescence takes place, but each remains distinct. If the plaintiff had the right of dower claimed, it was a real interest in the estate intervening b'e- tween the mortgage and the general right of redemption, which prevented a merger by the union of these titles." ^ ' Johnson v. Johnson, Wiilk. Ch. •' Tichont v. Iliirnion, 2 Aik. 37. 331. * Brown v. Jjaphtini, 3 Cush. 557. ^ Banta v. Garmo, 1 Sandf. Cli. 383. CH. XVIII.] ASSIGNMENT. 503 8 a. Where the purchaser of an equity of redemption, after taking possession, took an assignment of the mortgage, and entered to foreclose ; held, the widow of the mortgagor might elect to consider him in possession under the mort- gage, though the entry was ineffectual for foreclosure ; and that upon a bill in equity to redeem, brought by her, he was bound to account for the rents and profits from the time of assignment ; but not for those received prior to the assign- ment' 8 h. The wife of A., being seized of land, joined with him in several mortgages of it to secure his bonds. Before the death of A., his attorney, with funds furnished by him, paid the mortgages, and took an assignment of them to B., who gave a certificate to A. that he held them in trust for him, and subject to his control. Held, A. was the principal debtor, and his wife's land stood in the relation of surety for his debt ; that the securities belonged to him in equity, and the lands were discharged from the mortgages.^ 9. In the case of Moore v. The Harrisburg Bank,^ the Court say : — "It may be, that a person who has become a creditor or has parted with his rights upon the faith of a legal presumption of the merger of a mortgage, fairly raised by the acts of the party in whom the right to the mortgage and the estate in fee had become united, aU of which is placed upon record, shall be entitled to have the mortgage considered merged as respects him ; yet here the persons claiming to have the benefit of a merger parted with noth- ing upon the faith of any such presumption. They had been creditors, and obtained their liens before ; their con- dition was not made worse by keeping the mortgage alive." 10. An execution being extended upon land of the debtor, subject to two mortgages, the mortgagees made an agree- ment witli the mortgagor, to which the creditor was privy, that the land should be sold, and the proceeds applied first 1 Gibson v. Crehorc, 5 Pick. 146. 3 g Watts, 150. 2 Fitch V. Cothcal, 2 Sandf. Ch. 29, 504 THE LAW OF MOETGAGES. [CH. XVIII. to their mortgages, then to the execution. The land was accordingly sold, and the purchaser paid the mortgages, and the balance of the proceeds to the execution creditor. The first mortgagee acknowledged satisfaction upon the record, and the second released all his right to the mortgagor. On the same day, the mortgagor conveyed with warranty to the purchaser. Held, without regard to the execution creditor's knowledge of the transaction, the effect of it was, to make the purchaser substantially an assignee of the mortgages, the mortgagor being a mere instrument for effecting the assign- ment; and that the execution creditor could not hold the land without paying the mortgages to the purchaser.' 11. In Tuttle V. Brown,^ it was'held, that the purchaser of an equity of redemption sold on execution, who afterwards takes an assignment of the mortgage, may recover posses- sion of the land, by a suit commenced before the expiration of the mortgagor's right to redeem the equity, without an entry by himself or the mortgagee. There is no merger of the mortgage. 12. A mortgagee, before foreclosure, agreed to receive the sum due at a certain day, after foreclosure, which he received accordingly, and by the mortgagor's direction transferred his title to a third person, who had advanced most of the money. Held, this was not a payment and discharge of the mortgage, but a conveyance of the land, and that although the assignee gave to the mortgagor, soon after the transfer, a written promise to convey to him on payment of his advance with interest, he did not thereby become a mortgagee, whose title would not be liable to an execution. It seems, as against him, the mortgagor might specifically enforce the contract, if no rights of third persons had intervened, and that such contract might in equity constitute a mortgage or trust.'^ Woodbury, J., remarks as follows : * — "It would be unjust to treat the transaction as a payment and a mere 1 Marsli V. llice, 1 N. H. 1G7. ^ j Shaplcy v. Rangcley, 1 W. & M. - 14 rick. 514. 213. * lb. pp. 218, 219. CH. XVIII.] ASSIGNMENT. 505 discharge of the mortgage. Because that would strip Web- ster, who advanced most of the money, of all security for it ; and it would do this also against the clear intent of Spring, the mortgagor, who not only procured a conveyance of the premises to be made to Webster by the bank, which is in- consistent with an intent merely to discharge the mortgage, but took back a writing from Webster, stipulating to permit Spring to pay him the sum advanced at any time within three years ; and then to receive back a conveyance of the premises. All this shows explicitly Spring's intention not to have the money paid to the bank applied simply to discharge the mortgage, but rather to have the bank's title under it conveyed to some third person. The parties must in equity be regarded as intending to have an absolute estate exist in the bank, but under a stipulation that it should be conveyed to Spring or his appointee, at the time the check became p'ayable, if the money was then paid ; that such an estate was conveyed to Webster by the bank, he being properly selected by Spring to receive the conveyance on account of his having advanced most of the money, and that Webster thenceforward held an absolute estate, and not an assign- ment merely of a mortgage. It was not an assignment of the mortgage merely, for other reasons, because it had become foreclosed, and must be so considered in order to enforce the views of the parties and the equities of the case. Nor does it purport to be a mere assignment, as the note and mortgage deed were given up to Spring rather than transferred to Webster, he getting a conveyance of the premises only. Webster's writing to Spring was not sealed, nor given the same day with the deed ; nor was it an agree- ment between the parties to the deed. And this would prevent it from being what it otherwise might be, a defeas- ance, and the deed coupled with it a mortgage on its face. But for the circumstance of the writing not being between the grantor and grantee in the deed, it might be held in chancery, if Webster could sue Spring for the money, that VOL. I. 43 506 THE LAW OF MORTGAGES. [CH. XVIII. such writing converted the deed into a mortgage. Possibly Spring, if he choose, might in chancery have the land charged with a trust or mortgage, before any third person had bought or levied on the premises without notice of Spring's claims. But as to such third persons, the title of Webster must be deemed an absolute one." 12 a. A mortgagor conveyed one half the land, by metes and bounds, to A.; the other to B.; paid the mortgage in part, and died. A. pays the balance, taking an assignment of the mortgage. The heir of B., he being dead,' brings ejectment against A. for the B. half. Held, there was no merger as to this half, but the defendant had the rights of an assignee.' 12 b. After the bringing of a writ of entry by a mortgagor, the assignment by a mortgagee to the tenant in such action, of a mortgage on the land, the condition of which has been performed, will not defeat the action.^ 13. In the case of Peltz v. Clarke,^ certain land which had been mortgaged was sold after the mortgagor's death by trustees, to pay his debts. No deed was given to the pur- chaser, but he had paid most of the purchase-money. The mortgagee brought ejectment upon the mortgage against the trustees and the heirs of the mortgagor, and obtained a decree for foreclosure and sale. The purchaser, with the consent and in presence of one of the trustees, paid the whole amount due upon the mortgage, it being considered a part of the purchase- money due under the trustees' sale. The mortgagee gave the purchaser a receipt, and an order to enter the suit " set- tled," which was done. The heirs of the mortgagor then bring an action of ejectment against the purchaser. Held, although a stranger could not set up a mortgage, satisfied by the mortgagor, to defeat his title, he might thus use a mort- gage bought in by himself ; that, as the purchaser owned the equitable estate, and had paid off' the mortgage on his own 1 Casey V. Buttolph, 12 Barb. 637. » 5 Tct. 481. '■^ Chadbournc v. Kacklitt", 30 Maine, 354. CH. XVIII.] ASSIGNMENT. 507 account, the incumbrance belonged to him, and the mortgagor could not have demanded a reconveyance from the mortga- gee ; and that this action could not be maintained. 14. Mortgage, to secure certain sums of money, ffcid also the payment by the mortgagor to a bank of a certain sum due from the mortgagee, and for which the mortgagee had mortgaged the same land to the bank, with a power of sale. Afterwards the mortgagor became a bankrupt ; and the premises were sold under the power, and the mortgagor became the purchaser. He subsequently received a discharge in bankruptcy. Held, the mortgagor did not acquire an ab- solute title, but took subject to his own mortgage, so far as the debts thereby secured remained unpaid, although that mortgage contained no wan-anty of title.^ 15. Land mortgaged to secure a bond w^as conveyed by the mortgagor, the purchaser agreeing to pay the debt and interest. Upon his failure to pay the interest, the mortgagor paid it, and it was indorsed upon the bond. The mortgagor then purchased the securities, and took an assignment of them in the name of a trustee. Held, upon a sale of the land by a sheriff, he was entitled, as against a subsequent judgment creditor of the purchaser, to receive from the proceeds the principal as well as interest of the mortgage debt.^ The Court' say : ^ — " Contrary to what would seem to be the English doctrine on the subject, it is now definitively settled in Pennsylvania, that, though actual payment discharges a judgment oi^^ther incumbrance at law, it does not in equity, where justice requires it should be kept afoot for the safety of the paying surety. And this is always the case where the amount of the debt is advanced to procure the control of the security, and not with the intent to extinguish it." In regard to a supposed distinction in this respect between the principal and interest of the debt, the Court further remark : — "It is ordinarily difficult to conceive a mere surety's intention to be 1 Stewart r. Anderson, 10 Alab. 504. » lb. 500, 501. 2 Morris v. Oakford, 9 Barr, 498. 608 THE LAW OF MORTGAGES. [CH. XVIII. extinguishment, and not advancement. Prima facie, the latter is to be taken as the object. Here, every thing nega- tives the idea (that) the mortgagors intended to discharge the yearly •bterest in case of Barrington, who had expressly agreed to pay it. Nor does this conclusion work injustice to Morris, the subsequent judgment creditor. He took his judg- ment, of course, subject to the prior mortgage, as it was exhibited by the record, and the interest growing due under it. He must be taken to have had notice of the debtor's express undertaking to discharge the mortgage debt and its interest. He was bound to know that payment of the latter* by the mortgagors did not discharge the land of its lien. His delay to enforce his judgment was consequently at his own risk, in the absence of imputed fraud or deceit practised by the mortgagors, to whom, at all times, he might have had recourse for information." 16. A daughter took by inheritance certain estates of her deceased father, and also became entitled under his marriage settlement to a sum which the trustees of the settlement had lent him on mortgage of the estates. The daughter by deed charged the estates and the sum secured on them with an annuity, and otherwise indicated that she intended the mort- gage should be kept alive, at least for the purpose of securing the annuity. Soon afterwards she executed a will, devising the estates, after payment of her own debts, and settlement of her father's o-^rtiV^, but not disposing of the residuary personal estate. Held, as against her next of kin, the^icumbrance created by her father merged in the estates.^ 17. On the 20th of August, 1800, a mortgage was made to secure the sum of $2,500, payable in one year. In 1801, a creditor of the mortgagor caused his equity of redemption to be sold on execution, and himself became the purchaser. In December, 1806, the creditor paid and took an assignment of the mortgagee's bond and mortgage, and, in January, 1811, conveyed the whole estate by warranty deed for $7,500. In 1 Swabcy v. Swabcy, 15 Sim. lOG. CH. XVIII.] ASSIGNMENT. 509 March, 1810, the creditor assigned the bond and mortgage as security. The assignment was acknowledged after the deed of warranty, and the purchaser under that deed in his answer stated his belief that it was also made after that deed. Held, it was the intention of the creditor to extinguish the mort- gage, as he could have no object in keeping it alive, and the bill against the purchaser was dismissed.^ 18. The purchaser of land mortgaged paid the mortgage, and no intention was then disclosed to keep the mortgage alive, nor any contract made for an assignment of it. Eight- een years after such payment, the purchaser conveyed the land with warranty, and afterwards, without any new con- sideration, the second purchaser obtained an assignment of the mortgage from the mortgagee to the first purchaser. Held, the mortgage was discharged by the payment, and nothing passed by the assignment.^ 18 a. Writ of entry, founded upon a mortgage from Fry to Gould, an assignment thereof to Willard, and a supposed assignment to the father of the demandant, since deceased, in whom, it was contended, an absolute title vested by foreclo- sure. The action was brought against a second mortgagee. It appeared that the demandant, after purchasing the right of redeeming both the mortgages, which purchase proved to be void in law, paid to Willard the amount of his 'mortgage, taking from him a deed, in which he " remises, releases, grants, bargains, and sells," his interest in the land, referring to the mortgage, " meaning hereby to release all the right I have in the premises by virtue of said mortgage, the aforesaid sum having been this day paid me in discharge of said mort- gage." Held, the action could not be maintained, the deed in question having operated, not as an assignment of Wil- lard's claim, with the land as security, which claim was paid by the demandant, but as a grant of the legal estate, or a satisfied mortgage.^ 1 Gardner v. Astor, 3 Johns. Ch. 53. ^ "Wade v. Howard, 11 Pick. 289. 2 Given v. Marr, 27 Maine, 212. 43* 510 THE LAW OF MORTGAGES. [CH. XVIII. 19. Where a second mortgagee, holding also a mortgage from a surety for the same debt, purchases the premises of the mortgagor, subject to the first mortgage, for a price exceeding both mortgage debts ; his own debt is merged and extinguished, and the surety no longer liable.' 20. Where an assignment would be more beneficial to a junior mortgagee than a satisi"action of the prior mortgage, he may, by a bill in equity, have a decree for redemption and to compel such assignment, after tendering the debt and demanding an assignment.^ 21. Where a mortgagor transfers a part of the land, and the mortgage is assigned to the purchaser, the mortgage is not thereby merged as to the remaining part.^ 21 a. A mortgagor conveyed a part of the land mortgaged, and the grantee afterwards purchased the mortgage. The residue of the land was afterwards sold on execution against the mortgagor, with notice to the purchaser, of the mortgage, and of the amount due upon it. Held, the former purchaser could maintain ejectment against the latter, and hold until the amount due on the mortgage was paid.* 22. Where two purchasers of land jointly mortgage it for the price, and one of them pays the mortgage by instalments, and upon the last payment takes an assignment of it ; this does not operate as a merger or extinguishment, so as to give priority to a subsequent judgment creditor of the other pur- chaser.^ Coulter, J,, says -.^ — " Here the intent of the mort- gagor and mortgagee was quite apparent, that the security or incumbrance should be kept on foot, because the mortgagee assigned it to the recovering mortgagor. It is also clearly the interest of the mortgagor, that it should not sink in the inheritance. If it should be so held, an incumbrancer would get part of the proceeds of the sale in this case against equity, 1 Loomcr v. Wlieclwriglit, 3 Sandf. * I'liick v. Kcploglc, 13 Penn. 405. Ch. 135. 6 Duncan v. Driiry, Burr, 332. ■■^ Pardee v. Van Anken, 3 Barb. 534. <^ Ilj. .333. •' Kiiiy ?•. McVlckar, 3 Sandf. Ch. vri. CH. XVIII.] ASSSIGNMENT. 511 because, at the time he procured his incumbrance, the mort- gage was indisputably the oldest lien, and it continued so up till the payment of the money by Hart. Why, then, should the judgment against Duncan, the other mortgagor, who had really no equity in the land, all the money having been paid by Hart, be held extinguished by Hart's payment of the money contrary to the expressed intent of the parties, merely to take that much out of his pocket in favor of one whose whole lien was subject to the lien of the mortgage ? If he or anybody else had bid off the land, to an amount exceeding the mortgage, then he would have got his money." 22 a. A mortgage may, under some circumstances, be dis- charged in reference to the mortgagee, but revived in the hands of an assignee. Thus, there being several mortgages upon land, and the owner of a former mortgage becoming indebted to the owner of the equity of redemption, the mort- gage debt was allowed in part satisfaction of such debt. The mortgage was not cancelled, but was assigned to A., for the benefit of the owner of the equity, who afterwards borrowed money of B., and caused the bond and mortgage to be assigned by A. to B., as security. Held, the mortgage was discharged in the hands of A., who took no better right than his assignor; but that the assignment revived it, subject, however, to subsequent incumbrances.^ 23. Parol evidence, that an assignment of a mortgage was intended to be a discharge, is inadmissible, even on the part of a third person, except for the purpose of proving fraud ; such a^a fraudulent variance from the agreement of the par- ties, in order to accomplish some covert purpose.^ 24. The question has sometimes arisen, whether a mort- gage of indemnity, that is, a mortgage made to secure the mortgagee on account of his liabilities as surety for the mort- gagor, is extinguished by subsequent transactions, which • relieve the mortgagee from any direct indebtedness, without 1 Bollcs V. Wade, 3 Green, Ch. 458. - Howard v. Howard, 3 Met. 548; Ty- ler I'. Tavlor, 8 Barb. 585. 512 THE LAW OF MORTGAGES. [CH. XVIII. subjecting him to any loss, while at the same time they sub- stitute some third party in his place under the mortgage. 25. One Buck, in 1839, made a mortgage to Shaw, condi- tioned as follows : — "Whereas said Shaw, on the 13th of September last, signed a note, with said Buck as surety, for $4,000, payable to Daniel Smith or order in four years from date, with annual interest ; now, if said Buck shall save said Shaw from any trouble, cost, or expense, by reason of signing said note, this deed is to be void." In 1841, the equity of redemption was attached, and in April, 1843, sold on execu- tion, and conveyed to Hale and Eames. In September, 1843, the mortgagee assigned the mortgage to the defendant, as follows: — " In consideration of (the defendant) agreeing to release me from all liability, other than the use of my name, in the collection of the same, of a joint and several note, signed by Bushrod Buck and myself for $4,000, dated October 7, 1839, I hereby assign, transfer, and set over to (the defendant) all my right, interest, and claim to the within mortgaged premises." The defendant thereupon took peace- able possession, and held it for the purpose of foreclosure. The plaintiff brings a bill in equity to redeem against the defendant, claiming that nothing was due on the mortgage, because, by the assignment, Shaw was released from his liability as surety for the mortgagor, and the mortgage dis- charged. Held, this was not the effect of such assignment, and that the defendant should hold the land as against the plaintiff, until the latter should pay the mortgagor's note to the defendant.^ The Court substantially remark : ^ -»- " The real purpose of the assignment is quite obvious ; and the instrument ought to be so construed as to secure that object, if it may be consistently with the rules of law. The equity of the case is obviously with the defendant, upon the question whether his note shall constitute a lien upon the premises, before the defendant can be required to release the mortgage. The object seems to have been, that the defendant should 1 Ilaydcn v. Smith, 12 Met. 511. 2 ib. 513. CH. XYIII.] ASSIGNMENT. ' 513 receive from Shaw a transfer of the mortgage, and thereafter rely solely upon that, and mgfke no claim on Shaw personally. The defendant at once entered into peaceable possession for foreclosure. It is contended that the mortgage is discharged, because (according to the terms of the condition) Shaw has been saved from all trouble, &c., and that by force and effect of the arrangement made by the defendant with Shaw, he could be no further damnified. In the assignment it is recited, that in consideration of the defendant's agreeing to release him from all liability, other than the use of his name in the collection of the note, he assigns to the defendant all his right, &c., to the mortgaged premises. This instrument is not signed by the defendant, though accepted by him, and to some purposes assented to by him. But we do not think it necessarily is to have the same effect as a release, under his hand and seal, to Shaw, might have had. There might have been a technical release to Shaw, the effect of which perhaps coiild not be avoided. But we may .take into consideration the entire language and purpose of the instrument. It was only a substitution of the mortgage, for the personal liability of Shaw, and intended to be effected through the name of Shaw. The use of his name in the collection of the note was distinctly stipulated for in the assignment. It contem- plated the use of it, so far as was necessary to perfect the lien. The note has not been paid. It may be enforced against Shaw, unless discharged by the recital in the assign- ment. The recital was only a qualified discharge, to the extent compatible with the continuance of the security by mortgage. All parties understood the mortgage was a lien upon the property, to secure the note to the defendant." 26. In Viles v. Morlton,^ the defendant was co-surety with Edson and Story to the plaintiffs for William Ford, who gave Edson and Story a sufficient mortgage of indemnity. Ford subsequently mortgaged the same property to Blake, and also gave a mortgage of other property, to be discharged 1 11 Verm. 470. 514 ' THE LAW OF MORTGAGES. [CH. XVIII. on Ford's paying the plaintiff's debt. Blake purchased the equity of redemption of the mortgaged premises and then paid the plaintiff's notes. Held, no action could be main- tained 'upon the notes by or in the name of the plaintiffs, they being paid by the owner of the equity of redemption and second mortgagee.^ 26 a. Pending a bill to foreclose, the solicitor of the com- plainants, with their consent, received from A., a friend of the mortgagor, part of the debt, agreeing that A. should have the benefit of the mortgage to that amount. Held, an assign- ment in equity pro ta?ito, as against a subsequent mortgagee, who could not treat it as a payment.^ 26 b. After assignment of a mortgage, the mortgagor con- veyed the estate, and the purchaser subjected it to lien by way of mortgage, and then gave notes with an indorser to the assignee for the interest due on the original mortgage, which were paid by the indorser. The land having been sold, held, the indorser could not claim title as an assignee of the first mortgage, by subrogation.^ 26 c. A. appointed an agent to obtain a loan, authorizing him to execute a mortgage. B. indorsed a note for the agent, which C, by a subsequent arrangement with A., undertook to pay. B., afterwards learning that C. would not pay, took the mortgage, but, before its execution, C. had paid the note, and B. assigned the mortgage to C. Held, C. could not en- force it.^ 27. The assignment of a mortgage may itself be construed as a mortgage, subject to all the rights and privileges inci- dent to the original, conditional conveyance, (d) 28. The plaintiff, being indebted to the defendants upon a 1 Sec Converse v. Cook, 8 Verm. 1G6. » Neptune, Sec. v. Dorsey, 3 Md. Ch. 334. - McMillan v. Gordon, 4 Ala. 71 G. * Ravenel i\ Lyles, Speers, Ch. 281. (d) In Maine, it seems a conditional assignment of a mortgage may be treated as a mortgage of real estate, subject to redemption for three years. If otherwise, then subject to redemption in reasonable time. Cutts v. York, &c., 6 Shepl. IDl. CH. XVIII.] ASSIGNMENT. 515 note to the amount of $2,000, and in embarrassed circum- stances, upon their application assigned to them as security a bond and mortgage for $4,000 ; it being expressly agreed, that the sm-plus, after paying the note, should belong to him. The terms of the assignment were, that he, for the sum of $2,000, assigned the securities to the defendants, with power to collect $2,000 for their own use ; adding a covenant that this sum was due on the mortgage, and that the premises should sell for so much, with the interest and and costs. In 1817, the defendants foreclosed, and caused the premises to be bid in for $700. Before the sale, the plaintiff was told by the agent of the defendants, that if they purchased, the prop- erty should remain as it was to him, and the mortgagors only be foreclosed. The plaintiff always insisted upon his right to redeem, and in 1825 directly applied to do so, and offered to pay all that was due ; but the defendants would not allow him to redeem. Held, the assignment was a mort- gage, and would have been such, even though in terms abso- lute ; that the defendants might foreclose under the statute so as to bar the mortgagors ; that the assignment was a mortgage of the power of sale as well as of the debt ; that if the purchase had been made by a tliird person the plaintiff would have lost his right to redeem the land, but might stiU redeem in reference to the surplus of the purchase-money, and, the defendants being themselves the purchasers, and still retaining the legal title, he had not lost his right to re- deem the land itself ; and, the assignment being itself a mort- gage, and the plaintiff's right of redemption not divested by the statute of foreclosure, that the question of waiver by lapse of time did not arise.^ 29. Where a bond and mortgage are assigned as security for a debt, a subsequent assignee takes them, subject to the right of the first assignor to redeem, by paying such debt, with interest.2 30. A second assignee of a mortgage paid the first assignee the debt, to secure which the first assignment was made, and 1 Slee V. Manhattan, &c., 1 Paige, 48. 2 g^pct ^. yan Wyck, 3 Barb. Ch. 647. 516 THE LAW OF MORTGAGES. [CH. XVIII. the balance of the mortgage debt to the mortgagee," by agree- ment of parties. The mortgagee and second assignee had notice of an unregistered deed of the land, prior to the mort- gage. Held, the first grantee was entitled to redeem on pay- ment of what the second assignee paid to the first, with interest.^ 31. It is generally considered, that the introduction of a new proviso of redemption in the assignment of a mortgage does not constitute a new mortgage. But where the mort- gagee assigned a part of the mortgage debt, and joined with the heir of the mortgagor in mortgaging a part of the lands anew, with a new proviso and rate of interest, and a bond and covenant ; held, in a late case, this constituted a new mortgage.^ 32. A mortgagee, who has pledged the mortgage for a sum less than the mortgage debt, may file a bill for fore- closure in his own name ; especially if the pledgee refuses to do it. The latter may lawfully file such bill, and in such case would be trustee for the surplus over the amount of his own claim.^ 33. With regard to the form of an assignment, the assign- ment of a bond and mortgage may be valid, especially in equity, though the assignee be not called by name ; it is suffi- cient to describe him in a particular character sustained by him, if this description identifies him as well as a name.'* (e) 1 Gliddcn V. Hunt, 24 Pick. 221. =^ Norton r. Warren, 3 Edvv. lOG. - Cootc, 357; Barliam v. Earl, &c., * Lady Superior y.McNamara, 3 Barb. 3 M. & K. 106. Ch. 375. (e) la Shaw v. Loud, 12 Mass. 449, a bond and mortgage were given to the plain tiils by the description of the heirs at law of John Tyri-el, without mentioning any of their names, he being dead at the time. Held, the securities were valid. The assignment of a mortgage, like the mortgage itself, may be made to several persons, jointly. And where, in such case, each assignee pays a cer- tain part of the consideration, and the assignment specifies the share of each ; a payment of such share to one extinguishes his interest, and he has no longer any power to reassign. Furbush v. Goodwin, Law Rep., March, 18.35, p. GoO. CH. XVIII.] ASSIGNMENT. 517 34. It has been held, that where one person takes a bond and mortgage for the benefit of another, payable to the former, under a previous agreement to assign them to the latter, no particular formality of delivery and acceptance is necessary ; but placing them befcTe him for his signature to the assignment is a good delivery, and the execution of such assignment a good acceptance.^ 34 a. So actual delivery is not indispensable to a valid assignment.^ (/) So it may be made by a mere indorsement." 34 b. The acknowledgment is no part of an instrument of assignment.* 34 c. An assignee is, in general, subject to the same terms of redemption as the mortgagee.^ 35. The assignment of a mortgage' so far divests the title of the mortgagee, that he has no power to discharge the mortgage or any part of it.^ 36. The holder of a mortgage, having assigned it, after- wards received from the mortgagor his promissory note for interest in arrear. I^ld, the note was void for want of con- sideration. The bOTden of proof was on the plaintiff, to show, if he could, that the amount of the note had been applied on the mortgage debt. Until that was done, there was no consideration. " Indeed the taking of the note after having parted with the mortgage, unless the matter can be iLadySuperiori'. McNamara, 3Barb. * Livingston v. Jones, Harring. Ch. Ch. 375. 16.5. 2 Aldridge v. "Weems, 2 Gill & J. 36. ^ Plenderson v. Stewart, 4 Hawks, 256. 3 Barnes v. Lee, 1 Bibb, 526. « M'Cormick v. Digby, 8 Blackf. 99. (/) In Maine, one in possession of notes, and the mortgage securing theiii, cannot maintain an action upon the latter without a written assignment of it. Lyford v. Ross, 33 Maine, 197. Nor does the sale of a note operate at; a legal transfer of the mortgage by which It is secured. Warren v. Ham- stead, 33 Maine, 256. See ch. 11. The assignment of a mortgage, in Penn- sylvania, carries with it the claim against the mortgagor, and all the securities which the assignor holds against the mortgagor or other parties for the debt- Philips V. Bank, &e., 18 Penn. 394. VOL. I. 44 518 THE LAW OF MORTGAGES. [CH. XVIII. explained, was nothing less than a downright fraud upon the defendant." ^ 36 a. Mortgage to secure a bond. The mortgagee trans- ferred the securities, and afterwards the mortgagor conveyed the land to him, taking » discharge of the bond and mort- gage. Held, the discharge was invalid against the assignee.^ 37. On the other hand, an assignee may receive money in virtue of his mortgage, for which he will be liable to account to the mortgagor. Thus, the owner of property insured at a mutual office mortgaged it, and, with the assent of the com- pany, made to the mortgagee an assignment of the policy, in terms absolute, and expressed to be for valuable consider- ation, but intended only as security for the mortgage debt. The mortgagee, afterwards, for valuable consideration, as- signed the debt, mortgage, and policy, with the assent of the company to the latter assignment ; and the debt was subse- quently paid to the assignee by an assignee of the mort- gagor, who purchased with an agreement to pay the mort- gage, and the mortgage discharged. ^The assignee of the mortgage, after the expiration of the ^Hicy, received the re- turn premium, and the mortgagor brings assumpsit against him to recover it. Held, though the defendant might receive such premium as attorney for the plaintiff, he was bound to pay it over to him.^ Shaw, C. J., says :* — " Brooks received the whole of his mortgage debt of Rice, from a fund provided by the plaintiff, and the rights of the plaintiff are the same as if he had paid the whole of the mortgage debt of the plaintiff in money. The conclusion seems inevitable, that the money received by Brooks on the policy as a return of the premium was received by him to the use of the plaintiff; and not hav- ing applied it, or had occasion to apply it to the payment of the plaintiff's debt, he is bound in good conscience to pay it to the plaintiff. The sum received by Brooks, was received after he had been paid his mortgage debt in full ; it is clear, 1 Gillett V. Campbell, 1 Dcnio, 520, •'' Fclton v. Brooks, 4 Cush. 203. 522. * Ibid. p. 206. ^ Brown v. Blydenburgh, 3 Seld. 141. CH. XVIII.] ASSIGNMENT. 519 therefore, that he received it on a security which ought to have been surrendered to the plaintiff, and, of course, to his use. But if he had received it before, his failure to apply it towards the mortgage debt, and receiving the whole from Rice, who, as between him and the plaintiff, was bound to pay the whole as part of his purchase-money, is ample proof that Brooks held the return premium to the plaintiff's use." 38. Although the assignment of a mortgage divests the mortgagee of his title to the land, it does not pass rent due at the time of assignment, without express words tc^ that effect. Lord Chancellor Truro says: — "The question is, what passes, generally speaking, by the assignment or con- veyance of a mortgage ? Does it pass all the future rents that are to become due only, or does it pass all the rents at that time in arrear, to the mortgagee ? One would think that was a very ordinary principle. Men are in the habit of conveying estates day by day, conveying the fee. Well, what passes by that ? Do the by-gone rents in arrear pass by such a conveyance ? If they do not, what is the rule of law that makes a difference, that the conveyance of the mort- gage shall transfer by-gone rents, when the conveyance of the whole estate would not do that, but leave them perfectly unaffected?"! 39. The assignment of a mortgage operating to divest the mortgagee's title, it has been held, that a bill to fore- close cannot be brought in his name, for the use of the assignee.2 (g-) It is said, — " This proceeding is, in the main, a chancery proceeding, and must be conducted according to the rules of equity pleading. It is incompetent and unavail- ing therefore to sue, for the purpose of foreclosing a mort- gagor's equity of redemption, in the name of the mortgagees, 1 Salmon v. Dean, 5 Eng. Rep. 107, ^ Barraque v. Maunel, 2 Eng. 516. Ill; 15Jur. 641. (^g) In Missouri, the assignee of a mortgage may sue for the debt in his own name. Crinion v. Nelson, 7 Mis. 466. 520 THE LAW OF MORTGAGES. [CH. XVIII. for the use of another person. A court of chancery could take no cognizance of such a beneficiary." But where the mortgagee assigns his mortgage as security for an advance of money, which he also covenants to pay, he stands to some extent as a surety, and cannot be enjoined by the assignee from suing the mortgagor upon his covenant, unless the assignee release him from his own covenant, and recon- vey any estate of the mortgagee included in the second mortgage.! 40# Where the assignee of a mortgage has entered to fore- close, and afterwards releases to the assignor " all the estate, right, &c., by force of the conveyance made thereof by him, &c., to hold in like manner as if he had never conveyed the same, &c. ; " the assignor may avail himself of the entry for the purpose of foreclosure.^ 41. If a purchaser from the mortgagor, pending a bill against the latter for foreclosure, takes an assignment of the mortgage, he acquires all the rights of the mortgagor, dis- charged of incumbrance ; but he may proceed with the suit, (especially if the mortgagee does not object,) to a decree of foreclosure and sale, in order to perfect his title.^ So in Pennsylvania, the owner of the equity, uniting it with the mortgage, may sue out a scire facias in the mortgagee's name against the mortgagor, with notice to himself, recover judgment, and sell the estate.^ 42. It is no defence to an action of ejectment, brought by a mortgagor against a third person, that before commencement of suit the latter paid the money due on the bond secured by the mortgage ; although, since the commencement of suit, he has taken a formal assignment of such mortgage ; such payment giving the defendant only an equitable title to the land.^ 43. In the following case, one claiming to be an equitable assignee was held not entitled to pursue an action com- 1 Gumcy v. Sepping, 2 Phill. 40. * Moore v. Harrisburg, &c., 8 Watts, 2 Cutts V. York, &c., 6 Shcpl. 191. 138. 8 Mobile, &c. V. Hunt, 8 Ala. 876. ^ Den v. Dimon, 5 Ilalst. 158. CH. XVIII.] ASSIGNMENT. 521 menced by the mortgagee. Mortgage by tenants in common to secure the debt of one of them. The tenants afterwards transferred their respective titles to different purchasers, w^ho made partition. The mortgagee then brought separate ac- tions against such purchasers, for their respective portions of the land ; and the purchaser from the debtor, to whom, at the time of purchase, notice was given that he would be bound to pay the mortgage, paid the whole amount due, in discharge of the suit against him, under an agreement that he should thereby become owner of the mortgage. Held, he was not entitled to pursue the action against the other pur- chaser, in order to compel him to contribute half of the debt.^ Shaw, C. J., says r^ — " This claim, on the part of Green, is purely equitable, in the nature of an equitable assignment ; and if he cannot maintain it on this ground, he cannot main- tain it at all. If the payment made by Green was, strictly speaking, a payment of the whole mortgage, it would be a bar to both actions, both being brought to recover payment of one and the same debt. But supposing it intended to be a payment of one half, and a purchase of the plaintiff's right to the other half, the Court are of opinion that Green has no equity. He took Daniel S. Workman's right only, and that right was to redeem the estate upon the full payment of Daniel S. Workman's debt. Sidney S. Workman's estate, which came to the defendant, was liable for it in law, but it was in the nature of a suretyship. If the suit had been brought against Green alone, to charge the whole mortgage debt on the estate held by him, we think he would have had no claim for contribution from the tenant in this case. In paying the whole mortgage, he in effect paid the debt for which his estate was primarily bound, to the exemption of the estate of the tenant ; and he was in effect paying his own debt ; he had no right in equity, therefore, to prosecute this suit for his own benefit in the name of the nominal plaintiff." 1 Cook V. Hinsdale, 4 Cush. 134. 2 jtid. 137. 44* 522 THE LAW OF MORTGAGES. [CH. XVIII. 44. A mortgagee, who has assigned his bond and mort- gage, with guaranty, may take further security in his own name from the mortgagor, without the knowledge of the as- signee, but which will enure to his benefit. And the mort- gagee may have the benefit of such security, till fully in- demnified from the guaranty. A subsequent creditor, who would oblige the mortgagee or his assignee to satisfy his debt from the mortgage security, must make the assignee party to a bill for that purpose ; otherwise, no sale can be decreed, in order to ascertain, the sufficiency of the security.^ 45. So, the assignment of a mortgage may acquire addi- tional efficacy from acts done after such assignment by the assignor. Thus where a mortgage is assigned, any interest subsequently acquired by the assignor enures to confirm the assignment.'-^ . 46. It is said in an old case, " if a mortgagee in posses- sion assigneth over, if the mortgagor prefer his bill, upon supposition that the debt is satisfied, and to have an account of the surplus ; there he must make the mortgagee and all the assignees parties."^ (See infra, ch. 33.) But the later doctrine is, that if the mortgagee, not in possession, assigns the mortgage, with the concurrence of the mortgagor, he need not be made party to a bill for redemption ; otherwise, where the mortgagor does not thus concur."^ And where a mortgagor files a bill against the assignee of the mortgage, praying an account of what is due for principal and interest, and also for rents upon a lease made by him to the mort- gagee, and for permission to redeem ; the mortgagee should be made a party defendant.^ 47. Where the assignee of a mortgage files a bill for fore- closure against the mortgagor, the mortgagee need not be made a party, though an account is to be taken of the rents and profits during his possession ; because the amount may be proved by other evidence, and the mortgagee would not 1 Evertson v. Booth, 19 John. 486. * 1 Pow. 152. « 2 James v. Morey, 2 Cow. 248. '" Wolcott v. Sullivan, 1 Edw. 409. '^ 2 Ercem. 59. CH. XVm.j ASSIGNMENT. 523 be bound by any judgment in the suit, nor could any relief be had against him.' 48. With regard to the co^ideration of an assignment, a mortgage is not affected by selling it for less than its nomi- nal value.2 (A) Where the assignee purchases for less than ^ Whitney v. McKinnev, 7 John. Ch. ^ Warner i'. Gouverneur, 1 Barb. 36. 144. (h) Where an assignee of the mortgagor brings a bill in equity to redeem against the mortgagee and mortgagor ; he must prove a valuable considera- tion for the assignment. The following remarks of RufEn, C. J., refer to an important and well-settled distinction upon this subject : — "If this had been the case of an ordinary mortgage upon its face, and Hough had made a formal deed of assignment of the equity of redemption to the plaintiff, he might have filed a bill against Mask for redemption, without bringing Hough into the cause, or proving the consideration moving from himself to Hough, as the price of the equity of redemption. For a plaintiff need not make a person a party, who according to the facts alleged in the bill has no interest in the subject, and, although it requires a consideration to raise a trust, yet, after it is well raised, it may be transferred, as against the trustee, voluntarily. To Mask it would be immaterial upon what consideration Hough might have assigned it to the plaintiff; and it would therefore be sufficient, in the case supposed, for the plaintift'to prove the assignment, on the hearing. AVe do not say that it would be so in this case, since it is in form not an assignment of a clear and admitted equity of redemption, but an assignment of a covenant or executory agreement from Mask to Hough to convey the land to him upon the payment of a certain sum. Perhaps, therefore, it was indispensable in this case, that the plaintiff should bring in Hough, as well as the mortgagee. But, admitting that it was not, and that the plaintiff might have had a decree upon a bill against Mask alone, yet he has not thought proper to proceed in that way and claim a decree against the mortgagee upon the apparent assignment to him, leaving it to the as- signor to assert his right afterwards in a bill of his own, denying the assign- ment or its legal efficacy. On the contrary, the plaintiff has chosen to pro- ceed against both the mortgagee and mortgagor ; and thus lie puts, him- self, in issue, the assignment in respect of both of those parties, and is, consequently, bound to show one which is efficacious, and which the Court will specifically uphold against the assignor, so as to conclude him by a declaration of the assignment in the decree in this suit. Hence it became necessary in the bill to set out not only the naked fact of the assignment 524 THE LAW OF MORTGAGES. [CH. XVIH. the amount due on the mortgage, it has been suggested that he would be entitled to claim only the sum actually paid. But the rule seems well established to the contrary; except in cases of trust, express or implied, for the owner, who would then be entitled to the benefit of any advantageous bargain of the assignee. Generally, in order to redeem, the amount due on the mortgage must be paid.^ In the case above referred to,^ Edmonds, J., says : — " But if it was a loan, and usurious in its character, so far as to vitiate the title of the Life and Trust Company, as soon as the loan was discharged the taint would be removed, and the mort- gagor would cease to have any thing to complain of. I am not aware that the prohibitions against usury have ever been carried so far, as to determine that an obligation un- tainted in its concoction is rendered void, and the debtor dis- charged from all liability upon it by the simple fact that the owner had hypothecated it as security for a usurious loan. The relation of principal and surety does not in fact exist between Warner and Gouverneur's executors. As between them, he is the debtor, and they the creditors. It is only between them on the one side and the Life and Trust Com- pany on the other, that the relation of principal and surety 1 Coote, 355 ; Pease v. Benson, 28 ^ j garb. 39. Maine, 336. from Hough to Medley, but also that it was made on a valuable considera- tion. Equity does not act for a mere volunteer, but only for a real pur- chaser, at a fair price. The plaintiff has endeavored to be such a purchaser. But he entirely fails in the attempt. It is urged for him, that the assign- ment itself states, that he had fully paid and satisfied Hough for his interest in the land, and that such an acknowledgment is not to be disregarded, b»t must berdeemed sufficient evidence prima facie of a valuable consideration. But in equity there must be proof of an actual consideration ; and these general words, inserted merely as formal parts of an instrument, can by no means be admitted as conclusive, that some valuable consideration was ac- tually paid or secured, much less that an adequate consideration was paid or secured." Medley v. Mask, 4 Ired. Eq. 343-345. CH. XVIIT.] ASSIGNMENT. 525 may be supposed to exist. When this bill was filed that company had ceased to have any interest in the mortgage. Even the quasi relation of principal and sifrety had ceased to exist ; and the parties had returned to their original posi- tion of debtor and creditor in a contract uncontaminated by any illegal consideration. It is therefore unnecessary to in- quire, whether the transaction between Gouverneur and the Life and Trust Company was usurious or not, or if usurious, what the effect would be upon the rights or obligations of the mortgagor. It is enough to know that the contract which the executors are seeking to enforce is itself untainted with any illegality, and is held by them by a title equally uncon- taminated. For if they take as purchasers from the com- pany, it was not illegal to buy or sell the seciu'ity below par ; and if they retake as borrowers who have paid up the loan, they have removed all taint, and are restored to their origi- nal rights as against the mortgagor." 48 a. So a purchaser, subject to a mortgage, cannot offer evidence, that it was assigned for a less amount than was secured by it ; and where he gives further security for the forbearance of the assignee, the former mortgage is not void from usury, but the assignee, on foreclosure, must credit aU such additions.' 48 b. "Where notes, secured by mortgage, were, with the mortgage, assigned by the payee in payment for slaves in- troduced into the State contrary to law ; held, the mortgage might still be enforced by the assignee.^ 49. It has been a question much discussed, how far the assignee of a mortgage is bound by the actual state of the account between the mortgagee and mortgagor at the time of assignment ; that is, whether he may claim what appears to be due upon the face of the mortgage, or only what is really due, after deducting all payments and offsets. It is held, that a payment, made to the mortgagee before notice of an assignment, is good against the assignee.^ 1 Lovett V. Diraond, 4 Edvv. Ch. 22. 3 Hubbard v. Turner, 2 McL. 519. 2 Rowan v. Adams, 1 S. & M. Ch. 45. 526 THE LAW OF MORTGAGES. [CH. XVIII. 49 a. If the mortgage is given to secure a negotiable note, and both are assigned before maturity to a bond fide in- dorsee ; he tak^, clear of any equities between the original parties.' 50. In the case of Matthews v. Wallwyn,^ Baker having taken a mortgage from Matthews for £2,000, which was paid by Shepheard, the attorney of the latter, Matthews gave Shepheard a bond for <£2,000, and Baker assigned the mort- gaged estate to Shepheard, who afterwards deposited the bond and deed with Hercy, for j6 2,000. Hercy requiring payment, Shepheard applied to Wallwyn for a loan of X 2,000, who agreed to open an account with him on a deposit of the securities and his own note. The securities were accord- ingly redeemed from Hercy, and deposited by Shepheard with Wallwyn. Shepheard became bankrupt ; and, under a decree of chancery, his assignees assigned the mortgage to Wallwyn. Matthews had no notice of the dealings with Hercy and Wallwyn. Shepheard had been in the habit of receiving and paying large sums on account of Matthews. Matthews files a bill against WaUwyn for redemption ; and it was stated, that after settlement of an account between Matthews and Shepheard in October, 1794, which was sub- sequent to the deposit to Wallwyn, Matthews discovered that Shepheard had received sums not accounted for by him, and other sums since the settlement, which being deducted, a considerable balance would be due to Matthews. Wal- lwyn claimed a specific lien for their balance. The Lord Chancellor stated the question to be, whether the assignee of a mortgage could claim whatever appeared to be due by the instrument itself, without regard to the state of the account between the mortgagee and mortgagor. He also noticed the practice of conveyancers to make the mortgagor a party to any assignment, in order to secure a perfect title ; and referred to the case of Lunn v. Lodge, of which he had a note. In that case, Lodge mortgaged to Pitman, who as- 1 Reeves v. Scully, Walk. Ch. 248. - 4 Vcs. 118. CH. XVIII.] ASSIGNMENT. 527 signed to St. John. The mortgagor and mortgagee having both become bankriJ^t, the assignees of Lodge file a bill in equity, alleging that nothing was due between the estates. Lord Thurlow ordered the master to inquire, what was due at the time of the mortgage ; what at the time of assign- ment; and what remained due; and he reported <£7,000 due from Pitman to Lodge. Held, the assignm^ts should not avail against the estate of Lodge. The Lord Chancel- lor relied upon this case, as a direct authority in favor of the plaintiff in this bill ; decreed, that he might redeem upon payment of the sum due on the original mortgage to Shep- heard ; and ordered an inquiry by the master in the same form as above stated in the other case. 50 a. In conformity with this decision, the general rule is, that an assignee takes the mortgage subject to all equities between the original parties, more especially where he is guilty of laches, or where the assignment is made to secure a preexisting debt.^ (t) As against an assignee without notice, the mortgagor has the same rights as he has against the mortgagee, and whatever he can claim, in the way of sct-ofF or mutual credit, as against the mortgagee, he can claim equally against the assignee. If it is stated in the assignment, that a certain sum is due for principal and in- terest, although the mortgagee is bound by the statement, the mortgagor is not, unless a party to the assignment.^ 1 Glidden v. Hunt, 24 Pick. 221; - James ?•. Morey. 2 Cow. 247; Wol- Clark V. Flint, 22 Pick. 231 ; U. S. v. cott v. Sullivan, \ Edw. 402; Norrish Stuiges, Paine, 525. v. Marshall, 5 ]\Iad. 481 ; Carew v. Johnston, 2 Sch. & Lef. 296. (j) But not to the latent equities of strangers, of which he has no notice. 2 Cow. 246. Nor is he required for his own protection to give notice of the assignment to a subsequent assignee of, or purchaser from, the mort- gagee, lb. AVhere one had acquia-ed an equitable right to the assignment of a bond and mortgage, before an equitable right of set-off accrued to the mortgagor; held immaterial, that the mortgagor was ignorant of the equi- table assignment, he not having parted with any security im consequence. Smith V. Clark, 4 Paige, Ch. 368. 528 THE LAW OF MORTGAGES. ' [CH. XVIII. 50 b. One of two partners, being about to leave the State for his health, assigned to the other •partner a bond and mortgage which he held against a third person. He died while absent. His administrator sued the surviving partner for the amount of the bond and mortgage. On a sworn bill, filed by the surviving partner, stating that the deceased part- ner, when^he left, was indebted to the partnership in more than the amount of the bond and mortgage, and that it was agreed between them that they should be applied to the purposes of the partnership, in the manner stated in the bill, and that he had so applied them, the administrator was en- joined from proceeding ii\ the suit.' 50 c. A bill against a bond fide assignee must allege no- tice of the complainant's equities against the mortgagee, in order to bind the defendant by them.^ 51. The mortgagor cannot be prejudiced by any agree- ment between the assignee and mortgagee to increase the amount of the principal due ; hence the arrears of interest at the time of assignment cannot generally, without his concur- rence, be turned into principal and tacked to the mortgage. And even with his consent, the interest cannot with notice be tacked, to the prejudice of other creditors having a lien on the property.^ 52. A different rule was formerly adopted, if the arrears were actually bond fide paid by the assignee. But in the case of Matthews v. Wallwyn (4 Ves. 118, 128,) it is held by Lord Loughborough, that as between the mortgagee and persons claiming under him, without privity of the mort- gagor, they cannot add to what is due, settle the account, or turn interest into principal.* And it seems necessary, that a second mortgagee should join in an assignment of the first mortgage ; because, otherwise, arrears of interest cannot be turned into principal as against him.^ 1 Williams v. Stevens, 1 Ilalst. Ch. '^ Coute, 354. 119. ■* 1 Tow. 152, and note. '■' Cicotte V. Gagnier, 2 Mich. 381. '^ Uigby v. Craggs, 2 Ed. 200. en. XVIII.] ASSIGNMENT. 529 53. In Chambers v. Gold win/ it was held, that in general the assignee must take the risk of the correctness of the amount stated to be due ; but if the mortgagor delays for a long time, and deals with the assignee without objection, he cannot have a decree to surcharge and falsify, but must take his remedy against the mortgagee. 54. The doctrine, that an assignee can enforce the mort- gage for no more than is actually due between the mort- gagee and mortgagor, is made to rest in part upon the ground, that this would be the rule adopted in a suit at law upon the covenant or bond to which the mortgage is collat- eral ; and the assignee should stand no better in equity than at law.2 55. The declarations of a mortgagee, made before the mortgage was due, are inadmissible as against purchasers under the mortgage.-^ 55 a. A.'s wife joined in a mortgage, to secure the pay- ment of two hundred and fifty shares of a bank, to which A. had subscribed. The mortgage was assigned to trustees, by a resolution of the directors, to secure B. for debts due to him from the bank. After the assignment, A. made several transfers of stocks which were refused by B., to pay the mortgage, and also made loans to the bank after that time. In a suit by the special receiver of the bank to foreclose the mortgage, which had been assigned to him by the trustees, and also by the general receiver of the bank ; held, a banking corporation, under the general banking law, had the right to divide its business, and appoint separate committees of its directors to the different departments of business ; that a resolution of the committee of directors, having in charge the securities and investments of the bank, was valid to assign a mortgage, and the ratification of the resolution, by the whole board of directors, was a compliance with the statute requiring a transfer of over §1,000 to be made by a 1 1 Smith, 252. 3 Stark v. BoswcU, 6 Hill, 405. 2 Matthews v. Wallwyn, 4 Ves. 118. VOL. I. 45 530 THE LAW OF MORTGAGES. [CH. XVIII. resolution of a board of directors ; that the assignment at once vested the mortgage in those for whose benefit it was made, and the beneficiary, who had paid a valuable and adequate consideration, and who did not appear to have any notice of its illegality, at once became the assignee of the mortgage.; and that the set-offs, which A. claimed, as they accrued to him after the assignment, of which, as he was chairman of the finance committee, he was presumed to have notice, and arose by his payment to the bank, and not to the assignee, could not be allowed.^ 56. The question has arisen, how far the assignee of a mortgage is subject to an offset on the part of the mort- gagor, gi'owing out of a lease made by him to the mortgagee ; upon which he would have had a valid claim for rent against the mortgagee himself. Upon this subject it is held, that although a mortgagee is tenant to the mortgagor, in virtue of a lease e'xecuted at the same time with the mortgage, but without any agreement to connect the lease and mortgage inseparably, or that the rent shall be secured at all times by taking it out of the principal or interest of the money loaned ; the right to set off rents against the mortgage debt does not necessarily attach as an inherent quality of the contract, so as to prevent an assignment of the mortgage, with the usual effect of such assignment. The assignee does not stand upon any ground more favorable, than if the mortgagor had permitted his mortgagee to take possession under the mort- gage without a lease ; in which case, upon assignment of the mortgage, the only equity which the mortgagor could claim would have been, to set off' the amount of rents due at the time of receiving notice of the assignment. If a mort- gagee is suffered to retain possession, the mortgagor, after an assignment without notice, cannot charge the assignee with subsequently accruing rents. His remedy is, to evict the original mortgagee, or compel him to account and pay an occupation rent for the time he may thus hold possession 1 Palmer v. Yates, 3 Simdf. 137. CH. XVIII.] ASSIGNMENT. 531 after assignment. So, in the present case, though the mort- gagor could not enter, after notice of the assignment, excent for non-payment of rent under the lease ; yet, by virtue of the covenants, he could have pursued that and other legal remedies for the recovery of the possession, or the rents as they fell due. With these remedies, secured by express con- tract, he must be presumed to have been content, till the contrary appears. Another ground for this decision is, that if the mortgagor had distrained for rent, the assignee of the mortgagee could not have set off the interest against such rent, either in law or equity.^ 57. The assignment of a mortgage involves no implied guaranty as to the amount due thereon. Thus, in Bree v. Holbech,^ an administrator with the will annexed found among the papers of the deceased a mortgage, and assigned it for full value, covenanting that neither the testator nor himself had done any act to incumber the mortgaged estate. The mortgage turned out to be forged ; but, as there was no evidence that the administrator knew it. Lord Mansfield held that the purchaser could not recover back what he had paid ; remarking that the administrator " did not covenant for the goodness of the title, but only that neither he nor the testator had incumbered the estate. It was incumbent on the plaintiff to look to the goodness of it." So, where the distributee of an estate has received from the executors the assignment of a mortgage, to meet his share of the assets, he does not thereby guarantee the sufficiency of the mort- gaged property to extinguish the amount for which it was pledged, and become personally liable to the executors for the nominal excess of the mortgage over his proportion of the estate. He is only bound to use diligence and good faith in the collection of the mortgage, and pay over any surplus, of its actual proceeds, after satisfying his own claims.^ 1 Wolcott V. Sullivan, 1 Edw. 39'J. ^ Hammond v. Washington, 1 How. 14. - DoultI. 655. 532 THE LAW OF MORTGAGES. [CH. XVIII. 58. In the appropriation of the proceeds of a sheriff 's sale, the assignee of a mortgage which has priority of lien will be preferred to a judgment creditor, who holds the guaranty of the mortgagee for his judgment, though prior in date to the assignment.' 59. To avoid the inconvenience and hardship of charging an assignee with deductions and discounts of which he may have had no notice, the practice has been recommended, of making the mortgagor a party to the assignment of the mortgage, thus, of course, precluding him from a denial, that the face of the mortgage exhibits the true state of the mort- gagee's claim. Upon this subject Lord Loughborough re- marks as follows : " It was supposed that in practice there is no occasion to make the mortgagor a party, and in some cases it may not be possible to make him a party to the as- signment ; and 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 embarrass 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 assign- ment of a mortgage without the privity of the mortgagor as to the sum really due. No conveyancer of established prac- tice would recommend it as a good title to take an assign- ment of a mortgage without making the mortgagor a party, and being satisfied that the money was really due." ^ 60. An additional reason for the course recommended is stated as follows : — A m.ortgagee in possession being re- garded in some sense as trustee, and therefore accountable in equity for the profits, if he assign the mortgage without the mortgagor's consent, he will be held accountable for the sub- sequent profits ; because, having turned the mortgagor out 1 Moore's Appeal, 7 W. & S. 298. " Mattlicws v. Wallwyn, 4 Vcs. 128. See 1 Tow. 152. CH. XYIII.] ASSIGNMENT. 533 of possession, he is bound to take care in whose hands he places the estate.' 61. Chancellor Kent says,^ more particularly with refer- ence to the recording of assignments : " The abuse to which these clandestine assignments of mortgages (and which, in judgment of law are extinguished by merger) are subject, ought to impose upon persons who traffic in such securities the duty of making their assignments, as soon as possible, matter of record. If they do not, it is their own fault or neg- ligence, and they ought to suffer, rather than the subsequent purchaser, who is deceived by appearances, and has no notice or record to guide him. I am more and more inclined not to extend equitable refinements upon the plain common-law doctrine of merger. They never have been and never ought to be carried so far as to affect a subsequent purchaser, or judgment, or mortgage creditor, without notice." 61 a. But a purchaser of mortgaged property does not make himself liable for the mortgage debt, merely by becom- ing party, or giving his assent to an assignment of the mort- gage. 61 b. A., B. & C. became entitled to mortgaged property, unequally. A deed was executed, reciting that the mortga- gee had required payment of the debt, from A., B. and C, pro rata, that they " were unable to pay it, and had applied to D. and E. to advance the amount, w'hich they had consented to do, upon having repayment, w4th interest, secured as there- inafter stated ; " and proceeded to transfer the mortgage secur- ity to D. and E., subject to redemption on payment of prin- cipal and interest by A., B. and C pro rata, on a day newly- fixed ; and A., B. and C. covenanted to pay accordingly, and also gave a bond of even date with the mortgage. Held, merely a transfer of the mortgage ; and after the deaths of A., B. and C, their personal estate was not liable for the debt.3 1 Coote, 354 ; 1 Eq. Cas. Abr. 32S ; 3 Hedges v. Ilcciges, 12 Erig. Law & 1 Pow. 152. Eq. 331. - James V. Johnson, 6 John. Ch. 432. 45* 534 THE LAW OF MORTGAGES. [CH. XVIII. 62. It is the general, and probably universal practice, in the United States, to record or register the assignments of mort- gages, as well as the mortgages themselves. The question has arisen, whether such registration is equivalent to actual notice of the assignment, in reference to parties subsequently dealinsf with the mortsrasree. The followins^ case was decided in England. 63. In the case of Williams v. Sorrell,^ the defendant mort- gaged to Clifton, who assigned to the plaintiff without the defendant's concurrence, after which the defendant made payments to Clifton. The property was leasehold, in Mid- dlesex, and the assignment registered. The assignee files a bill for foreclosure, relying upon the registry as notice to the defendant ; but it was decreed that he might redeem on pay- ment of the balance, after deducting the sums paid the mort- gagee. (;•) 64. In Matthews v. Wallwyn,^ it was held, that in case of 1 4 Vcs. Jun. 389. ^ 4 Ves. 118 ; ace. AVilliams v. Sorrell, 4 Ves. 389 ; Coote, 441. (y) A mortgagee assigned his mortgage and tlie accompanying bond and warrant to two trustees, in trust for the use of his daughter and her children. Held, payment to one of the trustees discharged the debt. Bowes v. Seeger, 8 W. & S. 222. The Court say, (p. 223,) " Between the mortgagor and the mortgagee, the money was not a trust fund. It was an ordinary debt for the price of the property, on which the mortgage stood as a security ; and what mattered it to the mortgagor, that the mortgagee assigned the mortgage in trust for a stranger ? He could not change the nature of the original relation, or in- crease his debtor's responsibility and risk on the score of mispayment. A purchaser from trustees, knowing that he must see to the application of the purchase-money, knows what he has to encounter when he makes his bar- gain, and he '.akes the responsibility accordingly. But he incurs no respon- sibility of which he was not apprised; for where the sale is for a breach of trust, he is not afTected by it if he knew not of it. There was no trust in existence when this mortgage was executed, and the assignment did no more than substitute joint creditors for a single one. It is very clear, then, that payment to a joint creditor, of which his receipt is evidence, discharges the debt." W. XVIII.] ASSIGNMENT. 535 assignment, unless the mortgagor is a party thereto, any sub- sequent payment made by him to the mortgagee is valid, though the land lie in a register county. 65. It was formerly held in New York, that a mortgagor may make a valid payment of the mortgage debt to the mort- gagee, notwithstanding the registration of an assignment of the mortgage, unless he have actual notice ; such registration being legal notice only to those claiming under a subsequent transfer from the mortgagee or his representatives.' But under the Revised Statutes, the registration of an assignment is constructive notice of it.- {k) 66. It has been held in Pennsylvania, that the assignment of a mortgage need not be recorded.-^ {I) In the same State, the certified copy of the assignment of a mortgage is evi- dence* 67. An assignee takes subject to the equities of the mort- gagor, but not to latent equities of his cestids que trust or other persons. Thus, a trustee under a secret trust conveyed to his cestui, and then mortgaged to one having notice of such conveyance. The mortgagee assigned to one not having 1 New York Life, &c. v. Smith, 2 ^ Mott r. Clark, 9 Barr, 399. See Barb. Cli. 82: 2 Cow. 246. Craft v. Webster, 4 Bawle, 265 ; Por- ^ Vanderkemp v. Shelton, 11 Paige, ter v. Seabor, 2 Root, 146. 28. * Philips V. Bank, &c., 18 Penn. 394. (/.) In Williams v. Birbeck, (1 HofFtn. Ch. 3d9,) it was held that no one is chargeable with constructive notice of an instrument from its being re- corded, unless the law requires registration. In Roberts v. Jackson, 11 Wend. 48.5, Savage, C. J., says, the recording of an assignment of a mortgage is not necessary to its validity; but that it •may be recorded, and its execution proved in the same "way as a mortgage. In Williams v. Birbeck, 1 Hoffm. Ch. 3.59, the opinion is expressed, that since the Revised Statutes, an assignment of a mortgage must be recorded, to protect the assignee against a subsequent assignment without notice. In Wisconsin, (Rev. Sts. 329,) it is not notice ; but the mortgagor may make payment to the mortgagee. See Clark r. Jenkins, 5 Pick. 280 ; Pierce V. Odlin, 27 Maine, 341. (/) By St. 1849, (p. 527,) assignments may be recorded, and the record ■will be evidence. 536 THE LAW OF MORTGAGES. [CH. XvSP. notice, who re-assigned to another, the assignment not being recorded. After the first and before the second assignment, the conveyance to the cestui was recorded. Held, the assignee was not affected by this registry, nor by notice to the mort- gagee of the trust and conveyance.^ 68. The title of an assignee may be impeached by evidence of any fraud on his part, or to which he is privy. Thus, if a mortgage is, on its face, fraudulent, an assignee, though he take it in good faith, stands in no better condition than the mortgagee.^ 69. The assignment of a bond and mortgage was obtained by false pretences, which constituted a fraud and felony. The assignee transferred them for less than their value, and under circumstances calculated to put the second purchaser on inquiry. Held, the latter gained no title to the securities, and it was decreed that the assignments were fraudulent and void as against the original holder, and that the second pur- chaser should re-assign the bond and mortgage, and refund the amount collected by him, with interest.^ 70. And an assignee may even be affected by the unfair dealing of the mortgagee, though subsequent to the assign- ment, and though the former is no direct party to it. 71. Mortgage, conditioned for the payment of $800 in five years, with interest annually ; the whole debt to become due upon failure to pay interest when payable. The mortgagee, having assigned the mortgage, and guaranteed its payment, shortly before an instalment of interest fell due, informed the mortgagor of the assignment, but not of the assignee's resi- dence, and the mortgagor, unable to find the assignee, made a tender to the mortgagee, who refused it. Upon a bill to fore^ close, brought by tlie assignee, held, the tender was sufficient to prevent a forfeiture, or at least to justify a stay of proceed- ings, upon payment of the sum due, till further default ; the facts showing a design on the part of the mortgagee and 1 Mott V. Clark, 9 Barr, .399. » Pcabody z;. Fcnton, 3 Barb. Cli.451. - Fanners' Bank, &c. v. Douglass, 11 S. & M. 469. CH. XVIII.] ASSIGNMENT. 537 assignee to take an unconscientious advantage of the mort- gagor, and that he was prevented from paying at the time appointed through their act and not his own default.^ 72. To affect an assignee's title, the notice of the mortga- gee's want of authority to assign the mortgage must be clear and explicit. Thus, a bond and mortgage were made by a corporation to one of its directors, to enable him to raise money for the corporation by assigning them, and on his representation that he could not raise the money upon secu- rities running directly to the lender. The director negotiated the securities for his own purposes, taking from the assignee real estate therefor. Pending the negotiation, the assignor exhibited to the assignee certain certificates, signed by officers of the company, stating that the securities were binding upon the company, and that the amount thereof was due the director, but, before the bargain was closed, the president told the assignee, that the company were anxious to procure the money and have the works in operation, and would be able to do it if they could get the money. Held, the mortgage might be enforced by the assignee against the company.^ 73. How far notice of an outstanding title shall affect one claiming under the party who has such notice, is a question which has arisen in England in various forms. Thus, it has been held, that if one take a mortgage by assignment from a mortgagee having such notice, he will take subject to the adverse title ; that the assignor cannot transfer a better title than he has himself. This principle, however, has been ques- tioned. A similar question has been raised, as to the right of a third mortgagee, taking an assignment of the first mort- gage, to tack it to his own, where the assignor had notice of the second mortgage. The better opinion would seem to be, that tacking would be allowed, notwithstanding such notice.^ 74. The rights of an assignee in relation io foreclosure may depend upon similar considerations of notice and implied 1 Noyes v. Clark, 7 Paige, 179. s Coote, 433. 2 Van Hook v. Somerville, &c., 1 Halst. Ch. 633. 538 THE LAW OF MORTGAGES. [cH. XVIII. fraud. Thus, it is held, that a mortgage may be assigned after entry for the purpose of foreclosure, and the assignment will not necessarily afi'ect such foreclosure. But if made in order to prevent a redemption, or immediately before the right of redemption would expire, it may keep the right of redemption alive, until a tender can be made to the assignee, being regarded in the former case as a fraud, of which the party shall not himself take advantage, and in the latter, as analogous to the case of payment, made to a mortgagee after assignment, but before notice of it.^ 1 Peming v. Comings, 11 N, H. 474. CH. XIX.] VOID AND VOIDABLE MORTGAGES. — USURY. 539 CHAPTER XIX. VOID AND VOIDABLE MORTGAGES. — USURY. 1. General principle as to avoiding deeds. 2. Usury. 3. What constitutes usury in a mort- gage. 14. What does not constitute usury. 22. Statement of questions arising in relation to usurious mortgages. 24. When the sum legally due may \ judgment, &c be recovered. | 44. Form of pleading usury. 2.5. Distinction between a bill for I 46. Evidence — parol evidence. foreclosure, and a bill to redeem, in relation to usury. 28. What parties may be affected by usury in a mortgage. 31. What parties may avail them- selves of such usury. 38. What will preclude a mortgagor from setting up usury ; effect of a prior 1. In many respects, a mortgage is not distinguishable, with reference to the circumstances which render it void or voidable, from an absolute deed. Of course, however, this is not universally true. A mortgage, though in form a convey- ance of land, is for many purposes a mere executory contract, like the personal obligation which it accompanies, and there- fore admits o%Tiany defences or exceptions, which cannot be applied to absolute, executed conveyances. 2. Of this nature is usury, which cannot exist in connec- tion with an absolute sale of land for a certain price, however excessive, but is a natural incident to conditional convey- ances, made as security for loans of money. 3. In regard to the question, what constitutes usury, 'there is no substantial difference between morta^aofes and other obligations or securities. It would be foreign from the plan of the present work, to go minutely into all the distinctions upon this subject. Some of the decisions relating particu- larly to mortgages are here subjoined. In many of the States, by virtue of express statutes, usury no longer renders any securities absolutely void, but merely involves certain forfeit- ures of a portion of the amount promised. Of course those 540 THE LAW OF MORTGAGES. [CH. XIX. alterations of the law apply as well to mortgages as to other obligations, (a) 4. A ctionon a promissory note. Defence, that the plain- tiff loaned to the defendant $800, and received as security an absolute deed of a piece of land of much greater value, with an agreement that the defendant might redeem it by repay- ment of the loan with 12 per cent, interest, and should remain in possession of the land and pay therefor $48 per annum, being the simple interest, as rent, for which rent the note was given. Held, the transaction was usurious and the note void.^ So one person, through an agent, applied to another for a loan, at 15 per cent, interest, to be secured by mortgage. The party applied to declined taking a mortgage, but pro- posed to pm-chase the property for the sum named, and let it to the other for a rent equivalent to such interest, with the privilege of redeeming by payment of the sum advanced, and of the rent. The proposition was accepted, a deed made, and a lease taken back, in the terms above stated. Held, it was a question for the jury, whether the transaction was a real sale, or only designed to cover a usurious loan.^ 5. A mortgage made to the indorsee of a usurious note, to secure it, is void, though he had no notice of the usury at the time of indorsement ; especially if at the making of the mortgage he had such notice.^ 6. Bill to foreclose a mortgage, which was made as secu- rity for a bond of $5,000 and interest. The defendant answered, that he received from the plaintiff, for the bond and mortgage, two checks for $4,G58, payable in six months, without interest, his own note for $341.10 principal and in- terest, and ninety cents in cash ; all of which allegations, ex- 1 MitcliLll V. Preston, 5 Day, 100. 3 Morgan v. Tipton, 3 McL. 339. '■^ Tyson v. Kickard, 3 liar. & J. 109. (a) As to tbe ([uestion of usury in the assignment of a mortgage, see Mum- ford V. American, &c., 4 Comst. 4G3 ; U. States Dig. 1852, " Usury." CH. XIX.] VOID AND VOIDABLE MORTGAGES. USURY. 541 cept the last, were proved. Held, the answer was substantially- established, and the transaction usurious.' 7. The holder of a usurious mortgage indorsed upon it an amount equal to the sum included in it for usury, with the assent of the mortgagor. Held, the mortgage was void, not- withstanding such indorsement.^ 8. It has been held, that an agreement to set the profits of the estate against the interest of the loan is usurious, if such profits exceed the legal rate of interest.^ • 8 a. Mortgage, to secure the loan of $3,000, without any agreement about interest. The mortgagee let the premises to the mortgagor at the annual rent of $270. Held to be an agreement for usurious interest.* {h) 9. Land was conveyed for a consideration much less than its value, and to be reconveyed upon payment of the money loaned, with usurious interest. Held, this Avas a security for the payment of money, with usurious interest, and not an actual payment ; and that the statutory penalty was not incurred.^ 10. In New York, a statute provided, that all bonds, &c., whereupon or whereby there shall be reserved, &c. or secured, over 7 per cent., should be utterly void. Held, a mortgage taken on a loan of money, including a former usurious loan, was void, the usury destroying the whole security ; and that an action of ejectment could not be maintained for the land by an assignee of the mortgage.*^ 11. Sts. 2 and 3 Vict. c. 37, § 1, enabled parties to contract for more than 5 per cent., where the sum lent or forborne was 1 Lane v. Losee, 2 Barb. 56. * Gordon v. Hobart, 2 Story, 243. 2 Miller v. Hull, 4 Dcnio, 104. ^ Tliomes v Cleaves, 7 Mass. 361. 3 Robertson v. Campbell, 2 Call, 354. *^ Jackson v. Packard, 6 Wend. 415. (h) The only relief to which a mortgagor, in such case, is entitled, is to have the rate of interest cut down to the legal rate ; and the assignee of the mort- gagor is not entitled to be placed in a better situation, if he is entitled to any relief; concerning wliich, qucere. Gordon i\ Ilobart, 2 Story, 243. VOL. I. 46 542 THE LAW OF MORTGAGES. [CH. XIX, over XIO, but with a proviso that it should not apply to the loan, &c., of money upon security of any lands, tenements, &c. In Hodgkinson v. Wyatt,' this proviso was held appli- cable to a case, where the security consisted in an equita- ble mortgage by deposit of title-deeds to leasehold property. 12. In Bush V. Livingston,^ a bond and mortgage were given for $6,000, and assigned by the mortgagee, by the pro- curement of the mortgagor, nominally for the whole sum, and under an agreement that they were to be available to the assignee for the $6,000 and interest, but upon which he had paid only $5,600, the remaining $400 being intended as a bonus for advancing the money. The assignee filed his bill of foreclosure against the mortgagor and his assignee in bankruptcy, and the answer set up usury as a defence. Held, the mortgage was valid in the hands of the plaintiff to the extent of $5,600 and lawful interest ; and his recovery upon it was restricted accordingly, the transaction being a hard and unconscionable advantage taken by the lender of the mortgagor. 13. Bill in equity to foreclose a mortgage, conditioned that the mortgagor should pay the mortgagee, the plaintiff, the interest of 8 per cent, upon $1,000 of eight per cent, stock loaned by the plaintiff to the defendant, and should further pay him said sum of $1,000. Plea, the statute of usury, alleging that it was a loan of money and not of stock. It appeared in evidence, that the plaintiff authorized another person to sell $1,000 of eight per cent, stock, which he did through the agency of the defendant, who received the money. The plaintiff having endeavored without success to get from the defendant either the stock or money, it was finally agreed that the defendant should be considered responsible for the stock, and give a mortgage to secure repayment of it and 8 per cent, interest. Held, the contract was usurious, and the mortgage void.^ 1 4 Ad. & Ell. (N. S.) 749. ^ DcButt? v. Bacon, 6 Crancli, 252. '^ 2 Caincs's Cas. in Err. G6. CH. XIX,] VOID AND VOIDABLE MORTGAGES. — USURY. 543 13 a. A bank may take a mortgage for a debt due, with 7 per cent, interest, (that being the legal rate,) notwithstand- ing it is prohibited by its charter from taking " more than 6 per cent, per annum, in advance, on its loans or dis- counts." ^ 14. A mortgage made in Connecticut for 7 per cent, inter- est, to indemnify the mortgagee against an obligation given in New York for 7 per cent., is not usurious.- 14 h. A. made a mortgage of lands in Connecticut, where he resided, to B., as security for a bond to him, and subse- quently C. paid the bond, and took an assignment of the mortgage. Held, A. could not redeem, without paying to C. the sum actually advanced by him, and 7 per cent, interest, being the legal interest of the State in which the land lay and the mortgagor resided.^ 15. Notes were made in Massachusetts, but purported to be made in Illinois, and were secured by mortgage of land in Illinois. To a scire facias brought for foreclosure, the de- fendant set up as a defence usury under the laws of Massa- chusetts. Held, the forfeiture provided by those laws affected the remedy only, and could not be enforced in Illinois.* 15 a. Where A., living in New York, sold to B., also living in New York, a tract of land in New Jersey, and took his bond for part of the consideration money, with 7 per cent, interest, (the legal rate in New York,) and his mortgage on the lands conveyed, to secure the bond ; held, the mortgage was not usurious, though the papers were exchanged in New Jersey at the proper record office, they having been executed and acknowledged in New York, and a sufficient reason be- ing shown for not exchanging them there.^ 15 h. Mortgage, it) secure a certain sum of money at a certain time, with legal interest, and an agreement that, if the principal and interest should not be punctually paid, the land 1 Bailey v. Murphy, Walk. Ch. 424. + Sherman v. Gassett, 4 Gilm. 521. - Niehuls v. Cosset, 1 Root. 294. ^ Blydenburghy.Cotheal, 1 Hulst. Ch. " Mallory v. Aspinwall, 2 Day, 280. 631. 544 THE LAW OF MORTGAGES. [CH. XIX. should be sold to pay the same, with five per cent, damages thereon, and all costs. Held, the contract was not usurious.' 15 c. In a negotiation for the sale of land, the seller was willing to take $10,000 in cash, but, the person proposing to buy being unable to pay cash, it was agreed that a deed, and a bond and mortgage for $12,000, payable at a future time with interest, should be executed, to remain in the sell- er's hands, until he could negotiate a sale of the bond and mortgage, for a sum equal to the price he asked in cash for the land, and the deed then to be delivered. The papers were executed accordingly, the bond and mortgage after- wards sold for $10,000 cash, and the deed delivered at the same time. Held, this transaction was not usurious, and the bond and mortgage were a valid security for the sum of $12,000.2 15 d. Such a transaction, it seems, does not differ from the ordinary case of asking one price in cash for the property, and a higher price on credit, with the further condition, that the sale is not to be effected, until the security taken for the credit price can be sold for a sum of money equal to the cash price.^ 16. Mortgage, payable in small annual instalments, which were not due. The mortgagor advanced $1,400 to the mort- gagee upon the application of the latter, under an agree- ment that he would apply and indorse $2,100 as a payment on the mortgage. Held, this was not a loan nor forbearance, and therefore not usurious ; and that the agreement was for good consideration and not unconscionable.* 17. A mortgage on a loan of $700, to be paid in ten years, with interest at the end of that time, is not usurious, though in addition to the interest the mortgagee is to have, free of rent, the use of an acre of the land, worth $8 per year.^ 18. The purchaser at a master's sale procured the convey- 1 Gamhril v. Rose, 8 Blackf. 140. * \Vv^\\icvv. Stall, 3 Samlf. Cli. 608. '■2 Brooks V. Avery, 4 Comst. 225. '' Fox v. Lipe, 24 Wend. 164. 8 Ibid. CH. XIX.] VOID AND VOIDABLE MORTGAGES. — USURY. 545 ance to be made to trustees, to secure the payment to a third person of a loan alleged to be usurious. The purchaser and the trustees subsequently sold the premises, and took back a mortgage for part of the price, for the benefit of the lender, to secure the loan. Held, though the loan were usurious, the bond and mortgage were still valid.' 19. One holding a mortgage of a large tract, payable at a distant day, with 6 per cent, interest, at the request of the mortgagor took from him thirteen distinct mortgages on separate portions, for the same amount in the whole, with 7 per cent, interest, payable at the same time, thereupon can- celKng the old mortgage, and receiving from the mortgagor ^500 for granting the accommodation. Held, as there was no loan or forbearance, the transition was not usurious.- 19 b. A., having made a deed of trust to secure a debt, under which a sale of the land was advertised, agreed with B. that B. should bid the amount of the debt, and, if he be- came the purchaser, that B. should resell the land to A., on his paying, within twelve months, a sum afterwards to be agreed upon, it being understood that the sum should be sufficient to fully reimburse B., including his trouble and expenses. B. became the purchaser. Held, the transaction was not usurious, and the estate became absolute in B., on A.'s failure to pay within twelve months, and the sum not being fixed within that time." 19 c. A. mortgaged certain hereditaments to B. for £7,500, and his equity of redemption to C. for £5,000. C. after- wards agreed to take a transfer of both mortgages, and to advance a sum of £12,000 for that purpose, at interest at £5 per cent., reducible on prompt payment to £4 per cent. The transfer of the first mortgage not being ready to be executed, through the default of A., at the time appointed, C. advanced the £5,000 at once, and took a transfer of the second mort- 1 Stoncy V. American, &c., 11 Paige. - Necfus v. Vanderveer, 3 Sandf. Ch. 635. 268. 3 Jones i\ Hubbard. 6 Call, 211. 46* 546 THE LAW OF MORTGAGES. [CH. XIX. gage ; at the same time A. signed a memorandum, acknowl- edging that the remainder of the money was ready, (which was the case,) and agreeing that interest on the first mort- gage, when transferred to C, should run as from the date of that agreement, and that the deed of transfer of the first mortgage should bear date on that day. The deed of trans- fer of the first mortgage was not, in fact, executed, nor the X 7,500 paid over to B., until nearly six weeks afterwards. Held, the transaction was nevertheless good under the statute of Anne.^ 20. A mortgage, made for the purpose of being assigned upon a loan, and accordingly assigned for a loan at more than legal interest, is. Pjoudurant, 7 Monr. 421. Ch. Dccis. G6. c ^yinn v. Ilam, Cliarl. K. M. 70. '■^ Carter v. Dennison, 7 Gill, 157. CH. XIX.] VOID AND VOIDABLE MORTGAGES. — USURY. 551 consideration, without notice of the usury, is a bond fide pur- chaser, and not affected by such usury.^ 29. In Jackson v. Henry ,2 it was held, that a bond fide pur- chaser, [d) under a sale made by a power of attorney con- tained in a mortgage, is not affected by usury in the mortgage debt ; such sale being equivalent to a foreclosure and sale under a decree in equity. The statutory provision, that usurious securities shall be void, applies only between the original parties, where the suit is brought upon the security itself, and not to a new contract founded upon it, to which an innocent person is party. Kent, C. J., says : ^ — " The notice given by the advertisement is intended for the party as well as for the world, and he has an opportunity to apply to Chancery, if he wishes to arrest the sale on the ground of usury ; and the statute likewise gives him his remedy by action. If he stands by and suffers the sale to go on, and an innocent party to purchase, unconscious of the latent defect, and without any means of knowing it, the purchaser has the preferable claim in equity to protection." 30. But in Jackson v. Dominick,* which was an action of ejectment, brought upon a title derived from the mortgagor, subsequent to the mortgage, against the mortgagee, who had proceeded upon a statutory foreclosure, under the power contained in the mortgage, and obtained an absolute title ; the plaintiff was permitted to go into evidence of the usuri- ous consideration of the mortgage, (although objected to,) and, upon his proving usury to the satisfaction of the jury, judgment was rendered for the plaintiff. The Court say : ^ — " In the case of Jackson v. Henry it was decided, that a bond fide purchaser, without notice, under a sale duly made pur- 1 Jackson v. Bowen, 7 Cow. 13. ■'14 John. 435. 2 10 John. 195. 5i1j. pp, 441 442. 8 lb. p. 196. (f/) In North Carolina, by statute, usury cannot be set up against a bona fide purchaser of land. N. C. St. 1842, 1843, 107. 552 THE LAW OF MOETGAGES. [CH. XIX. suant to the statute, by virtue of a power contained in a mortgage, is not affected by usury in the original, debt. The Court there considered such a sale as equivalent to a fore- closure and sale under a decree of a court of equity, and that it could not be defeated, to the prejudice of a bond fide pur- chaser, on the ground of usury. That case was likened to the case of a contract originally usurious between the parties, and which has been subsequently changed by a new contract founded on it, with a third person, who had no notice of the usury ; in which case, such new contract could not be im- peached for the usury which infected the original transaction ; and also to the case of an innocent purchaser for a valuable consideration, whose title is valid, notwithstanding he may have bought from one w4io had obtained his title fraudulently. The general principle, that a derivative title is not better than that from which it is derived, is specifically recognized ; but the fact, that Plenry was a purchaser without notice of the usury, was considered as excepting such a purchase from the operation of that principle. Much stress, in that case, was justly laid upon the circumstance of the mortgagor's standing by, and permitting the sale to take place, and an innocent party to purchase. The purchaser here was a party to the corrupt agreement upon which the mortgage was given, and bought, with his eyes open, a disputed title. The mortgage here forms a part of the defendant's title ; and he, being fully apprised that the mortgage was void in law, stands in no better situation than if no foreclosure had taken place. He is not in as good a situation as a bond fide assignee of an usurious mortgage, as to whom there is no question that the mortgage would be void. Whether a purchaser under a judgment, recovered upon a usurious debt, with notice of the usury, would acquire a valid title or not, is a point not now presented for decision. Most probably he would ; but there is a palpable distinction between that case and this. When a cause of action has once passed in rem pidicatam, the defendant and every otlier person is forever afterwards pre- CH. XIX.] VOID AND VOIDABLE MORTGAGES. — USURY. 553 eluded from availing himself of any preexisting matter, which might have been insisted upon in bar of the recovery. The original debt ceases to have a legal existence, being merged in the judgment ; and the title of a purchaser under it is derived from the judgment, independent of the debt. But where the mortgage, and the power to sell, form the foundation of the purchaser's title ; if these are void, so is the title derived under them, except in the case of an innocent purchaser. The defendant in this case is not a bond fide purchaser. A foreclosure of a mortgage under the statute is not founded upon any judgment. It is the mere act of the mortgagee, who cannot make that good and effectual, by a sale, which was unlawful and void in its inception." 31. A stranger cannot set up the defence of usury. Other- wise with one claiming under and in privity with the mort- gagor, in law or otherwise.^ (e) Thus a purchaser from the mortgagor .2 32. A direct assignee in trust of the mortgagor may im- peach the mortgage for usury ; more especially where he has not bought subject to the mortgage, and retained the amount of it in his hands, under an express or implied agreement to provide for it. Such an assignee stands in the place of the mortgagor, with the same rights which he had ; and, like an assignee in bankruptcy, or an executor, or administrator, may question the validity of the debt outstanding against the estate.^ (/) 1 Post V. Dart, 8 Pai<;e, 640. ^ pearsall v. Kingsland, 3 Edw. 195. - Doub V. Barnes, 1 Md. Ch. 127. (e) In replevin against a sherifT, for goods taken on execution, by one claiming under a prior mortgage from the judgment debtor ; the defendant may set up as a defence usury in such mortgage. Dix i". Van Wyck, 2 Hill, 522. (/) In Lloyd i'. Scott, (4 Pet. 205,) it was held, that the grantee of lands, subject to an annuity or rent-charge, might set up the defence of usury in the deed from his grantor creating the rent-charge, the payment of which was attempted to be enforced by the summary remedy of distress VOL. I. 47 554 THE LAW OF MORTGAGES. [CH. XIX. 32 a. A. made a deed to B. of a tract of land, receiving from B. a writing, stipulating that A. should occupy the land for eighteen months, and at the end of that time, B. should reconvey to A. upon receiving the money advanced to A. with usurious interest. B. being unable to pay, the contract was extended. C. took an assignment of the con- tract from A. in satisfaction of a judgment, and filed his bill alleging usury, and that the transaction was a mere mortgage, and not a sale. Held, C. should be permitted to redeem.' 33. Where the holder of a usurious bond and mortgage files a bill of foreclosure against the mortgagor, making a subsequent judgment creditor a party, in order that his de- cree may vacate the judgment lien, in the hands of the pur- chaser under such decree ; the judgment creditor may rely upon the defence of usury to the full extent of his judgment lien, although the bill is taken pro confesso against the mortgagor.- 34. Where a bill for foreclosure is brought against one who purchased the equity of redemption subject to pay- ment of the mortgage, he cannot stft up usury in the mort- gage as a defence, and thus obtain an interest in the property, which the mortgagor never agreed nor intended to transfer.^ Nor can this defence be set up by a subsequent mortgagee ; more especially by one who has foreclosed his mortgage and himself become the purchaser, and sold the estate subject to the first incumbrance.* If a subsequent mortgagee can set up this objection, he must allege it in his bill.'' 1 Skinner r. Miller, 5 Litt. 84. )'. Darf, 8 Paip;e, 640. See Gordon v. '^ Tost V. Dart, 8 I'ai-e, 0.3!). llol.art, 2 Sumn. 402. '^ Morris v. Floyd, T) Harh. Su]). 130; ■* I!).: Mechanics', &c. v. Edwards, Brooks V. Avery," 4 Comst. 22.'j ; Tost 1 Barb. 271. s Baldwin t-. Norton, 2 Conn. 161. under tlie deed. A mortgagee of real e.state, subject to the lien of a prior judgment, confessed by the mortgagor upon a usurious consideration, is not a borrower within the statutes concerning usury, and therefore cannot main- tain a bill to set aside the judgment, without paying or ofTering to pay the sum really due. llcxford v. Widger, 2 Comst. 131. CH. XIX.] VOID AND VOIDABLE MORTGAGES. USURY. 555 35. Where an estate in land, conveyed as security, has become absolute in the grantee, who, at the request of the grantor, conveys it to a third person, upon his paying the amount of the debt secured ; in an action for the land by a subsequent bond fide purchaser, having no knowledge of usury in any transaction connected with the land, against one not a party, nor claiming under a party to the usury ; it is not a good defence that there was usury between the party requesting the conveyance and the second grantee.^ 36. In the case of Green v. Kemp,^ the demandant in a real action counted generally on his own seizin and a dis- seizin by the tenant. The tenant set up a title derived from one Woods, who had mortgaged the premises to the de- mandant, and afterwards conveyed the equity of redemption to the tenant. The language of this conveyance w^as as follows : said Woods " demised, released, and quitclaimed to the said Kemp all the right in equity of redeeming, which he had in the premises." The deed did not mention the mortgage ; nor in any manner specify the incumbrance alluded to, nor state how the right of redemption arose. But no other m.ortgage than that to the demandant was suggested at the trial. The tenant objected to the title of the demandant, upon the ground that the mortgage was made on a parol, usurious contract. Held, that evidence of such usury was inadmissible. The Court say :^ — "Although by the statute of 1783, c. oo, § 1, all mortgages on usurious considerations are declared to be utterly void ; yet it never could have been intended that a stranger might enter on the mortgagee or commit a trespass on the land, and justify himself under the statute, when all parties interested in the title should be disposed to acquiesce in the contract. The statute must have a reasonable construction, and in conform- ity to its general object; which was to protect debtors from the enforcement of unconscionable deman'ds. A mortgage 1 Thomaston, &c. v. Stimpson, 8 213 Mass. 515. Shepl. 195. 3 lb. 518. 556 THE LAW OF MORTGAGES. [CH. XIX. on a usurious consideration is therefore void only as against the mortgagor, and those who may lawfully hold the estate under him. On this construction, if the tenant had pur- chased the land, he might avoid a previous usurious mort- gage, although he had notice of such mortgage before the purchase. But the tenant has no title in the land before redeeming. He has purchased only the right to redeem ; and if he will not avail himself of this right, which is the basis of his title, he cannot hold the land ; and having no title in the land, he cannot be permitted to avoid the mort- gage by plea or proof of usury. The principle contended for by the tenant's counsel would serve to encourage fraud and injustice, rather than to restrain the taking of excessive usury." 36 a. In a real action, the tenant alleged that the demand- ants' title was by mortgage, and pleaded usury paid to a prior holder of the mortgage ; averring that the note came to the demandants discredited. The demandants, in their repli- cation, denied that the note came to them discredited ; set forth several assignments ; the foreclosure of the mortgage, and a conveyance of the premises to themselves ; alleged that they took without notice of usurious transactions, (ten- dering their own oath,) and that the usury, if paid at all, was paid to one B., a former holder of the note and mortgage, after he had assigned the same. They also tendered the oath of B., to prove that the amount of usury taken was less than that alleged. Held, this plea was bad.^ 36 b. In such action, the tenant should first allege that the demandant's title is by mortgage only, and then plead usury .'^ 36 c. In case of such an allegation and plea, the plaintiff may, 1, file a counter allegation ; 2, make an objection, which would be sufficient, if the action were upon the note ; 3, reply that a smaller sum only was taken as usury, and 1 Briggs V. Sholcs, 15 N. II. 52. 2 jbid. CH. XIX.] VOID AND VOIDABLE MORTGAGES. — USURY. 557 offer to verify by oath ; 4, reply that the mortgage is fore- closed.^ 36 d. If the demandant reply a foreclosure, and fail in sus- taining his replication, he admits the usury, and such judg- ment will be rendered for the tenant as his plea entitles him to ; unless the demandant obtain leave to reply to the plea of usury .^ 37. Where to a suit for foreclosure against a purchaser from the mortgagor, the defendant sets up the defence of usury, in order to avail himself of the fact, that the defend- ant purchased subject to the mortgage, the plaintiff must set forth in his bill the execution and terms of the conveyance.^ 38. The law will always afford to the mortgagor an oppor- tunity to avail himself of the defence of usury, unless he is guilty of some laches. Thus, an equity of redemption hav- ing been sold on execution, and the purchaser having become absolute owner by the lapse of a year, he took an assign- ment of the mortgage and thus acquired the whole estate ; but the mortgagor always remained in possession. In a writ of entry by the purchaser against the mortgagor ; held, the latter might set up as a defence usury in the mortgage notes ; this being the first opportunity afforded him to avail himself of such defence, and the right not having been waived or forfeited by any neglect.^ 38 a. So, a statutory foreclosure of a usurious mortgage, and a sale of the mortgaged premises, followed by a sale thereof to a third person for a valuable consideration, with- out notice of the usury, will not convey a valid title to the land, or estop the mortgagor from alleging usury in the mortgage.^ 39. But if judgment has been recovered upon a usiuious contract secured by mortgage, and a new mortgage given, the mortgagor cannot resist a suit on the latter, upon the ground of usury. The judgment upon the contract wliich 1 Biiggs V. Sholes, 15 N. H. 52. * Richardson v. Field, G Grecnl. 35. '^ Ibid. 5 Hyland v. Stafford, 10 Barb. 558. 3 Hetfield v. Newton, 3 Sandf. CIi. 564. 47* 558 THE LAW OF MORTGAGES. [CH. XIX. was affected by usury having concluded the debtor from showing it in an action upon the judgment; he is equally concluded in a suit on the mortgage.^ 40. So, where a mortgagee sues upon his mortgage, and the mortgagor defends upon the ground of usury, but fails in such defence, and afterwards conveys his right in the land ; the purchaser cannot maintain ejectment against the mort- gagee upon this ground, being estopped by the former judgment.^ 41. So, w^here mortgage notes are usurious, the mort- gagor must set up this defence to a bill for foreclosure, or he will be barred by the decree. But if the original contract, proved by the notes, was not usurious, a subsequent payment of usury has no connection with it, and may be recovered back as money had and received, even after a decree for foreclosure, without deduction of such usury.^ 42. So, after a default has been regularly entered in a foreclosure suit, it will not be opened for the purpose of en- abling the defendant to set up as a defence, that the mort- gage was given in violation of the restraining law, except upon the terms of paying the moneys or property actually received from the mortgagee.'^ 43. So, a judgment creditor, acquiring a lien upon the mortgagor's whole interest in premises subject to a usurious mortgage, may obtain a perfect title by sale and purchase under the judgment ; and may then enjoy the property as fully as the mortgagor would have done had he continued to be the owner.'' (g-) 1 Tliatchcr v. (Jammon, 12 Mass. 268. * Bard v. Fort, 3 Barb. Ch. 632. '-2 Adams v. Barnes, 17 Mass. 365. ^ Post v. Dart, 8 I'aige, 640. 8 Grow V. Albee, 19 Verm. .'J40. i'j) Where a mortgage is made to secure a claim which is void by stat- ute, and a subse(|ucnt mortgage to another person for a lawful debt, and the former claim is satisfied by a sale or a discharge of the first mortgage ; the second mortgagee cannot recover the amount from the first mortgagee. Ellsworth V. Mitchell, 31 Maine, 247. CH. XIX.] VOID AND VOIDABLE MORTGAGES. USURY. 559 44. In Connecticut, in an action of ejectment, the defend- ant may prove usury, in order to invalidate the plaintiff's title, founded on mortgage, without having given notice.^ 45. To a bill of foreclosure, the defence of usury must be set up by way of plea, and, if insisted upon in the answer, it must be proved not by the answer, but by evidence aliunde.- 46. It has been held, that parol evidence is admissible to prove a deed absolute in form to be in reality a usurious mortgage.3 47. But in the case of Flint v. Sheldon,^ the demandant, to prove his seizin, produced an absolute deed from the tenant to him. The defence was, that the deed was made upon a usurious contract ; and the tenant offered to prove by parol evidence, that the conveyance was not, as it purported to be, an absolute one, nor the contract upon which it was made a purchase and sale of land, but an agreement for the loan and repayment of money, the deed to be void, or the premises reconveyed, upon such repayment. Held, such evidence was inadmissible. The Court say,^ after remarking that inde- pendently of the rate of interest, it would be clearly incom- petent to control an absolute deed by evidence of a parol agreement : — " The question then is, whether the rate of interest, at which the money is supposed to have been lent, makes any difference in such a case. The parol evidence would tend to explain or vary the import and effect of the deed, as much if the loan were proved to be at the rate of seven per cent., as if it were at the rate of six. The statute of usury has not rescinded, nor in any manner modified the rules of evidence before mentioned. The intention of the legislature was to render void every usurious contract ; but they have left it to be ascertained, as in other cases, whether there is a contract for the loan and repayment of money, be- fore the provisions of the statute can apply." They further 1 Iloltoii V. Cutton, 4 Conn. 436. ^ gtapp v. Thelps, 7 Dana, 300 ; Cook ■^ Dyer v. Lincoln, 11 Vorm. 300; f. Colyer, 2 B. IMon. 72. Briggs V. SIiolcs, U N. H. 202. * 13 Mass. 443. See ch. 3, ^ 14. 6 Ibid. 447. 560 THE LAW OF MORTGAGES. [CH. XIX. remark,^ as to the consequences of a different doctrine, " on proving usury in any conveyance within forty years by the demandant or his ancestor, he would recover the land against the grantee, or any assignee of his, however remote. For if the statute of usury applies to the contract, it renders it merely void. It would not, therefore, be enough, that a pur- chaser of land knew his own contract to be legal and valid ; he must be certain that every successive sale of the land for forty years preceding had been likewise untainted with usury." 48. "Where one purchased an equity of redemption, then took an assignment of the mortgage, and immediately mort- gaged to the original mortgagee ; held, in a writ of entry brought by the assignee against the mortgagor, the declar- ations of the original mortgagee could not be given in evi- dence, to prove usury in the first mortgage.^ 1 13 Mass. 450. 2 Eicliardson v. Field, 6 Greenl. 303. CH. XX.] VOID, ETC. MORTGAGES. — CONSIDERATION. 561 CHAPTER XX. VOID AND VOIDABLE MORTGAGES. WANT OR FAILURE OF CON- SIDERATION. ILLEGAL CONSIDERATION. 1. Want of consideration; as between the parties, and in relation to creditors, &c. 10. Want of failure of consideration, consisting in a defect of title. 1. The question has arisen, whether a mortgage could be avoided for ivant of consideration. A mortgage of real estate is a sealed instrument, and in general the consideration of such an instrument is not open to dispute. Thus it is held, that a mortgagor is estopped from saying that no title was conveyed to the mortgagee.^ The peculiar nature of a mort- gage, however, as a mere incident to the personal obligation which it is made to secure, has, in this as in other respects, given to it a different legal effect from that of other instru- ments, which are in form similar, [a) ' Eailcy v. Lincoln Academy, 12 Mis- 174. (a) See Pratt v. Law, 9 Cranch, 456. lUcgalUy of consideration undoubt- edly avoids a mortgage, as well as any other executory contract ; whether it consist in violation of some rule of the common law, or of a positive statute. In some instances, this general principle is enforced by express statutory provision. Thus, in Massachusetts, all mortgages, in which the whole or any part of the consideration shall be for money or goods won by gaming, or by betting on the sides or hands of any persons gaming, or for repaying money knowingly lent or advanced for gaming or betting, or at the time and place thereof to any person gaming or betting, are void between the parties, and as to all but ignorant, hondfide purchasers; and, when declared void, the lands pass to the then heirs of the mortgagor. Mass. Rev. Sts. 387. Similar statutes exist in other States. A mortgage given to secure payment of a certain sum to the county, and as the condition of a pardon, is not void for duress. Hood v. "Winslow, 2 562 THE LAW OF MORTGAGES. [CH. XX. 1 o. The plaintiff contracted to sell and the defendant to buy, a tract of land, the deed to be received as soon as it could be conveniently executed, and a mortgage made for the price. The mortgage was executed and left with the plaintiff's agent, and the plaintiff executed a deed, and sent it to his agent for delivery. Held, in a suit on the mortgage, it was not invalid for want of consideration.' 1 b. Forbearing to collect a debt for three months is suffi- cient consideration for a mortgage to secure the debt, if any consideration be necessary.^ 2. In the case of Wease v. Peirce,^ it was held, that want of consideration, for the note secured by a mortgage, is a good defence to an action to foreclose such mortgage, brought by the administrator of the mortgagee, even though the note was made for the purpose of defrauding creditors. Shaw, C. J., in giving the opinion of the Court, suggested various considerations as the grounds of this decision. The object of such an action is chiefly to enforce payment of the debt, and for this reason the right of action is vested in the admin- istrator, to whom the debt itself belongs. So also the judg- ment is conditional, and becomes vacated if the condition of payment within sixty days be complied with. Of course, therefore, the Court are bound to inquire how much is due, and, when it appears that there was no consideration for the note, there is nothing to found a conditional judgment upon, and the action cannot be sustained. Although an intention to defraud creditors might not of itself constitute a defence to the note, if a consideration were proved ; yet such inten- tion is no answer to the defence arising from want of con- sideration. In such case the maxim applies, in pari delicto^ potior est conditio defendentis. 1 Farmers', &c. v. Curtis, 3 Selil. 46. « 24 rick. 141. Sec cli. G, § 20. ^ Bauk, &c. V. Carpenter, \Vri;^lit, 729. Doug. C8. A mortgagor may redeem, altliongli the mortgage was given to seeure notes founded on a eonsideration wliicli was illegal, or in violation of publie poliey. Cowlcs v. llagnet, 14 Ohio, 38. CH. XX.] VOID, ETC. MORTGAGES. — CONSIDERATION. 563 3. In Abbe v. Newton,^ a note and mortgage were made for inadequate consideration. Upon a bill for foreclosure against a purchaser from the mortgagor, making the latter a party ; held, the plaintiff should have a decree only for the value of the property. 4. In the case of Mackey v. Brownfield,^ which was scire facias upon a mortgage, it was held, that the mortgagor might give in evidence admissions of the mortgagee, that the mortgage was made for more money than the mortgagor received. 5. The grantee of land made a mortgage of it to a third person, which mortgage was afterwards disputed, on the ground of want of consideration both as to the grantee and mortgagee. The consideration, as to the former, was the conveyance itself, and as to the latter, the payment by him of debts due the grantor, and of other sums, at the request of a party interested in the land. Held, in the absence of fraud, these considerations were sufficient, and the mortgage valid to the extent of the actual payments by the mortgagee ; and that the fact, that the consideration stated in the mortgage far exceeded the amount of such payments, was only pre- sumptive evidence of fraud, which might be rebutted.^ 5 a. Where land is defectively conveyed in satisfaction of a mortgage, and no title passes ; a new mortgage may be made for this consideration, but the old mortgage cannot be revived without the mortgagor's consent and that of subse- quent mortgagees.* 5 b. A. gave his notes to three persons, for B.'s benefit, one for $1,500, and another for $3,500, and took from B. his note for $5,000, secured by mortgage. Held, the transaction was a valid one.'^ 5 c. In New York, the Revised Statutes allow want of consideration to be set up as a defence against a sealed in- strument. But where an executor brought an action for 1 19 Conn. 20. * Lasselle v. Barnett, 1 Blackf. 1.50. 2 1.3 S. & K. 239. 5 Bishop v. Warucr, 19 Coim. 460. 3 Parker v. Barker, 2 ISIct. 423. 564 THE LAW OF MORTGAGES. [CH. XX. monev had and received, and the defendant claimed to have received the money under a mortgage from the testator ; held, the above provision did not apply to cases where the consideration comes in question collaterally ; and that want of consideration for such mortgage could not be set up in defence to the action.^ 6. A conditional pardon, having required the criminal to secure $1,000 to the county, the county commissioners ob- tained a mortgage for $1,150. Held good for $1,000, but void for the rest.^ 7. Want of consideration may of course be set up in case of a mortgage, as of other deeds, to show fraud against creditors. Thus, a mortgagee, claiming against a purchaser under a judgment creditor of the mortgagor, must prove the consideration of his mortgage.^ 8. On the other hand, where the plaintiff avers that he is a creditor of one of the defendants, and that the latter had executed a mortgage in favor of the other defendant, with- out consideration, and for the fraudulent purpose of defeating the plaintiff's recourse upon the property, and prays that the mortgage may be cancelled, and the property subjected to his claims ; the plaintiff must prove himself a creditor, even though judgment was rendered by default.* 9. A person in failing circumstances, and about to mort- gage his real estate and assign his personal property for the security of certain creditors, gave his own note for $800, and included it in the first mortgage and the assignment, on the sole consideration that the promisee should give his note for the same amount to the mortgagor, in order to furnish him with the means of support for himself and his family, until he could resume business, and to enable him to make some provision for unsecured claims. The promisee accordingly gave his note, and paid thereupon $200, which the promisor applied exclusively to his own support. Held, the debt thus 1 (Jilluhui.l V. Failing,', 5 Denio, 308. " McGintry v. Reeves, 10 Ala. 137. '■^ Uuod i-.\Viiislo\v,2 Doug. (Mich.) G8. * Fink v. Martin, 1 La. Ann. R. 117. CH XX.] VOID, ETC. MORTGAGES. CONSIDERATION. 565 created was invalid against other creditors, and no part of it could be protected by the securities held by the promisee.^ 9 fl. A mortgage from son to father, mortgaged to secure payment of a certain sum advanced in lands, since mortgag-ed, imports that the lands were given as an advancement, and is invalid as against creditors of the mortgagor.^ 10. In cases of a conveyance of land, and a mortgage back for the price, the question has often been raised, whether want OT failure of consideration, consisting in a defect of title on the part of the mortgagee or grantor, can be set up as a defence to a suit upon the mortgage.^ 10 a. A vendee may deduct, from the amount of his pur- chase-money, the value of an easement in favor of another estate, to which the land sold is servient, existing at the time of his conveyance, and of which the vendee at that time had no notice.* 11. Conveyance with warranty, and a bond and mortgage back to secure part of the price. The mortgagor brings a bill in equity for an injunction of a suit at law, upon the ground of a failure of consideration of the bond and mort- gage, consisting in a want of title in the mortgagee. It appeared, that the plaintiff had taken possession and never been evicted ; that the securities had been assigned, for value ; and that the plaintiff, in consideration of forbearance, gave the assignee a new bond and mortgage, the latter having no notice of any fraud or failure of consideration in the original transaction. Held, the bill could not be maintained.'^ 12. In Van Waggoner v. M'Ewen,^ a defence to a bill for foreclosure was denied, because the party merely alleged an outstanding title. 13. Conveyance to the president of an incorporated com- pany and his successors in trust for the stockholders. The 1 Pettibone r. Stevens, 15 Conn. 19. ^ Rumpus v. Platner, 1 Johns. Ch. 2 Waller v. Todd, 3 Dana, 50.3. 213 ; Davison v. Dc Freest, 3 Sandf. 3 See Naf)icr v. Elam, Yerg. 108; Ch. 456. Forster v. Gillam, 1 Ilarr. .340. ^ 1 Green, Ch. 412. See Jaques v. * Stehlcy v. Irvin, 8 Barr, 500. Esler, 3 Ibid. 462. VOL. I. 48 566 THE LAW OF MORTGAGES. [cH. XX. president, under a power from the stockholders, conveyed and delivered possession to the defendant, having notice of his title, and took notes for the price, secured by mortgage of the property. In a bill to foreclose, brought by an assignee of one of the notes, the mortgagor sought to defend upon the ground that the deed to the president was void, but did not allege any fraud or mistake. There had been no eviction from the premises. Held, no defence to the suit.^ 14. Defence to a suit for foreclosure, that the mortgage was given to secure the price of the land, which was con- veyed to the defendant without covenants, and that an adverse claimant had brought a suit for the land, which was vigorously prosecuted, and, if successful, would deprive him of all title except a right to dower ; the defendant having been in possession since the purchase, and never evicted. Held, the plaintiff should have a decree for a sale, and for payment of any deficiency against the mortgagor.^ 15. In a bill to foreclose a mortgage, no question was made by the defendant, as to the complainant's right to a decree for a sale of the mortgaged premises, and payment of the debt and costs out of the proceeds, as far as the same would go. But the answer showed, that the defendant gave the bond and mortgage in part payment of the purchase-money for a number of lots, including those mortgaged ; that the grantor had no title, and under the deed to him he had none to four of the lots embraced in the deed and mortgage. But the answer was sUent about the possession of the four lots ; and whether it was or ever had been in the defendant ; or whether the possession was held adversely under title para- mount, or what that title was ; resting on the broad assertion that " the deed, &c. had conveyed no right, title, or estate, or interest whatsoever, in or to the said four lots," and claim- ing, upon this ground, that the mortgagee should not have a decree over against the mortgagor for any deficiency, (accord- ing to the statutory provision in New York.) Held, upon 1 Natchez V. Minor, 9 Sin. & M. (Miss.) .544. - Banks v. Walker, 2 Sandf. CIi. 344. en. x:;:.] void, etc. mortgages. — consideration. 567 • this answer, the Court was not bound to decree the defend- ant exonerated even pro tanto from the mortgage debt, but, in order to obtain such decree, the defendant should file a bill ; but further, that there was enough disclosed in the answer to warrant the Court in withholding the personal decree, and leaving the plaintiff to sue at law upon the bond, and also to file a bill for relief. Decree for foreclosure and sale, but with liberty to sue at law for any balance.^ 16. Mortgage, in consideration of land purchased by the mortgagor, the title to a part of which fails, but without fraud on the part of the grantor. The mortgagor having entered, and the conveyance containing covenants of war- ranty ; held, the facts furnished no defence to a bUl for fore- closure, and that there should be a decree for a sale of the mortgaged premises, and an execution against the defendants for any deficit there might be after the sale. Bronson, J., says : — " No one has brought any suit to question Varick's title, and, as far as we can know now, none will ever be brought. But should he ever be disturbed, he has an ample remedy on the covenants in the deed. More than that, he might have sued before this time, and may still sue when he pleases, on the covenant of seizin. If there was a serious question about the title, and a suit had actually been com- menced to recover a - portion of the land, Chancery might enjoin the respondents from proceeding at law to collect the whole amount of the mortgage debt, until the title had been tried ; ^ and in such a case, where the proceedings to collect the mortgage debt are commenced in Chancery, that Court might perhaps stay the foreclosure suit, until there had been a trial at law. But it is no answer to say, peradventure the title may fail, and thus call on a court of equity to try in this collateral manner, and without the proper parties, a question which properly belongs to a court of law. If the purchaser has not been ousted, he must pay the mortgage debt, and take his remedy on the covenants. The fact that there may 1 Withers v. Mon-ell, 3 Edw. 5G0. ^ Johnson v. Gere, 2 John. Ch. 546. 568 THE LAW OP MORTGAGES. [CH. ' XX. now be a decree in personam, as to any balance which may remain after a sale under the mortgage, does not alter the principle." ^ 16 a. A., being assignee of a mortgage for the purchase- money of a large tract of land, took a mortgage from B., the holder of a portion of the land, for his ratable proportion of the original mortgage debt, all the parties having notice of a claim of a paramount title by the State. The several holders of the land, covered by the original mortgage, subsequently petitioned to the State for relief against the State claim, stating that they had satisfied the original mortgage, and obtained a release from the State, at a price reduced on account of the alleged satisfaction of the mortgage. Held, B. could not afterwards resist the demand of payment of the substituted mortgage, especially as against a bond fide assignee of such mortgage.^ 17. In Piatt V. Gilchrist,'^ a mortgage was given for the purchase-money of land conveyed with warranty. The answer to a bill for foreclosure alleged, that a suit had been brought by parties claiming the land under a paramount title, and prayed that the foreclosure and sale might be deferred till this suit should have been determined. Held, although after eviction relief would be granted, to prevent circuity of action, until such eviction the Court could not interfere. Mason, J., says : — " The purchaser in this case promised to pay the purchase-money at stipulated periods, and the seller covenanted, that if at any time the title should fail, and the purchaser be evicted by a paramount title, he would refund the purchase-money with interest. The possibility that the title might fail, and the purchaser be evicted, was in the minds of the parties. They might also have provided, that in case of a claim being made by title paramount before actual payment of the consideration-money, the right of the vendor to call for its payment should be suspended. But this 1 Edwards v. Bodinc, 2G Wend. 109, ^ 8 N. Y. Lej;. Ohscrv. 7 ; ace. MeLe- 11.3, 114. more v. Mabsoii, 20 Ala. 137. ^ Lee V. Torter, 5 John. Cli. 2G8. CH. XX.] VOID, ETC. MORTGAGES. — CONSIDERATION. 569 they have not thought proper to do, and this Court can with no more propriety add such a clause to the contract, and suspend the collection of the purchase-money, than it can suspend the collection of rent expressly covenanted to be paid, upon the destruction of the buildings, where the parties have not themselves provided against it." 18. So, it has been held, that where land is sold at auc- tion, and conveyed without warranty, and at the risk of the purchaser, and a bond and mortgage given for the price, part failure of title is no defence to a suit for foreclosure, if there was no fraud or misrepresentation on the part of the mort- gagee.i 18 a. Where a purchaser has notice of an outstanding claim of title, and takes a deed with general warranty, he cannot set up that title as a defence to an action on a mort- gage for the purchase-money, when his possession has not been disturbed ; though he was misled as to the nature of the adverse title by a statement of the vendor's agent.^ 19. So, in a suit for foreclosure, a defence of undue influ- ence and misapprehension of title was held insufRcient.^ 20. But actual eviction has been held a good defence to a mortgage. In 1814, the plaintiff conveyed to the defendant, taking back a mortgage to secure the purchase-money. In 1824, a third person brought a suit for the land, of which the plaintiff had notice, and promised to defend, but judgment was rendered by default. In 1826, a wnrit of possession issued, of which the agent of the plaintiff had notice. In 1830, the defendant took a lease of the land from the plaintiff in the former suit, and continued to hold under him till 1845. In an action on the mortgage, held, the plaintiff must show title in himself, and that the defendant might set up a failure of consideration of the mortgage, notwithstanding his con- tinuing in possession.* 21. In Van Riper v. Williams,^ to a bill for foreclosure, the 1 Banks r. Waller, 3 Barb. Ch. 438. * Povntnell v. Spencer, 6 Barr, 254. 2 Bradford v. Potts, 9 Barr, 37. ^ 1 Green, Ch. 407. 3 Wooden v. Ilaviland, 18 Conn. 101. 48* 570 THE LAW OF MORTGAGES. [CH. XX. defendant answered, that it was given for the price of land conveyed with covenant of seizin and against incumbrances, except a specified mortgage, but that the premises were sub- ject to another mortgage " still outstanding, unsatisfied, and uncancelled." The case being submitted on the pleadings and proofs ; held, the mortgage must be removed, before a decree for foreclosure and sale could be made, or a sufficient portion of the proceeds of sale ordered to be applied to the mortgage, and deducted from the debt. en. XXI.] VOID AND VOIDABLE MORTGAGES. — FRAUD. 571 CHAPTER XXI. VOID AND VOIDABLE MORTGAGES. FRAUD BETWEEN THE PAR- TIES AND IN RELATION TO CREDITORS. FRAUD ON THE PART OF A MORTGAGEE; EFFECT UPON SUBSEQUENT INCUMBRAN- CERS. I. Fraud between the parties. 5. Fraud as to creditors, &c. II. Fraudulent concealment or mis- representation of title by a mortgagee ; eft'ect upon subsequent incumbrances ; attestation by him of a subsequent deed ; delivery of title deeds to the mortgagor. &c. 34. Limitations and restrictions of the rule above stated. 44. Mortgage from client to attorney. 1. Fraud avoids mortgages, as well as other securities and transfers ; and, as in other cases, may exist between the par- ties, or only in reference to creditors.^ 2. A bill in equity lies to set aside a fraudulent mortgage, though the plaintiff is in possession, and might maintain it, against the mortgagee, at law.^ Upon this subject. Judge Story says : ^ — " It is objected, that the bill asserts, that the title of the defendant being fraudulent is ipso facto void ; and therefore his remedy is at law ; and he has no standing in a court of equity. But a court of equity has a clear concurrent jurisdiction with courts of law in cases of fraud. Besides > here the bill goes for a discovery, and other equitable relief, which cannot be obtained by a suit at law. The plaintiff is in possession, and cannot sue at law. His only remedy is in equity. He seeks to remove out of his way a title, fraudulent in its nature, which obstructs his own title ; and he seeks a declaration from the Court, that it is fraudulent, and that the fraudulent party shall execute a release." 1 In New Jersey, a mortgage made B. Monr. 72; Wooden v. Haviland, 18 after arrest of the mortgagor is void. Conn. 101. Rev. Stat. 324. See Cook i-. Colyer, 2 ^ Marston v. Brackett. 9 N. H. 337. 3 Briggs V. French, 1 Sumn. 505, 506. 572 THE LAW OF MORTGAGES. [CH. XXI. 3. In a bill for discovery, and to set aside a mortgage, which the plaintiff alleges was taken by the defendant with intent to defraud the plaintiff, the defendant cannot, by demurring, avoid answering, and disclosing when the mort- gage was made, or whether he claims to hold under it ; or disclosing, and if in his power producing, the mortgage note ; or stating when, where, in whose presence, and for what it was given, or from whom the consideration was received, and to whom paid.' 4. Fraud in procuring a mortgage is no defence to a bill for foreclosure, unless committed by the mortgagee or his agents, or with his knowledge at the time of taking the mortgage. The answer must distinctly state the facts which constitute the fraud, and charge the mortgagee with notice of it.2 4 a. It has already been somewhat considered, how far a mortgage may be impeached by creditors of the mortgagor for ivant of consideration ; (ch. 20). The following addi- tional principles and cases illustrate the same point. 4 b. Possession after the law-day raises no presumption of fraud.3 4 c. Where one conveys absolutely, to protect the prop- erty from his creditors, with a private agreement, reserving a title to himself; neither he nor his administrator can claim relief in equity.^ 5. Mortgage, to secure a note made without consideration, for the purpose of defrauding creditors, the mortgage being duly recorded. The mortgagee afterwards delivered up the note to be cancelled, and the mortgagor then conveyed to a bond fide purchaser. Subsequently, the mortgagee procured a new note, like the former one, and attempted to claim under the mortgage. Upon a bill in equity filed by the pur- chaser, held, he was entitled to a release of the mortgagee's pretended title ; that the case did not fall within the princi- 1 Burns v. ITobbs, 29 Maine, 273. ^ Steele t'. Adams, 21 Ala. 534. ^ Aikin v. Morris, 2 Barb.' Cli. 140. * Arnold v. Mattison, 3 Rich. Eq. 153. CH. XXI.] VOID AND VOIDABLE MORTGAGES. — FRAUD. 573 pie, that a bond fide purchaser without notice cannot main- tain a bill for relief, although he have a good equitable defence, the parties in this case not having equal equities ; nor within the principle, that a subsequent purchaser with notice is not entitled to dispute a prior conveyance.^ 6. An oral promise by a mortgagee to creditors of the mortgagor, to relinquish his claim to the land, if they wiU take from the mortgagor another mortgage, and extend the time of payment ; is presumptive evidence of fraud in the existing mortgage.^ 7. Upon a bill to redeem brought by a subsequent against a prior mortgagee, the latter- cannot defend, upon the ground that the second mortgage is fraudulent as against creditors, being neither a creditor himself, nor standing in such a rela- tion as to defend in behalf of any creditor ; but, as showing the intention of certain acts, and in connection with an alleged want of delivery of the deed, the evidence is admis- sible.3 But a first mortgagee may take advantage of a fraud against creditors in a subsequent mortgage.* So, a pur- chaser under a decree of sale, in a proceeding to foreclose the first mortgage, may impeach a subsequent mortgage, as fraudulent against creditors.^ 7 a. It is not a badge of fraud in a mortgage, that it was taken, after the creditor knew of the intention of the debtor to mortgage the same land to another creditor, to secure a preexisting debt.^ 8. Conveyance of land, fraudiilent as to creditors. The grantee mortgaged back to secure the notes given for the price ; the mortgagee assigned the notes and mortgage, and the mortgagor also transferred his right in the land. Held, the assignees of both parties succeeded to the rights of their assignors ; that the purchaser of the equity of redemption 1 Marston v. Brackett, 9 N. H. 337. * Shiveley v. Jones, 6 B. IVIon. 274. 2 Parker v. Barker, 2 Met. 423. ^ jhid. 3 Powers V. Russell, 13 Pick. 69. ^ Craig v. Tappin, 2 Sandf. Ch. 78. 574 THE LAW OF MORTGAGES. [CH. XXI. had a right to redeem, but could not as a creditor object to the title of the assignee of the mortgage.^ 8 a. Whether the consideration of a mortgage is bond fide ^ or merely colorable to defraud creditors, or so inadequate as to constitute a badge of fraud, is a question of faft which should be left to the jury, upon the whole evidence, without any restriction on the part of the Court, as to the necessity of proving all the items of indebtedness alleged,^ 8 b. In Massachusetts, (Stat. 1852, chap. 312, sec. 52,) one claiming a title to real property, and in possession thereof, may file a bill in equity, for the purpose of compelling an adverse claimant to bring an action and try his right. In a recent case it was held, that the holder of a mortgage, duly recorded, will not be ordered by the Court to bring an action for the purpose of trying his title, upon the petition of the assignee in insolvency of the mortgagor under the above stat- ute. The Court say : — "The petitioners, if they deny the validity of the mortgage altogether, as one fraudulent against creditors, can bring a writ of entry themselves to try the title ; and the defendants in their plea would be obliged to admit or deny the petitioners' title." ^ 8 c. A mortgage given by a fraudulent grantor to a cred- itor, to secure the payment of a judgment, is good against him, and all claiming under him.* Also against a creditor of the fraudulent grantor, who has had the assignment set aside,* but who acquired no lien on the property prior to the mortgage.'' 8 d. The declarations of a mortgagor, as to his intention in executing the mortgage, are not admissible to impeach the title of the mortgagee, by showing fraud, unless they were brought to his knowledge prior to the execution of the mortgage.*^ 8 e. Where a mortgage was made by a debtor to two of 1 Sprague r. Graham, 29 Maine, IGO. * Tox v. Clark, Walk. Ch. 535. 2 Williams v. Kolscy, G Geo. 305. ^ Ibid. 8 Dcwcy V. Bulklcy, Gray, 41G, 417. ^ y^^^^^. j,_ White, 12 111. 2G1. CH. XXI.] VOID AND VOIDABLE MORTGAGES. FRAUD. 575 his creditors, of property against which he knew an attach- ment was issued, but before it had been levied, and there were no other circumstances indicating fraud, the mortgage was held to be valid.' 8/. A debtor may give preference in a mortgage to one creditor over another, or designate the order in which the debts provided for shall be paid out of the mortgaged prop-. erty.2 8 g. Where a creditor took a mortgage, covering property beyond what was necessary to satisfy the sum due, leaving out nothing to satisfy a decree which was shortly expected to be rendered against the mortgagor ; held, fraudulent and void.^ 8 li. A son, being indebted to his mother, executed to her a mortgage of all his property, which was no more than ade- quate security, at her solicitation. Held, the understanding of the parties, that the mortgage would not be enforced, did not avoid it as to creditors.* 8 i. Where a surety takes from his principal a mortgage to indemnify him, and joins with the principal in a bond for the prosecution of a writ of error, on a several judgment against the mortgagor on the debt, for which the mortgagee is surety, the validity of the mortgage will not thereby be affected.^ 9. A mortgage to secure the debt of another is not jjer se fraudulent against creditors. Such mortgage is distinguish- able from a voluntary conveyance or deed of gift, without consideration. In this case, the grantor finally parts with his property, and it is alienated as well from his creditors as himself. In the other it is a pledge only, perhaps for a small amount, and the grantor's estate is not devested. Moreover, a conveyance is not in law fraudulent, without a fraudulent intent in both parties. In a voluntary, absolute deed, both of course know the want of consideration ; and 1 Kennaird v. Adams, 11 B.Mon. 102. ^ Thompson v. Drake, 3 B. Mon. 565. 2 Robinson v. Collier, 11 B. Mon. * Maples t;. Maples, Rice, Ch. 300. 332. 5 Stover v. Heirington, 7 Ala. 142. 576 THE LAW OF MORTGAGES. [CH. XXI. from this a fraudulent intent must necessarily be inferred, if the grantor is at the time indebted. But a mortgage to se- cure the debt of another is not voluntary} 10. In Connecticut, in the case of Palmer v. Mead,^ con- trary to the general doctrine above stated, it was held, that, upon a bill for foreclosure, the title of the mortgagee cannot be inquired into. Hence, where attaching creditors of the mortgagor, after production of the note and mortgage, set up as a defence to such bill that the mortgage was fraudu- lent and void against creditors ; it was held that such evi- dence was incompetent. The Court remarked, that if the title to land might be brought in question, the process was local ; whereas, by the established law, a bill for foreclosure need not be brought in the county where the land lies. In such bill it is sufficient to aver, that the defendant executed a deed on condition ; and of course any circumstances show- ing the instrument to be no deed, such as forgery, want of witnesses, duress, fraud, coverture, &c. may be shown in defence ; but not circumstances merely impairing its effect. (Two Justices dissented.) [a) 11. A mortgage will be avoided, as to third persons, by any misrepresentation or concealment, on the part of the mortgagee, with respect to his incumbrance, which induces them to purchase or make advances upon the land. This kind of fraud is chiefly cognizable in equity, though even courts of law will often take notice of it. In many cases, 1 Manlcn v. Babcock, 2 Met. 99, 104, 27 Conn. 149. 105; liearn, 1 Buck's liankr. C. 1G5. ' (a) Where a mortgage is made to the mortgagee as trustee, who brings a bill for foreclosure ; the mortgagor cannot set up as a defence the legal invalidity of the trust. The Court say: — " He (the defendant) and those clainiing under him can be in no danger of being made liable to pay the bond and mortgage or the purchase-money a second time, if they fshould now pay or suffer the property to be sold in payment and satisfaction of the lien upon it." Schenck v. EUingwood, 3 Edw. 175, 177. en. xxr.] VOID and voidable mortgages. — eraud. 577 equity and law have concurrent jurisdiction. The principle of equity is, that where one seeks, by misrepresentation or even improper concealment of facts, in the course of a trans- action, to mislead the judgment of another to his prejudice, the Court will generally interfere. Mere concealment or looking on has the same effect, as using express words of inducement. " Qui facet, consentire vicletur. Qui potest et debet vetare, jubet^ (6) But in general it must appear, that the acts would not have been done, and that the party must (Jj) If a person maintain silence, wBen in conscience be ought to speak, equity Tvill debar him from speaking when conscience requires him to be silent. Hall v. Fisher, 9 Barb. 17. The maxim is also applied, "it is a fraud to conceal a fraud." 1 Story's Eq. § 390. And it is no answer that the incumbrance was concealed from prudential motives, or a mistaken sense of duty to the party's employer. L'Amoreux v. Vandenburgh, 7 Paige, 321. If the mortgagee stands by at the sale by the mortgagor of a part of the land, and receives the consideration ; that part is discharged from the mortgage. McCormick v. Digby, 8 Blackf. 99. In the case of Mocatta v. Murgatroyd, (1 P. ^Vms. 393,) Lord Cowper decided, that a prior mortgage should be postponed to a subsequent one, merely on the proof that the prior mortgagee was a witness to the subsecjuent mortgage. This case was overruled by Lord Ilardwicke in the case of Welford v. Beezely, (1 Vez. sen. 6,) and by Lord Thurlow in Beckett v. Cordley, (1 Bro. C. C. 357,) so far as it charges a witness to a deed with knowledge of its contents merely from his attestation ; ace. Clabaugh v. Byerly, 7 Gill, 354. But in none of these cases was it doubted, that if a mortgagee has actual knowledge of the contents of a subsequent mortgage, and nevertheless stands by, and witnesses the execution of the second mort- gage, without disclosing his prior incumbrance, this would be such a fraud in him, as would authorize a court of equity to postpone such prior incum- brance, so as to let in the subsequent mortgage. See BrinkerhofT v. Lan- sing, 4 Johns. Ch. 65. But a first mortgagee's merely drafting a second mortgage will not postpone him, unless he denied and fraudulently concealed his title. Paine v. French, 4 Ilam. 318. Upon the principle stated in the text, a mortgagee, without notice of an outstanding equitable title, in one who encourages him to take the mortgage, or stands by and makes no objection, will be protected against it. Green V. Price, 1 Munf. 449. VOL. I. 49 578 THE LAW OF MORTGAGES. [CH. XXI. have conceived they would not have been done, except upon such encouragement ; ^ though, in some cases, even the igno- rance of the party misleading has been held to make no dif- ference. In a case of this kind, chancery will not only refuse its aid to enforce the mortgage, but, upon a bill by the party injured, to qniet his title, will decree a perpetual injunction against enforcing the mortgage, declare it void, or order a release or reconveyance.^ 12. In a late case,^ Woodbury, J., says : — "If parties claiming an interest in land look on and see it conveyed, or take part in the transaction without complaint or objection, they are usually estopped in equity from afterwards setting up a title against the grantees and those holding under them. This rule rests rather on the tendency of such conduct to mislead, than on any deceit actually intended or actually practised in each case." 13. In the case of Barnard v. Pope,^ Parker, C. J., says, referring to certain declarations, made by a claimant of land, inconsistent with his title : " It not appearing when and where these declarations were made, or to whom, we can- not presume they were made under such circumstances as would prove fraud on the part of the petitioner; like the cases where a first mortgagee or lessee has been postponed in favor of a second, in chancery. If it appeared, that when William Barnard conveyed to Peck, the petitioner stood by, knowing that his brother was about conveying a moiety, and had declared that he had conveyed his share to him, the case would be analogous to those alluded to ; and would deserve serious inquiry, whether so manifest a fraud must prevail in a court of law. But the declarations offered to be proved might have been made long after the conveyance to Peck, and even to the respondent, so as not to have influenced 1 Ibbotson V. Rhodes, 2 Vcrn. 554; ^ Shepley v. Rangelcy, 1 Woodb. & Cootc, 485 ; Otis v. Sill, 8 Barb. 102. M. 217. '^ 1 Ilill. Real Prop. 452. See Law- * 14 Mass. 437. rcnce r. Delano, 3 Sandf. 333 ; Grace V. Mercer, 10 B. Mon. 157. CH. XXI.] VOID AXD VOIDABLE MORTGAGES. — FRAUD. 579 the purchase; and, in that case, verbal declarations could not operate to defeat a title." 14. Lord Denman remarks upon this subject as follows : " The rule of law is clear that, where one by his words or conduct wilfully causes another to believe the existence of a certain state of things, and induces him to act on that belief, so as to alter his own previous position, the former is con- cluded from averring against the latter a different state of things as existing at the same time." ^ In a subsequent case,2 his Lordship says, " The principle of that case (Pick- ard V. Sears,) may be -stated even more broadly than it is there laid down. A party, who negligently or culpably stands by and allows another to contract on the faith and understanding of a fact which he can contradict, cannot afterwards dispute that fact in an action against the person whom he has himself assisted in deceiving." 14 a. Thus w^here a mortgagee consents to the sale of the property, or permits it to be levied upon mthout asserting his claim, he is barred from claiming title to it as against the purchaser.-^ (See s. 34 a.) 14 b. So, as between the mortgagee, and the purchaser, of property acquired subsequently to the mortgage, but mentioned therein as being conveyed thereby, the former, by attending the sale upon execution, bidding, and^omitting to give the bidders notice of his claim, will be estopped from claiming a right to specific performance of the contract to give a mortgage.* 14 c. A. executed mortgage deeds of the same land, on the same day, to B. and C. ; and C. afterwards assigned his interest to D. E., having attached the premises as the prop- erty of C, and recovered judgment against him, sent an agent to D., who had knowledge of such judgment, to inquire whether there was any priority in the deed under which he claimed ; to which D. replied, " There was not ; " that " both 1 Pickiird V. Sears, 6 Ad. & Ell. 474. 3 Grace v. Mercer, 10 B. Mon. 157. - Gregg V. Wells, 10 Ad. & Ell. 97, * Otis v. Sill, 8 Barb. 102. 98. 580 THE LAW OF MORTGAGES. [CH. XXI. deeds were delivered at the same time ; " and that " B. had given a writing to that effect." E., thereupon, took a mort- gage of the premises from C. to secure his debt ; C. being, at this time, insolvent. D.'s representation, however, was not true ; the deed to B. having been, in fact, delivered first. On a bill of foreclosure, brought by D. against E. it was held, that the plaintiff was precluded, by these facts, from claiming a priority of title.^ 14 d. One having a mortgage upon the property of his son, encouraged a third person to purchase the property, promising to abide by any agreemeat which the son might make concerning the mortgage. The son delivered the mortgage to the purchaser, but it was redelivered to the father for the purpose of having it discharged. Held, the mortgage could not be enforced.^ 14 e. If the mortgagee permit the mortgagor to sell, under a promise of payment from another fund ; the purchaser's title does not depend upon the fulfilment of such promise.^ 14/. Such consent may be implied from his failure to disclose his title, when informed of the proposed sale ; long delay in claiming under the mortgage, until the death of the mortgagor ; and permitting the sale of other property included in the mortgage.* 15. The following case in New Hampshire, though relat- ing directly to the effect of this kind of fraud upon an attach' ment, involves also the rights of mortgagor and mortgagee, and is valuable for the general principles and the careful dis- tinctions suggested by the Court. 16. The defendant, having notice that a part of the real estate of his debtor was mortgaged, apparently for its full value ; and being informed by the plaintiff, another creditor, that he proposed to procure an arrangement by which such mortgage should be removed and another mortgage made to him, advised the plaintiff to complete the arrangement, as 1 Broome v. Beers, 6 Conn. 198. ^^ Tavlor v. Cole, 4 Munf. 351. ^ Curtiss V. Tripp, 1 Clark, 318. * Ibiil. en. XXI.] VOID AXD VOIDABLE MORTGAGES. — FRAUD. 581 it would be good security for his debt. The agreement hav- ing been made, and the first mortgage discharged, before a new one was executed, the defendant laid an attachment upon the land. The plaintiff brings a bill in equity, praying that the defendant be enjoined from claiming under liis attachment contrary to the plaintiff's title under the mort- gage. Held, he was entitled to such decree.^ In giving the opinion of the Court, Parker, C. J., says : ^ — " We are not required to give an opinion upon the question, whether a creditor can by means of an attachment avail himself of the benefit of a mere change of mortgages, in a case where he had no knowledge that such change was intended, but de- signed merely to avail himself of his right to attach the equity in (of) redemption. If in such case the change was to his prejudice, the mortgage substituted being of greater amount than that previously existing, he might well con- tend that his rights could not thus be affected by transac- tions to which he was no party, and of which he had no notice. Even if the new mortgage upon the land was of less amount than that previously existing ; still, if he had no knowledge respecting the intention to make an exchange, and attached in good faith, he might perhaps well claim the benefit of the accidental advantage he had derived, and hold the land whoUy discharged from incumbrance, because the prior mortgage was removed, and the new one executed subsequent to his attachment. We do not undertake to say that such would be the result. Nor is the case presented one where the attachhig creditor has mere knowledge that a change of security is intended, and attaches with an inten- tion of availing himself of the change, by interposing his attachment before the new mortgage, in case the parties to the contemplated change shall perfect it, without the caution of examining the records to ascertain whether any creditor has attached. That would be a much stronger case than 1 Buswell V. Davis, 10 N. II. 413. 21^.424,405,428. See Beall v. Barclay, 10 B. Mon. 261. 49* 582 THE LAW OF MORTGAGES. [CH. XXI. the other ; but whether the creditor might not in such case legally avail himself of the want of caution, asserting his right to attach, and take the chance of the removal of the existing incumbrance, so long as he in no way participated in advising to the change itself, is a question we may pass by at this time. The evidence carries the present case still fm-ther. Without going into the question, whether the testimony does not prove that the defendant advised to the arrangement with the very purpose of interposing an attach- ment, after the mortgage to Damon & Stickney was removed, and before that to the plaintiff was executed, it is sufficient that being consulted respecting the arrangement, he advised the plaintiff to effect it. If he desired to have any provision made in that arrangement for himself, he should have so stated explicitly. He cannot be permitted, after giving such advice, to avail himself of the exchange of the mortgages, and thereby obtain a security against the plaintiff, which he could not have had against Damon & Stickney. An attach- ment, with the purpose of obtaining a security prior to that of the plaintiff under these circumstances, would not be a fair exercise of superior diligence, but would operate as a direct fraud upon the plaintiff." (c) (c) In Massachusetts, the same question arose upon an alleged fraudulent attachment. The plaintifiF, proposing to purchase land which was subject to a mortgage to the defendant, paid to the mortgagee the value of his interest in the land, and the mortgagee reconveyed to the mortgagor, to enable him to pass the entire title, four days afterwards, but immediately, and before execution of the deed, attached the land in a suit against the mortgagor, and subsequently levied an execution upon it. In an action of trespass for such levy, held, the attachment was fraudulent and void, and the plaintiff entitled to judgment, but, no actual damage to the land being proved, that he could recover only nominal damages. Spear v. Hubbard, 4 Pick. 143. In June, 1782, the demanded premises were mortgaged for their full value to McFarland by Frceland. In January, 1792, the plaintiff attached the property in a suit against the mortgagor, subsequently recovered judg- ment, and extended an execution upon the estate. Four days after the attachment, the plaintiff was present and assisting at a negotiation between en. XXI.] VOID AXD VOIDABLE MORTGAGES. — FRAUD. 583 17. One co-tenant, owing one eighth of the land, and hold- ing a mortgage on the other seven eighths, joined the other in a conveyance of the whole, the terms being as follows : — " Do hereby give, &c., that is to say, the said, &c. does hereby give, &c. seven eighth parts, and the said, &c. one eighth part of the following piece, &c. And we do covenant, &c. that we are lawfully seized, &c. ; that they are free of incumbrances, and that we have good right to sell, &c. in the aforesaid proportions." The mortgagee did not disclose his mortgage to the purchaser. Held, an action could not be maintained upon the mortgage.^ Shepley, J., says : — " Admitting the covenants to be several and not joint, the effect of this trans- action is, that the demandant knowingly becomes a party to the most solemn assurance made by his mortgagor under his hand and seal, that the seven eighths ' are free of all incum- brances,' and that ' he has good right to sell and convey the same.' And he does this, while he held a mortgage cover ing the premises, on which was due more than double the 1 Durham v. Alden, 2 Appl. 228. the mortgagee and mortgagor and one Goddard. The mortgage was can- celled, upon Goddard's paying part of the debt, and the mortgagor's giving a new mortgage of other lands, which were also attached by the plaintiiF for the balance due him. The mortgagor then conveyed the demanded prem- ises with other lands, in fee, to Goddard, under whom the defendant claims, The plaintiff was present, assisted in casting the sums due, and did not dis- close his attachment ; but he afterwards, before judgment, informed the mortgagee of it, and expressed his intention to levy his execution upon the lands last mortgaged, but, on the mortgagee's threatening to oppose him, and make known his privity to the transactions, he consented that the mort- gagee should have the benefit of such mortgage. Judgment was rendered for the defendant upon a ground independent of the facts above stated. la regard to this part of the case. Parsons, C. J., remarks: — "Were we sit- ting as a Court of Chancery, with all the equitable powers of that Court, we ought to set aside the plaintiff's attachment on account of his fraudulent concealment of it. But as the justice of this case can be attained by the determination of the first question, it is not necessary to decide this point when sitting as a Court of Law." Foster r.Briggs, 3 Mass. 313. 584 THE LAW OP MORTGAGES. [CH. XXI. amount of the purchase-money, without causing any excep- tion of his own title to be introduced. He is as much bound by the declarations of his mortgagor as if they were his owji. It would be a fraud upon the purchaser to permit him now to disturb that title. It would be no legal excuse, if done through ignorance or inattention, for it is more just that he should be the loser under such circumstances than that the innocent and faultless purchaser should." 18. In Berrysford v. Millward,i Lord Hardwicke granted a perpetual injunction against a mortgagee, who was casually present at a negotiation between the mortgagor and another, as to a marriage settlement on the marriage of their children, and concealed his mortgage from the father of the intended bride, but made a verbal promise to the mortgagor to rely upon his personal security only. And the Chancellor there refers to another case, where a perpetual injunction was granted against a mortgagee, who had engrossed a deed of settlement, without disclosing that he had a mortgage on the estate ; and that too although the mortgagee was not of age at the time he engrossed the deed. 18 a. A mortgagee requested the holder of a note of the mortgagor, in which the mortgagee was surety, to obtain judgment on the note, and levy on and sell the mortgaged premises ; he was also present at the sale, and asked one person to bid, and did not object to the sale. Held, he was estopped to assert his title under the mortgage.^ 19. An attorney, holding a mortgage upon land, was em- ployed by the mortgagor to draw the deed and assist in the conveyance of a portion of the premises to an ignorant pur- chaser, and, although knowing that the purchaser was pay- ing the full value of the property, concealed the fact of the mortgage. Held, neither the attorney, nor his assignee, could enforce the mortgage against this portion of the land.3 1 1 Barn. CIi. 101. ^ L'Amourcux v. Vandcnburgh, 2 Moriurd v. Bliss, 12 B. Mon. 255. Taigc, 31 G. CH. XXI.] VOID AND VOIDABLE MORTGAGES. — FRAUD. 585 20. A mortgagee was told, that a person was drawing, or about to draw another mortgage on the same property, and on another occasion he stated to a party interested that he had examined the clerk's office, &c., and that he had fre- quent transactions with the mortgagor, whose embarrass- ments were notorious. Held, these facts were sufficient to affect him with notice, or at least to avoid any right of tack- ing subsequent advances to the mortgage debt.^ 21. A mortgagee promised by a writing not under seal to extend the time of payment ; and a third person in conse- quence bought the estate from the mortgagor. Held, the mortgagee was bound by his promise, and could not main- tain scire facias upon the mortgage, until the time of such extension had expired.^ Huston, J., says : ^ — " Whether such a paper given to the debtor would have been binding, is not the question, though if a mortgagee gives a writing to his mortgagor that he will accept a debt presently due, if paid in instalments at specified times, and receives one or more of them as they fall due, it may in some instances be a great fraud to afterwards proceed before the other instal- ments fall due ; and I am not prepared to say that it would under all circumstances be void ; but that is not this case. It is not fair nor honest to make a promise which induces a man, a stranger to the party, to pay his goods and give his labor to exchange his own property for an incumbered prop- erty, on a promise not to press the incumbrance, and then say, I make nothing by the indulgence which I promised you, and I will not meet my promise. True the mortgage was a deed under seal, and this not under seal, but it was, though informal, enough to induce John to exchange for that land and pay one third of a debt which he was not liable for, and never would have been, except for that paper. And in equity it was as binding as if more formahy drawn, and under seal and witnessed." 1 Averill v. Guthrie, 8 Dana, 82. 3 ji,. 355, 356. 2 Hoffman v. Lee, 3 Watts, 352. 586 THE LAW OF MORTGAGES. [CH. XXI. 22. Devise of lands to children of the testator, with a pro- vision that the part devised to one of them should be subject to the maintenance of his widow for life. The widow, claim- ing a beneficial interest in the lands devised, under a mort- gage made to the testator and herself, deceptively acquiesced in the provisions of the will for several years, and thereby gave reason for confidence on the part of bond fide purchasers from the children that such provisions were to be final and not disturbed. Held, although such purchasers are not proved, in fact, to have acted on this confidence, she is estopped to impeach their title.' 23. In Hatch v. Kimball,^ the demandant gave in evidence a quitclaim deed from the tenant to Daniel Kimball, dated December 23, 1818 ; the levy of two executions on the 8th of November, 1827 ; a conveyance from the execution credi- tors to the demandant ; a deed from Daniel to Leggett and Hance, dated November 27, 1828 ; and a deed from them to the demandant, dated April 25, 1832. The tenant then offered a bond from Daniel to him, dated December 23, 1818, conditioned to reconvey the property ; a mortgage from the tenant to one Peabody, dated May 17, 1811, to secure a cer- tain sum ; an assignment of it by Peabody to Wheelwright and Clark, April 24, 1812 ; an assignment from them to one Buck, of June 2, 1827 ; and a deed from Buck, reciting a judgment on the mortgage and possession taken under it in 1824, to the tenant, dated June 2, 1827. The levies were duly recorded, as also all the deeds, all of which covered the demanded premises. The bond to reconvey was not recorded. The tenant had been in possession thirty years, built a house on the land, and made expensive repairs both before and after Buck's deed to him. Upon these facts, the defendant having been defaulted, the default was taken off, and a new trial ordered. Upon the new trial, a verdict was rendered, for the demandant. It appeared, that after the tenant had paid off the mortgage, and taken a release of the 1 Ackla V. Ackla, C Barr, 228. - 2 Slicpl. 9. en. XXI.] VOID AND VOIDABLE MORTGAGES. — FRAUD. 587 premises, having conveyed to Daniel and being still in pos- session, he knowingly suffered two executions to be levied on the premises as Daniel's without claiming title ; that he pointed out the bounds at the time of the levy, and agreed to become a tenant and pay rent. He continued the tenancy till 1829, and rendered an account of repairs made by him to the plaintiff, who subsequently himself made repairs and put in another tenant. No claim was made under the mortsase, till after the plaintiff had purchased the title. Held, the mortgage, under these circumstances, was extinguished ; that it could be kept alive only by the equitable principle of being most for the mortgagee's interest, which was rebutted by a stronger equity on the part of the demandant, and could not be applied where it would promote a fraudulent pur- pose.i 24. The question has arisen, whether registration of the prior mortgage constitutes such notice thereof, as to prevent a subsequent incumbrancer from availing himself of any con- cealment or misrepresentation, in order to give priority to his own title. 25. K" a mortgagee represents to a creditor of the mort- gagor, who has attached his goods, that the mortgage debt is paid or satisfied and nothing due thereon, and the creditor, by reason of such statement, relinquishes the attachment, and takes a mortgage of the land to secure his debt ; the second mortgage, as between the two mortgagees, takes precedence of the first, though the first was on record at the time of such representation. The Court remark : — " Nor is it any objec- tion, that the title of Piatt was by a recorded deed. It is true, that title by mortgage-deed cannot be released by parol. But although the legal title might exist, as a paper title, the party may not be able to enforce it or render it effectual. This species of defence, when offered to control written con- veyances or title deeds, is no more obnoxious to the objec- tion of permitting oral evidence to control written, than exists 1 Ilatch V. Kimball, 4 Sbepl. 146. 588 THE LAW OF MORTGAGES. [CH. XXI. in the ordinary cases of setting aside conveyances for fraud upon oral proof." ^ (d) 26. The incumbrance itself may be valid against the pur- chaser of the estate, in consequence of being recorded ; while at the same time equity will afford relief against the party concealing such incumbrance. Thus, in the case of Napier V. Elam,^ Catron, C. J., says: — "The mortgage of Eastin being registered, Elam had notice thereof by construction of law. Having notice, he purchased subject to the incum- brance, and it was his duty to pay the debt of Eastin, having, in presumption of law, bought the property for so much less. Truly, Elam was bound by the previous mortgage made by Eastin, because the legal title was in Crutcher, the trustee. Constructive notice is one thing, actual knowledge another. As to the trustee, Crutcher, Elam was bound to take notice of his title, because it was legal, and because it was regis- tered, yet Erwin might conceal the fact from Elam, and sell him property representing he had the unencumbered fee, when in fact it was mortgaged for more than it was worth." 27. It is held in New Hampshire, that a mortgagee, who has knowledge of a subsequent purchase, and has stood by and seen the purchaser making repairs and improvements, without speaking of the mortgage or making objections ; may still set up the mortgage, if it was at the time on record, 1 Piatt V. Squire, 12 Met. 494. But 2 q Yerg. IIG. see Clabaugli v. Byerly, 7 Gill, 354. Ql) In the above case, the suit was a bill in equity to redeem, brought by a second mortgagee against a first mortgagee, who also claimed under a third mortgage, which was made under the misrepresentation above referred to as to the second mortgage. The defendant set up an absolute tide by entry and continued possession for the purpose of foreclosure, under the third mortgage ; a tender having been made by the plaintiff only of the amount due on the first mortgage. Upon other grounds, the plaintiff was allowed to redeem a portion of the mortgaged estate, but as to the rest, the title under a foreclosure of the third mortgage appears to have been sus- tained. CH. XXI.] VOID AND VOIDABLE MORTGAGES. — FRAUD. 589 and if it does not appear that he knew the purchaser was ignorant of the mortgage, and that he was guilty of a fraud- ulent concealment.^ 28. The Court in Vermont say : — " The incumbrance offered to be shown was a preexisting mortgage, which must have been upon record, or it could not affect the defendant, unless he had notice at the time of the conveyance, in which case he could not now complain. If the deed were upon record, it would be constructive notice to defendant as well as plaintiff, and it does not appear either of them had notice in fact. And if the plaintiff had notice in fact of the incum- brance, which was upon record, and used no means to pre- vent the knowledge coming to the defendant, he would be guilty of no legal fraud in selling and deeding to defendant, without notifying him of the incumbrance." ^ 29. In the late case of West v. Jones,^ one of two trustees paid over only a portion of the money, in consideration of which a mortgage was made to them ; but the facts show- ing, that the other trustee had been misled into an advance of the money to his associate, in part by the conduct and declarations of the mortgagor, and the trustee who received the money having died insolvent, the mortgage was held to bind the mortgagor for the full sum expressed therein. The Court say : * — " The plaintiff relies on a principle perfectly familiar, not only to courts of equity but to courts of law, namely, that where a party has by words or by conduct made a representation to another, leading him to believe in the existence of a particular fact or state of facts, and that other person has acted on the faith of such representation, then the party who made the representation shall not after- wards be heard to say that the facts were not as he repre- sented them to be. This doctrine is not confined to cases where the original representation was fraudulent. The doc- 1 Marston v. Brackett, 9 N. H. 337. 3 3 ^ng. Rep. 223. - Per Redfield, J., Richardson v. Bo- * Ibid. 227. right, 9 Verm. 372. VOL. I. 50 590 THE LAW OF MORTGAGES. [CH. XXI. trine not only of this court, but also of courts of law, goes much further. Even where a representation is made in the most entire good faith, if it be made in order to induce another to act upon it, or under circumstances in which the party making it may reasonably suppose it will be acted on, then primd facie, the party making the representation is bound by it, as between himself and those whom he has thus misled." 29 a. If a second mortgagee stand by and see the first in- duced by the mortgagor to release his mortgage and 'take an assignment of a subsequent security, supposing it to be the second ; the second mortgage will be postponed.' 29 b. The rule in question applies to a subsequent mort- gagee, where the title of the first mortgagee is originally defective, but is strengthened by a title acquired from a third person after the making of the second mortgage ; the second mortgagee having notice of the first mortgage. 29 c. A. conveyed to B., in mortgage, land, the title to which was in the United States. C. afterwards obtained a patent to the land, and conveyed it to A., who afterv\^ards mortgaged it to D., with notice of the prior mortgage to B. Held, that the conveyance by C. to A. enured to the benefit of B., and that D. took only as second mortgagee ; and the rule was the same, whether D. had actual notice of the mort- gage to B., or only constructive notice, by the registry of B.'s mortgage. 2 29 d. Where a note was made by five joint trustees, and a mortgage of the joint trust property given to secure it, pur- porting to convey the whole estate, but signed by only four of the trustees, although drawn in the name of all, and it ap- peared, from the circumstances, that the other trustee must have known of the transaction, and that he never made any objection to it ; held, the mortgage was binding upon him by an equitable estoppel, and the purchaser of the equity of re- 1 Stafioid V. Ballou, 17 Verm. 329. - Wavburton i'. Mattox, 1 Morris, 3C7. CH. XXI.] VOID AND VOIDABLE MORTGAGES. — FRAUD. 591 demptioii of the mortgagors at a sheriff's sale was also bound by iV 30. The general principle above referred to has been applied, in England, to the case of a mortgagee's allowing the mortgagor to retain the title-deeds, and thus create a wrong impression as to his title. (See eh. 23.) Thus, in Peter v. Russell it was held, that if a mortgagee of a lease- hold estate lends the original lease to the mortgagor, for the purpose of enabling him to take up more money, which is accordingly done, and a second mortgage made ; the latter mortgage shall have priority of the former.^ 31. In Farrow v. Rees,^ Lord Langdale, M. R. says : — " The first objection made to the mortgage is, that no title- deeds were handed over to the mortgagee. The omission is not of itseK sufficient to invalidate the mortgage ; though a mortgagee may omit to take the title-deeds under such cir- cumstances as to displace his priority in favor of a subse- quent mortgagee." 32. Agreement to sell an estate, a part of the price to be paid on execution of the deed, the balance secured by mort- gage. The sum agreed was paid, and the deed executed, but, with the title-deeds, retained by the seller. Without notice to the seller, the purchaser mortgaged to a third per- son, who did not investigate the title, or inquire as to the title-deeds, and afterwards to the seller as agreed. Held, the second mortgage should have priority of the first.^ The Court say : ° " The title to chattels is evidenced by possession ; but the title to land is evidenced by written instruments. Therefore it was the duty of Morgan, before he took his mortgage, to ask for the deeds ; and, if he had asked for them, he would have learnt that they were in possession of persons \^ho claimed a lien or charge upon the tenements, for unpaid purchase-money. And I think that he must be taken to have 1 State Bank i;. Campbell. 2 Rich. Eq. * Worthington r. Morgan, 16 Sim. 179. 547. 2 2Vern. 726. ^ib. 551. 34 Beav. 21. 592 THE LAW OF MORTGAGES. [CH. XXI. had notice of those circumstances, which, if he had not neglected his duty, would have come to his knowledge." 33. The rule above stated has been usually applied to a party falsely representing that an incumbrance was extin- guished, when it was really still subsisting. In the following case, the application was reversed. One interested in an estate, which was charged with an annuity, was asked by a third person, who was about to loan money to the annuitant, whether the charge was still subsisting, and replied in the affirmative, when in fact it had been satisfied. Held, the loan was still a charge upon the land against the party's heirs.^ 34. There is a class of cases, in which the general doctrine of equity above considered has been somewhat restricted, or construed more favorably to the rights of a prior mortgagee. In the case of Whitbread v. Jordan,^ Alderson, B., says, " When a party having knowledge of such facts as would lead any honest man, using ordinary caution, to make further inquiries, does not make, but, on the contrary, studiously avoids making; such obvious inquiries, he must be taken to have notice of those facts which, if he had used such ordinary diligence, he would readily have ascertained." 34 a. So, where a mortgagee had notice of a previous lien upon the land before he took the mortgage, he cannot escape from its effect by having forgotten it at the time he took the mortgage.^ So, a mortgagee, whose mortgage is on record, upon being present at a sale of the equity of redemption, on execution, is not called upon to give notice of his mortgage to the purchasers.^ (See § 14 a.) So, a denial by a mortgagee that he has a mortgage will not postpone his lien, unless he knows at the time, that he is inquired of with a view to a loan of money on the credit of the same estate.^ So, where money is loaned to the mortgagor, on the faith of the declarations of the mortgagee, denying that he has a mortgage, M Story on Eq. 210; Pearson v. ^ Unnt „_ Qiark, 6 Dana, 56. Morgan, 2 Bro. 388. * James v. Morey, 2 Cow. 246. M Y. & Coll. 328. 6 Cliester v. Greer, 5 Humph. 26. CH. XXI.] VOID AND VOIDABLE MORTGAGES. — FRAUD. 593 but no security is taken on the property itself, the mortgage cannot be avoided for fraud in making the false declarations.^ 35. So, it is said, where one v^ho is " about to lend money on real estate, applies to one who holds a prior mortgage, to ascertain whether he has any incumbrance on it ; there is no doubt, in such a case, that if the person making the applica- tion discloses that he is about lending money on the estate, he will be preferred to the first mortgagee, should the latter deny his having a mortgage, or assert that it is satisfied ; and it seems agreeable to the dictates of reason and good con- science, that his claim should be postponed to that of a person whose confidence was inspired by the misrepresentation of one who was acting for himself, and every way competent to inform him of the truth. But in all the cases which have been decided on this principle, the fraud, for such it is sup- posed to be, has been practised by a party who has himself an interest in the subject-matter of inquiry, who cannot well be mistaken, and whose conduct therefore ought to be con- clusive on him, when the rights of third persons come in question." ^ 35 a. So, it has been held in Maryland, that mere silence ^vill not estop the prior mortgagee. There must be actual fraud, such as false representations, assurances of good title, or deceptive silence when information is asked. And the bur- den of proving such fraud lies on the subsequent mortgagee.^ 36. In another case, the principle in question was held not to apply, because the mortgagee " did not any thing against good conscience, whereby to forfeit his mortgage, he having neither actually encouraged the plaintiff to lend the money, nor passively, as standing by and concealing the mortgage, knowing that the plaintifi" was about to lend money on the ' premises." * 36 a. So, a subsequent mortgagee cannot avail himself of this objection to the prior mortgage, if he knew of its exist- 1 Chester v. Greer, 5 Humph. 26. ^ Clabaagh v. Byerly, 7 Gill, 354. " Per Livingston, J., Lee i". Munroe, * Peter v. Rassell, 2'Vern. 727. 7 Crunch, 368. 50* 594 THE LAW OF MORTGAGES. [CH. XXI. ence when his own was given, but has delayed to object on this ground. As where he thus delayed for nearly eighteen months.^ 37. In the case of Jones v. Smith,^ Wigram, V. C, goes into an extended notice of the decisions upon this subject, the result of which he states as follows : — "It is indeed scarcely possible to declare a priori what shall be deemed constructive notice, because, unquestionably, that which would not affect one man may be abundantly sufficient to affect another. But I believe I may, with sufficient accuracy for my present, purpose, and without danger, assert that the cases in which constructive notice has been established, re- solve themselves into two classes. First, cases in which the party charged has had actual notice that the property in dis- pute was in fact charged, incumbered, or in some way affected, and the Court has thereupon bound him with constructive notice of facts and instruments, to a knowledge of which he woul(J have been led by an inquiry after the charge, incum- brance, or other circumstance affecting the property of which he had actual notice ; and secondly, cases in which the Court has been satisfied from the evidence before it, that the party charged had designedly abstained from inquiry for the very purpose of avoiding notice." 38. Before advancing money on a mortgage, the mortgagee inquired of the mortgagor and his wife, whether any settle- ment had been made upon their marriage, and was informed that a settlement had been made of the wife's fortune only, and that it did not include the husband's estate which was proposed as the security, and he afterwards advanced the mortgage-money without seeing the settlement or knowing its contents. Held, the mortgagee was not affected with con- structive notice of the contents of such settlement.^ 39. If a mortgagee consents to the sale of the mortgaged premises under an administration stilt, he may still claim 1 Clabaugli V. Byerly, 7 Gill, 354. ^ Jones i'. Smith, 1 Hare, 43. " 1 llure, 55. CH. XXI.] VOID AND VOIDABLE MORTGAGES. — FRAUD. 595 priority in the distribution of the proceeds.' Wigram, Vice- Chancellor, says,2 " that a mortgagee is entitled to his prin- cipal, interest and costs, as against the mortgagor and puisne incumbrancers claiming under the mortgagor, cannot, as a general proposition, be disputed. But it was said that in this case the mortgagee, consenting to a sale, had thereby, to the extent at least of the costs of the sale, lost his priority, and that the expenses of the sale should, at all events, come out of the proceeds of the sale in the first instance. I am not of that opinion. The mortgagee consented that the estate should be sold free from incumbrances. How can such a consent have the effect of subjecting the security of the mort- gagee to the costs of the sale. The consent of the mortgagee, that the mode of administering the equity of redemption shall be by a sale of the estate, free from incumbrances, is no waiver of his priority ; although, where the sale is peculiarly for his benefit, it may possibly be otherwise." 39 a. So, although, where a mortgagee directed and sanc- tioned a sale of the property, without reference to the mort- gage or the equity of redemption ; received the proceeds ; and did not object to or quash the sale ; his conduct implies an admission of title in the mortgagor, and an abandonment of any title in himself inconsistent therewith, and bars him firom setting up the mortgage in equity against the purchaser ; yet it is not so, where the lien is acquired by attachment in chancery? 40. If a conveyance is made, with a covenant against all claims by the grantor or any one under him, and the grantee gives back a bond, to reconvey the premises to the grantor on demand, and the grantor afterwards becomes assignee of a mortgage previously made by him to a third person ; he is not estopped from setting up his title under the mortgage against the grantee or those claiming under him.^ The Court say,^ " Taking both instruments together, Daniel (the 1 Hepworth v. Heslop, 3 Hare, 485. * Hatch v. Kimball, 2 Shepl. 9. " ^ PP- 486, 487. 5 lb. p. 13. a Beall I'. Barclay, 10 B. Mon. 261. 596 THE LAW OF MORTGAGES. [CH. XXI. grantee) was to take no beneficial interest. He could not avail himself of the covenant in the deed to him. He could neither enforce its performance, nor recover damages if it was not performed. It was completely neutralized and defeated by the condition in the bond. Stephen (the grantor) then is not estopped to claim the land ; and he was at liberty to acquire for his own use any collateral title or assurance." 41. Where a conveyance of lands is made by a person not the proprietor, but assuming to be his agent, such pro- prietor does not ratify, or estop himself to deny, the sale, by taking notes and a mortgage back, the mortgage not refer- ring specifically to the deed, or containing any thing incon- sistent with the agent's want of authority,^ 42. Though the prior incumbrancer inaccurately states a particular sum as the amount of his charge ; yet if such sum is also stated to be subject to an indefinite increase, so that the subsequent incumbrancer could not have relied upon having any specific amount of security ; he will be held to have had notice of the prior incumbrance.^ 43. The doctrine of estoppel has been held not applicable to a feme-covert, who merely stands by, without objection, at a sale made by her husband.^ (e) 1 Spofford V. Hobbs, 29 Maine, 148. ^ Rangeley i'. Spring, 8 Shepl. 130. ^ Gibson v. Ingo, G Hare, 112. (e) The qualification of the principle of estoppel has been applied in favor of one claiming adversely to a mortgagee. Thus, a mortgagee from an in- solvent of copyholds, without notice of the insolvency, cannot claim priority in equity to the assignees, on the ground, that by neglecting to take posses- sion of the premises, or sell them, permitting the insolvent to retain posses- sion, and omitting to make their entry on the Court rolls, as required by the insolvency acts, they have enabled the insolvent to commit a fraud ujion the mortgagee, though nineteen years have elapsed since the insolvency. Cole V. Coles, G Hare, 517. It is provided by statute in Georgia and South Carolina, that a mortjca^or who mortgages anew without disclosing in writing to the second mortgagee the existence of the first mortgage, shall not ^ al- CH. XXI.] VOID AND VOIDABLE MORTGAGES. FRAUD. 597 44. Owing to the confidential relation between an attorney and his client, it has been held in some cases, that a mortgage from the latter to the former is invalid, upon the presumption of a want of consideration, or an unfair bargain. Thus, it has been decided, that, where a party to a partition suit, pending the same, mortgages his interest to his solicitor, such mortgage is not even prima facie evidence of the debt for which it purports to be given.^ 45. The assignee of such mortgage, though for valuable consideration, and without notice of any equities between the mortgagor and mortgagee, will take it subject thereto.^ 46. But a mortgage from client to attorney for a just debt, will not be set aside in equity.^ (/) lEllisy.Messervie, 11 Paige, 467. ^ pheslyn v. Dalby, 2 Y. & Coll. 2 Ibid. (Exch.) 170. lowed to redeem the second mortgage. But the second mortgagee, (whose deed is on record, in Georgia,) may redeem the first mortgage. In South Carolina, if a person suffer a judgment or enter into a statute or recogni- zance binding his land, and afterwards mortgage it, without giving notice in writing of the prior incumbrance, unless within six months from a written demand he clear off such incumbrance, he shall not be allowed to redeem. Prince, 161 ; 1 Brev. 166, 167, 168. These statutes appear to be substan- tially reenactments of an act of parliament. Mr. Greenleaf says, (2 Greenl. Cruise, 126, n.) there are provisions similar to this (the concealment of a prior incumbrance by the mortgagor, St. 4 Wm. & Mary, ch. 16,) in South Carolina, Georgia, Tennessee, and North Carolina. But they are all origi- nally of colonial enactment, probably either in the absence of any registration laws, or under the idea that registration was not notice to all the world. In the other States, the subject is left to be dealt with upon general law. (f) In connection with the general subject of void, etc. mortgages, it may be stated, that reference has been made in a former chapter (see ch. 1, § 20,) to the mortgages of infants, which, like most of their legal acts, are held to be voidable, not void, and therefore susceptible of confirmation upon their com- ing of age. Thus, Avhere an infant leases, and on coming of age mortgages to the lessee, referring in the mortgage to the lease ; this is a confirmation of such lease. Story v. Johnson, 2 Y. & Coll. (Exch.) 586. In Robbins v. Eaton, (10 N. H. 561,) one Harvey conveyed to the de- fendant, taking back a mortgage for the price. The notes and mortgage 598 THE LAW OF MORTGAGES. [CH. XXI. -were assigned to the demandant, who brings a writ of entry for the premises. It appeared that the defendant was an infant at the time of making the mortn-age, but after coming of age he occupied the premises, and offered to sell them. Held, if the purchase and mortgage back were one and the same transaction, the defendant's conduct after coming of age was an affirmance of the mortgage ; otherwise, if the defendant purchased and paid for the land, so that the contract was complete and ended, and by a subsequent transaction mortgaged it. In the latter case, his remaining in possession and holding out against the mortgagee, instead of being an affirmance of the morfTan-e, would be an express denial of Its validity, and a resistance of the attempt to enforce a claim under it ; Avhile, at the same time, such possession and claim of the land, after arriving of age, would be an affirmance of the original contract of purchase. CH. XXII.] EQUITABLE MORTGAGE, ETC. 599 CHAPTER XXII. EQUITABLE MORTGAGE. — DEPOSIT OF TITLE-DEEDS. 1. Equitable liens. I 11. Decisions, establishing the doc- 3. Deposit of deeds; constitutes a j trine. mortgage. I 31. American doctrine. 4. Establishment of the doctrine ; case I 32. Effect upon the title of a mort- of Riissel V. Russel. gagee, of leaving the deeds in the hands 6. Qualifications and criticisms of the ] of the mortgagor, and a deposit bv rule; remarks of judges and elementary, him. writers. 1 1. In addition to the actual, conditional conveyance of land, which constitutes a legal mortgage ; Courts of Equity have recognized certain other liens, arising from the implied agreement of parties, or the justice of the case ; but not de- pending upon any express transfer of title. These are usually termed equitable mortgages. 2. Of one of these liens, Chancellor Kent gives the follow- ing account.^ 3. It is a doctrine of the Court of Chancery, that a deposit of the title-deeds of an estate with a creditor of the owner, constitutes a mortgage of the land, as against such owner or any purchaser from him, having actual or implied notice ; and that such mortgage may be enforced by a bill and decree for sale or foreclosure. The rule is said to have originated in 1783, and has always met with strong opposition from eminent judges ; but appears to be now well established in the English law. It is however strictly construed, and not extended by any implication. Thus it is held, that all the deeds must be actually and bond fide deposited with the 1 See ch. 2t), § 30. 600 THE LAW OF MOETGAGES. [CH. XXII. mortgagee himself. And a parol agreement to deposit or to mortgage will not be enforced.^ (a) 4. The following case is said to be the earliest one, in which the doctrine was definitely settled ; and, as will be seen, though held a binding authority in subsequent cases, the principle of it has been often very seriously questioned. 5. In Russel v. Russel,^ (&) a lease was pledged by one who afterwards became bankrupt to the plaintiff, as security for a loan and other indebtedness. The pledgee brings a bill for a sale, claiming a lien on the estate, which was resisted by the assignee, on the ground, that it would be charging the land without writing, contrary to the statute of frauds. Lord Loughborough : — " In this case, it is a delivery of the title to the plaintiff for a valuable consideration. The Court has nothing to do but to supply the legal formalities. In all these cases the contract is not to be performed, but is executed." Ashhurst, Lord Commissioner : — " Where the contract is for a sale, and is admitted so to be, it is an equivocal act to be explained, whether the party was admit- ted as tenant or as purchaser. So here it is open to explan- ation, upon what terms the lease was delivered." An issue was directed to try whether the lease was deposited as a 1 4 Kent, 149, 150. ^ I Bro. 238. (a) The principle, that equity will consider that as clone which ought to be done, does not apply, unless the Court in which relief is sought has juris- diction of the case, and authority to order that the act be done. Thus a mere parol agreement to execute a mortgage does not fall within this rule. Clabaugh v. Byerly, 7 Gill, 354. (/;) A note to this case says, that previously the point was much doubted. It was the first determination on the subject, and though confirmed (after the result of the inquiry, see 9 Ves. 117,) by Lord Thurlow, an4 often followed, has been uniformly disapproved of upon principle, for the most important reasons. It seems, from the cases, the Court will not allow the deposit to be a security for future advances, without the most distinct evi- dence of an agreement for the purpose. CH. XXII.] EQUITABLE MORTGAGE, ETC. 601 security for the sum advanced ; and the jury found that it was. 6. In Ex parte Haigh,^ Lord Eldon expressed his regret at the establishment of this rule ; remarking that it had led to discussion upon the truth and probability of evidence which it was the very object of the statute of frauds entirely to ex- clude. 7. In Norris v. Wilkinson,^ Sir William Grant remarked upon this subject, substantially as follows. The mere fact that one man's title-deeds are found in another's possession, is not conclusive of any purpose to mortgage the estate. It may exist without any contract whatever. " If the deposit is made when the money is advanced, the purpose must obvi- ously be, to secure repayment, and there is little to be sup- plied by other evidence. The connection is not so direct, betu^een a debt antecedently due and a subsequent deposit ; nor is the inference so plain. And where the deeds are de- livered, not as a present security, but only for the purpose of enabling the attorney to draw a mortgage, which has been agreed for, the principle is wholly inapplicable. The deposit of deeds is indeed held to imply an obligation to execute a conveyance, whenever required. But in such case the pri- mary intention is, to execute an immediate pledge ; with an implied engagement to do whatever may be necessary to render the pledge effectual for its purpose. But in the case supposed, there was no intention to put the deeds into pledge. Nor does the death of the owner, before making the proposed mortgage, give any effect to the transaction as a deposit. 8. In Hooper, ex parte,^ a mortgagee for a term made fur- ther advances, and died. The mortgagor having become bankrupt, the executors of the mortgagee filed a petition, alleging an understanding and agreement, that the sum due for further advances should be tacked, and a further mort- gage made therefor, and praying a sale. Lord Eldon said :* 1 11 Ves. 403, 404, and note. - 12 Vcs. 197, 198, 199 ; ace. Chap- 3 19 Ves. 477. * Ibid. 478, 479. man i.-. Chapman, 3 Eng. Law &Eq. 70. VOL. I. 51 602 THE LAW OF MORTGAGES- [CH. XXII. " With great deference to Lord Thurlow, who first held, that the deposit of a deed necessarily implied an agreement for a mortgage, I repeat, that this decision has produced consider- able mischief ; and that the case of Russel v. Russel ought not to have been decided as it was. There never was a case, where a man, having taken a mortgage by a legal convey- ance, was afterwards permitted to hold that estate as further charged, not by a legal contract, but by inference from the possession of the deed. The other cases have gone far enough, indeed too far ; and I will not add to their author- ity, where there are circumstances distinguishing the case before me." (c) The order was confined to the legal mort- gage. 9. " On a review of the decided cases," says Mr. Coote,^ " establishing this mode of mortgage security, it is perhaps to be regretted, that the old law was not adhered to, and the principle on which the statute of frauds was founded more respected. For although equity, by declaring the deposit itself to be evidence of an agreement executed, has contrived to evade the strict and literal wording of the statute, yet it is manifest that the door has been in some degree open to fraud and perjury ; nor does a creditor seem to deserve much favor, who will not be at the trouble of a few lines in writing, if he is desirous to have a charge on his debtor's estate. If the debtor denies that the deposit was intended to cover future advances, or if he insist that the deeds were not delivered by 1 Coote, 222. (f) In the same case Lord Eldon furtbcr remarked, that it was an error to suppose, that a deposit of deeds can refer to nothing but an intention to subject the estate. A deposit may be of considerable use, without any such object. Tiie right to hold the deeds, and so to work out payment, is of great value. In Whitbread's case, (19 Ves. 211,) Lord Eldon is reported to have said, that the decisions upon this subject amount to a repeal of the statute of frauds. CH. XXII.] EQUITABLE MORTGAGE, ETC. 603 way of deposit, but with a different intent, resort must, in many cases, be had to parol evidence ; and, as remarked by Lord Eldon, 'the mischief of all these cases is, that the Court is deciding upon parol evidence with regard to an interest in land within the statute of frauds.' " 10. Judge Story says ;! — "It is now settled in England, that if the debtor deposits his title deeds to an estate with a creditor, as security for an antecedent debt, or upon a fresh loan of money, it is a valid agreement for a mortgage between the parties, and is not within the operation of the statute of frauds. This doctrine has sometimes been thought difficult to be maintained, either upon the ground of principle or of public policy. And although it is firmly established, it has of late years been received with no small hesitation and dis- approbation, and a disposition has been strongly evinced, not to enlarge its operation. It is not therefore ordinarily applied to enforce parol agreements to make a mortgage, or to make a deposit of title-deeds for such a purpose ; but it is strictly confined to an actual, immediate, and bona fide deposit of the title-deeds with the creditor, as a security, in order to create the lien. Such an equitable mortgage will not, how- ever, avail against a subsequent mortgagee, whose mortgage has been duly registered, without notice of the deposit of the title-deeds." 11. Notwithstanding these very reasonable strictures, how- ever, a long series of cases seems to have fully established the doctrine above stated, as a rule of English equity juris- prudence. It is unnecessary to cite all of them ; but some of the principal will be summarily referred to. 12. In RoUeston v. Morton,^ the Lord Chancellor of Ireland said : " If a man has power to charge certain lands, and agrees to charge them, in equity he has actually charged them, adid a court of equity will execute the charge." 13. In Keys v. Williams,^ Lord Abinger thus vindicates 1 2 Storv's Eq. ^ 1020. 3 3 y. & Coll. Exch. GO, 61. '^ 1 Dr. & War. 195. 604 THE LAW OF MORTGAGES. [CH. XXII. the policy and reasonableness of the rule : — " The doctrine of equitable mortgages has been said to be an invasion of the statute of frauds ; and no doubt there was great difficulty in knowing how to deal with deposits of deeds by way of security after the passing of that statute. But in my opinion that statute was never meant to affect the transaction of a man borrowing money and depositing his title-deeds as a pledge of payment. A court of law could not assist such a party to recover back his title-deeds by an action of trover, the answer to such an action being, that the title-deeds were pledged for a sum of money, and that, till the money is repaid, the party has no right to them. So, if the party came into equity for relief, he would be told, that before he sought equity he must do equity, by repaying the money in consideration for which the deeds had been lodged in the other party's hands. The doctrine of equitable mortgages, therefore, appears to have arisen from the necessity of the case. It may, however, in many cases, operate to useful purposes, and is certainly not injurious to commerce. In commercial transactions it may be frequently necessary to raise money on a sudden, before an opportunity can be afforded of investigating the title-deeds, and preparing the mortgage. Expediency, therefore, as well as necessity, has contributed to establish the general doctrine, although it may not altogether be in consistency with the statute." 14. In Pain v. Smith,^ the plaintiff filed a bill, for the pur- pose of giving effect to an equitable security made by the deposit of deeds, and praying a sale of the estate. Per Sir John Leach, M. R. : " If the contract between the plaintiff and the defendant had been, that the deeds should be deposited as a security until a legal mortgage could be prepared, there would be ground for the argument of the defendant ; " (name- ly, that if a sale were decreed, an equitable mortgagee would be in better situation than a legal mortgagee.) " But there 1 2 My. & K. 417. Sec Tvlcc v, Wchh, C Bctiv. 552 ; Lewtliwaitc v. Clarkson, 2 Y. & Coll. Exch. 372. en. XXII.] EQUITABLE MORTGAGE, ETC. 605 being here a general equitable charge upon the property, the plaintiff is entitled to a sale for satisfaction of that charge, and such has been the constant course of the Court." 15. In Mandeville v. Welch,' Judge Story says : " It may be admitted, that according to the course of the authorities in England, and as applicable to the state of land titles there, a deposit of title-deeds does in the cases alluded to, create a lien, which will be recognized as an equitable mortgage, and will entitle the party to call for an assignment of the property included in the title-deeds. The doctrine proceeds upon the supposition, that the deposit is clearly established to have been made as security for the debt ; and not upon the gTound that the.mere fact of a deposit unexplained affords such proof." 16. Where, in order to prevent immediate proceedings against a debtor, he deposited his title-deeds with the attorney of his creditor, for the purpose of preparing a mortgage ; held, an equitable mortgage of the estate.^ Lord Abinger says:" " It has been very ably argued, that the circumstance of the deed having been deposited, not as a present security, but with a view to a future security, gives rise to such a distinc- tion. Certainly, if before the money was advanced the deeds had been deposited with a view to prepare a future mortgage, such a transaction could not be considered as an equitable mortgage by deposit ; but it is otherwise where there is a present advance, and the deeds are deposited under a promise to forbear suing, although only for the purpose of preparing a future mortgage. If it were necessary to decide the specific point, I should say, that an agreement to grant a mortgage for money already advanced, and a deposit of deeds for the purpose of preparing a mortgage, is, in itself, an equitable mortgage by deposit ; but here the deposit was evidently made as a present security, as weU as with a view of pre- paring a future mortgage. In default of payment of principal and interest, within the usual time, a sale must, take place." 1 5 Wheat. 284. - Kevs v. Williams, 3 Y. & Coll. 3 lb. 61,62. Excb. 55. 51* 606 THE LAW OF MORTGAGES. [CH. XXII. 17. In Hockley v. Bantock/ executors and trustees agreed to give a residuary legatee, as security for his share, a legal mortgage of real estate, which they had taken for a debt due to the testator, and, for the purpose of having the mortgage prepared, delivered the title-deeds to the agents of the legatee. Held, he thereby acquired an equitable lien as against the executors, though not as against the other legatees. 18. In Hodge v. Attorney- Gen eral,^ the title-deeds of a leasehold estate were deposited with bankers, by way of equitable mortgage, to secure the balance of a running account. The debtor being afterwards convicted of felony, the creditors filed a bill against the attorney-general for a sale. Held, the legal title being in the Crown, the Court could not decree a sale, nor a conveyance of the legal title, but only declare the plaintiffs entitled to possession, tiU the Crown should redeem. 19. In Whitworth v. Gaugain,^ it was held, that an equi- table mortgagee, by deposit of title-deeds, might enforce his lien in preference to another creditor, who subsequently, with- out notice, recovered judgment against the debtor, and obtained possession by writ of elegit and attornment of the tenants. Shadwell, V. C, says : " The plaintiffs are equitable mortgagees, by a deposit of title-deeds, accompanied with a memorandum in writing, explaining that the purpose of the deposit was to secure a then existing debt and future advan- ces. No one, I apprehend, could seriously contend that the memorandum in writing above set forth had not the effect of charging the property as between the mortgagees and the mortgagor." His Lordship proceeds to lay down the estab- lished principle, that a judgment creditor stands in place of the debtor, and can take in execution only what belongs to him, subject to every liability binding upon the debtor him- self. This principle applies to all other equitable incum- brancers, and should therefore be held alike applicable to an 1 1 lluss. 141. 2 3 Y. & Coll. Excli. 342. '^ 3 Ilarc, 416, 424, 429. CH. XXII.] EQUITABLE MORTGAGE, ETC. 607 equitable mortgagee, whose title is no more imperfect than that of a cestui que trust. His Lordship further remarked, that the argument, of the judgment creditor's having an equal equity and in addition the legal title, and therefore a right which ought to prevail over the plaintiff's, took for granted the whole question in dispute, assuming that the creditor might seize what did not actually belong to the debtor. 19 a. A., insisting that B., the owner of an agreement for a building lease, had deposited it to secure to him X900, claimed payment from the administrator of B., who had expended his own money in •finishing the houses, and obtained leases from the lessors, and questioned the deposit and the extent of the advance, if any had been made. Held, the affidavits proving a deposit, the Court was bound to act upon them ; that the deposit entitled A. to a mortgage, and gave him a right to payment. Decree for an account and sale of the houses.' ■ 20. In Ex parte Langston,^ on the 14th of June, title-deeds were deposited as security for advances. Between this time and June 20th, further advances were made, and on the latter day a memorandum was signed by the debtor, stating that the deposit was made to secure the several advances. The same day, he became bankrupt. Held, the memorandum could not prejudice the creditor's claim, being perfectly con- sistent with it, and a ratification of the prior agi-eement ; and that he was entitled to hold the deeds as security, 21. Mortgage by deposit, to secure the debtor's account, until such account should not exceed £100. The debtor having died, owing more than that sum ; held, the deposit was a security for the whole sum, and not merely for the excess over ,£100.3 22. The deposit may be made either to the creditor him- self, or to some third person over whom the depositor has no control. But not to the wife of the depositor, nor a fortiori 1 Sims V. Helling, 9 Eng. Law & Eq. - 17 Vcs. 230. 45. 3 Ashton V. Dalton, 2 Coll. 565. 608 THE LAW OF MORTGAGES. [CH. XXII. if permitted to be retained by the debtor, though he deliver to the creditor a memorandum to that effect. Nor will the equitable deposit in the hands of one person be extended to an advance made by another, unless the party holding the deeds is a mere trustee and has made no advances.' 23. In Brizick v. Manners,^ the owner of land delivered his title-deeds to an attorney for the purpose of having a mort- gage drawn, but died before its completion. The creditor attempted to establish a title as equitable mortgagee, but the point was given up. 24. An equitable mortgagee may himself create an equi- table mortgage, by a deposit of the deeds, though he does not deliver over the memorandum.^ 25. A mere deposit, without a memorandum, will, as against strangers, create an equitable mortgage, only when the possession of the title-deeds can be accounted for in no other way, or the holder is a stranger to the title and the lands.* 26. Such mortgage has preference over a subsequent pur- chaser or mortgagee of the legal estate with notice. And notice will be implied from the nature of the transaction ; as, if the latter was informed that the creditor had possession of the deeds, and neglected to inquire for what purpose ; this being gross negligence.^ 27. But this rule does not apply, where the holder of the deeds is solicitor of the debtor ; such deposit being in this case according to the usual course of business.^ 28. Such deposit gives a lien upon all the property included in the deeds, unless an intention is clearly proved to the con- trary." 29. With regard to the mode oi foreclosing' a mortgage of this description, Mr. Coote says, the proper decree would seem to be for a foreclosure and conveyance. The right to a sale does not appear so clear, though in some cases a sale 'Cootc, 217. "Cootc, 221. Mliern r. iMill, 13 Vcs. 114. ■■^ 9 Mod. 284. ' lb. 217. « Bozon v. Williams, 3 Y. & Jerv. 150. ^ Ashton V. Daltoii, 2 Coll. 565. CH. XXII.] EQUITABLE MORTGAGE, ETC. 609 has been decreed. Such right clearly exists, where the mem- orandum of deposit provides for a formal mortgage with power of sale, or where the bill is filed against the represen- tatives of one deceased. So a sale would seem proper, when the defendants are infants.^ 30. Six months will be allowed for redemption, although from the nature of the transaction no interest is due.- 31. With regard to the American doctrine upon this sub- ject, Mr. Greenleaf remarks :^ — " Whether the deposit of title-deeds alone will create an equitable lien on. the land, in any of the United States, may well be doubted. No case is found, in which this doctrine has been actually administered, though in several cases it has been adverted to, as a rule of law in England." {d) 32. In analogy with the doctrine above stated, there seems to have been an ancient rule in Chancery, that if a first mort- gagee voluntarily left the title-deeds with the mortgagor, he should be postponed to a subsequent mortgagee, without notice, and in possession of the deeds ; because he thereby enabled the mortgagor to impose upon others, who, in the ab- sence of any registry, looked for their security only to the deed, and the mortgagor's possession. Thus in Head v. Egerton,* the Lord Chancellor said, it was hard enough upon a subse- quent mortgagee, that he had lent his money upon lands subject to a prior mortgage, without notice of it, and therefore 1 Cootc, 220. ^ Ibid. 221. » 2 Greenl. Cruise, 85, n. * 3 P. Wms. 279. {(1) In the case of Rockwell v. Hobby, (2 Sandf. Ch. 9,) where there had been an advance of money, and the title-deeds were found in possession of the lender, there was held to be an equitable mortgage. So the deposit of a bond and accompanying mortgage of leasehold prop- erty, (given without consideration, for the purpose of raising money,) as security for a loan ; has been held to give a claim by the assignee against the mortgagor. Day r. Perkins, 2 Sandf Ch. 359. It has been held in Maine, that a grantee, whose deed is not recorded, cannot create an equitable mortgage by a pledge of the dcLMl, and thus de- feat a prior recorded mortgage. Hall v. McDuft', 11 Sliepl. 311. 610 THE LAW OF MORTGAGES. [CH. XXII. he could not add to his hardship, by taking away from him the title-deeds and giving them to the elder mortgagee, un- less the first mortgagee paid him his money ; especially as the first mortgagee, by leaving the title-deeds with the mort- gagor, had been in some measure accessory in drawing in the defendant to lend his money. But Chancellor Kent, upon a review of the cases, denies the existence of any such rule ; or that it is now in force, if ever adopted ; and lays it down as the settled principle on the subject, that a subse- quent mortgage shall not have priority for the reason stated, unless in case of fraud or gross negligence, or a voluntary, distinct, and unjustifiable concurrence, on the part of the first mortgagee, to the retaining of the deeds. More especially is the rule inapplicable in the United States, where deeds are uniformly recorded. Hence it was held, that in case of the mortgage of a leasehold estate, leaving the lease with the mortgagor was no evidence of fraud, because registration is a beneficial substitute for the deposit of the deed, and gives better and more effectual security to subsequent mort- gagees.' 33. So Judge Story says : — " In cases not affected by the registry acts, the mere fact, that a first mortgagee has left the title-deeds in the possession of the mortgagor, without any attendant circumstances of fraud, will not be sufficient to postpone such first mortgagee to a second, who has taken the title-deeds with his mortgage, without any notice of the prior mortgage." - 34. Mr. Coote says, how far possession of the title-deeds gives a subsequent mortgagee the- preference over a prior one, has been a question of frequent discussion. The prin- ciple to be derived from the cases is said to be, that want of possession of the title-deeds by the first mortgagee is open to explanation, and is only primd facie^ not conclusive evi- J Berry v. Mutual, &(;., 2 Jolins. Cli. 23,'}. Sec Ryall r. Rolle, 1 Atk. 1G8: COS, 609 ; JohiiSDTi v. Slafjf?, 2 Johns. 1 Vcs. .'500. 510 ; !icc. Van Meter v MeFaddiii, 8 !'>. - 2 Story's Eq. § 1020. Moil. 4.'J.j ; Sliitz v. DielTeiil):icli. 3 Barr, CH. XXII.] EQUITABLE MORTGAGE, ETC. 6ll dence of fraud.^ (e) And it has been very recently held, that a legal mortgagee will not be postponed to a prior equitable one, on the ground of not having got in the title-deeds, unless guilty of fraud or gross or wilful negligence. As where he has made bond fide inquiry for them, and received a reason- able excuse for their non-delivery .^ 1 Coote, 486. - Hewitt v. Looscmore, 9 Eng. Law Si, Eq. 35. (e) The doctrine above referred to, as to the effect of depositing title- deeds, has been stated as a rule of equity. Questions upon the same general subject have sometimes occurred in courts of law. In Goodtitle v. Morgan, (1 T. R. 755,) it was held, that a second mortgagee, who takes an assign- ment of a term to attend the Inheritance, and has all. the title-deeds, may recover in ejectment against the first mortgagee, not having had notice of the prior mortgage. Ashhurst, J., says, (lb. 762) "No man ought to be so absurd as to make a purchase without looking at the title-deeds ; if he is, he must take the consequence of his own negligence. If the first mortgagee had used ordinary precaution, he must have known that this term was then outstanding. And if he did know of it and neglected to take an assignment of it, it was enabling the mortgagor to commit a fraud by mortgaging the same estate again. By this, therefore, he became particeps crhiiinis." Bul- ler, J., says, (lb.) " It is an established rule in a court of equity that a second mortgagee, who has the title-deeds, without notice of any prior incum- brance, shall be preferred. If this has become a rule of property in a court of equity, it ought to be adopted in a court of law." The assignees of a bankrupt, who owned the moiety of an estate in a reg- ister county, brought assumpsit for a moiety of the rents against the owner of the other half, who had received the whole rents. It appeared, that the defendant had lent the bankrupt a certain sum, to complete his part of the purchase, it being agreed that the title-deeds should be deposited as security. The defendant afterwards took an assignment of the bankrupt's moiety, but the assignment was not registered. The assignment from the commissioners to the assignees was duly registered, and therefore had preference over the unregistered deed. Held, the action could not be maintained, as the equitable mortgagee might have retained the rents against the bankrupt, if he had been solvent, and might therefore do the same against his assignees ; and the requisition of registry did not apply to an equitable mortgage, where there was no deed to be registered. Sumpter v. Cooper, 2 B. & Ad. 223. In Harrington v. Price, (3 B. & Ad. 170,) the vendor of an estate having, upon a groundless pretence, refused to deliver up the deeds ; the purchaser 612 THE LAW OF MORTGAGES. [CH. XXII. transferred his title, and the assignee brought an action of trover for the deeds, and recovered judgment. Subsequently the first vendor deposited the deeds with the defendants, and absconded. The purchaser brought trover against the defendants, claiming that he was entitled to them as owner of the estate, though, after the conveyance to him, they were pawned to a third person without notice. Held, although a second mortgagee, obtaining the deeds without notice, might retain them against the first ; the same rule did not apply to a prior purchaser, because a mortgagor generally retains pos- session of the property, and therefore his retaining the deeds is likely to mislead third persons ; and that the plaintiff was entitled to recover. (See Hooper V. llamsbottom, 6 Taun. 12 ; Head v. Egerton, 3 P. Wms. 280.) Mr. Coote says, that previously to the establishment of this doctrine, (meaning the doctrine stated in the text,) it was held that mere possession of title-deeds gave no interest in the estate, except collaterally, as in the instance put by Lord Eldon (Ex parte Whitbread, 19 Ves. 211); that is, if the owner of the land could not part with the estate without the deeds, he should not have them without paying the debt due from him to the holder ; so that possession of the deeds gave no direct interest in the estate, but only a power of embarrassing the property in a sale. Coote, 214. CH. XXIII.] EQUITABLE MORTGAGES. — VENDOR'S LIEN. (m CHAPTER XXIII. EQUITABLE MORTGAGES. LIEN OF A VENDOR FOR THE PURCHASE- MONEY. I. General nature of the lion. 3. Kemarks upon the policy of the rule ; whether it is consistent with the general doctrines relating to real prop- erty. 7. The doctrine is well settled by the weight of authorities. II. Strictures and criticisms of the American courts. The rule is not adopted in some of the States. 16. But it is adopted in most of them. 17. Abstract of decisions upon the subject. 19. General nature of the lien; an equitable right. 30. Against what parties the lien may be enforced. Purchasers ; by what no- tice they shall be affected. 43. Heirs. 44. Widow. 47. Creditors. 56. By whom the lien may be en- forced. 59. TT'cnVer and discharge of the lien of a vendor for the purchase-money, by taking security therefor, or by other acts and agreements. 84. Mode of enforcing the vendor's lien ; bill, decree, &c. 1. Ix addition, and somewhat analogous, to the form of equitable mortgage^ arising from a deposit of title-deeds, which was considered in the last chapter, courts of equity recognize a lien upon real estate, not expressly provided for by con- tract, nor growing out of any transaction which has such lien for its object, but implied by law, (^ci) for the purpose of (rt) An express agreement, that land shall be chargeable with, and secu- rity for, the payment of a debt, though imperfect as a legal mortgage, will be regarded as a mortgage in equity, and enforced against a purchaser, with notice. Davis v. Clay, 2 Mis. 161 ; Johnson v. Slawson, 1 Bai. Ch. 463. A written agreement, intended to give a lien for security of a debt, is a good equitable mortgage, though not lawfully witnessed for a conveyance of real estate. Abbott v. Godfrey, 1 Mann. (Mich.) 198. K a school commissioner has sold school land, the statute requiring him to take a mortgage as security for the purchase-money, which he omits to do, the lien is not lost, and may be enforced against subsequent purchasers, VOL. I. 52 614 THE LAW OF MORTGAGES. [CH. XXIII. effecting substantial justice, and the presumed intention of the parties. This lien may properly be treated as amortgage, both because an express mortgage, as has been abundantly shown in the foregoing pages, according to the established modern doctrine on the subject, creates no higher interest than a lien ; and because the mode of enforcing the lien in question, and the general rights and remedies incident to it, are substantially similar to those created by an express mortgage. (6) 2. It has been already remarked, (supra, pp. 1, 2,) that one of the most common occasions for executing a mortgage occurs, where a conveyance of land is made, and a mortgage of the same land at the same time taken back by the grantor, to secure the whole or a part of the purchase-money. The lien, to be considered in the present chapter, is a title'sub- stantially corresponding with that created by such a mort- gage, but arising by implication merely, and not depending upon any deed or written instrument whatever. The doctrine of equity is, that a vendor of real estate, either merely selling, or both selling and conveying the property, without receiving payment of the purchase-money, retains a lien upon it as se- curity for such purchase-money, or so much of it as remains unpaid.! 3. The mere statement of this rule, in its general terms, is sufficient to show, that it is an anomaly in the law of real property ; certainly in that branch of the law, as modified and established by American statutes and judicial deeisions. 1 See Farrarv. Winterton, 5 Beav. 1 ; Burns v. Taylor, 23 Ala. 255. •with notice, if proceedings are instituted for that purpose within a reason- aVjle time. School Trustees v. Wright, 12 111.432. Where a vendor had only an agreement for a title, and afterwards, on oljtaiiiing the legal title, gave back a mortgage to his vendors for the pur- chase-money ; held, the mortgage was a valid claim on the land. Chew v. Barnett, 1 1 S. & R. 389. (h) See Haley v. Bennett, 5 Port. 452 ; Irwin v. Davidson, Ired. Ch. 311 ; Kelly V. Paine, 18 Ala. 371. CH. XXIII.] EQUITABLE MORTGAGES. VENDOR'S LIEN. 615 We have had repeated occasion to suggest, that notoriety or pjibliciti/ is the settled and prominent requisition, ap- plied to titles to real property in the United States. It is the universal policy of American law, to divest these titles of all secrecy, so that purchasers or creditors, by resorting to a public and general repository of deeds, may be able to ascertain, with an assurance little short of absolute certainty, to whom any particular estate belongs, and who therefore has power himself to pass a title. In the last chapter it was shoAvn, that the mortgage by deposit of title-deeds, though as fully recognized in England as any other form of mortgage, has been repudiated in this country for the reason above suggested ; its inconsistency with that registry system, which now constitutes an elementary part of our jurisprudence, and is undoubtedly one of the most useful innovations upon the common law of real property. It will be seen, however, that this consideration, though as forcible in the present case as in the other, and though its force has often been admitted by our courts ; has not proved sufficient to prevent the general adoption of the English rule. 4. Besides the objection to the doctrine in question, arising from its want of harmony with the prevailing policy of American law, there is no topic in the law of mortgages, in relation to which the decisions are more confused and variable. As will be hereafter more particularly stated, the origin of the rule is referred to the civil law. But that law adopted the same rule in regard to both real and personal property ; (c) giving the vendor of each a lien upon the thing sold, until payment of the price ; or, to speak more accurately. (c) It lias been hold that a vendor of grass, (-^hich may be regarded as partaking of the nature of realty,) sold on credit, with a license to cut it, but no reservation of a lien, cannot claim such lien for the payment of the purchase-money. Cutler v. Pope, 1 Shepl. 377. But it is held, that where personal property is sold, under an agreement that it shall be mortgaged for the price, the purchase-money will be a lien on the property, though no mortgage is executed. Alexander v. Heriot, 1 Bailey, Ch. 223. 616 THE LAW OF MORTGAGES. [CH. XXIII. making payment of the price a condition precedent to any title whatever in the vendee, (d) There would seem to be no good reason for abandoning this principle in regard to personal estate, which has unquestionably been done by the English law, except in allowing the vendor a lien ivhile he retains possession ; and adhering to it with reference to real estate, alike where the vendor or the vendee is in possession, and notwithstanding the latter may exhibit in his own hands and upon the public records a perfect documentary title. 5. It may be mentioned, as another illustration of the un- certainty attending this doctrine, that the cases constantly speak of it, as alike applicable, whether the vendor has ac- tually conveyed, or merely contracted to convey, the legal title ; (e) of course involving the conclusion, that the nature of his title is the same in both instances. And yet it is diffi- cult to understand, how a party can have a lien upon prop- erty, of which he at the same time has the absolute legal ownership ; or how the same term can be accurately em- ployed to denote such ownership, subject to a mere execu- tory agreement for conveyance, and the very shadowy inter- est, " neither property nor a right of action, neither jus in re nor jus ad rem,'" which remains in the vendor after an actual transfer to the vendee. In the former case, the lien consists in the vendor's right to withhold a deed until the price be paid ; in the latter, it authorizes the same or similar proceed- ings against the land, treated as the vendee's property, as in case of an express mortgage ; and these two rights have little else in common but the name which is alme applied to them. 6. The same want of certainty prevails, in relation to the (d) " Quod vcndidi non aliter Jit accipientis, (]uam si aut pretium nobis solutum sit," &c. Dig. lib. 18, tit. 1. (e) See Mims v. Macon, &c. 3 Kelly, 341 ; Gilkeson v. Snyder, 8 W. & S. 200. CH. XXin.] EQUITABLE MORTGAGES. ^TINDOr'S LIEN. 617 parties by and against whom the lien may be enforced, and to the acts or agreements by which it may be waived or dis- charged. And upon a view of the whole subject, it may be safely said, that its entire disuse or abrogation in the United States would greatly contribute to the security of titles to real property, and put an end to many complicated and em- barrassing controversies, by substituting clear, written words of conveyance, for presumed intention and vague and con- flicting equities. 7. Notwithstanding the obvious objections to this rule of law, which have been above stated, it is still undoubtedly well settled by judicial decisions. Thus it is said by the Court in North Carolina : ' " That this is the doctrine of the English Court of Chancery, there can be no doubt. It is establishe'd by many authorities and running through many years of the judicial history of that country." 8. In another case, with more particular reference to the objection against the doctrine, arising from the statute of frauds, (/) it is said: — " It is not, perhaps, so strong a case as that of a mortgage implied by a deposit of the title- deeds of real estate, which seems dh-ectly against the policy of the statute, but which nevertheless has been unhesitatingly sustained." ^ (^) {Infra, sec. 10.) 1 Per Nash, J., Womble v. Battle, "^ Mims v. Macon, &c. 3 Kelly, 341. 3 Ired. Eq. 183. (/) Such lien is said to fall under th.e}iea.d^co72structive trusts, to which the statute of frauds does not apply. It is saia to be neither Jus in re, nor jus ad rem, neither property nor a right of action, but a charge. 1 Hill, on R. P. 475. Skaggs v. Nelson, 25 Miss. 18. It cannot be created, it is said, by parol agreement. lb. So, if in an action on a note alleged to have been given for the price of land, the plaintiff prays for an enforcement of his lien ; the sale cannot be proved by parol evidence. Farmer v. Simpson, 6 Tex. 303. See sec. 19. {g) We have already adverted {supra, s. 3,) to the inconsistency of the American courts, in recognizing the implied lien of a vendor, and at the same time rejecting the equally well settled English doctrine of a mortgage . by deposit of deeds. 52* 618 THE LAW OF MORTGAGES. [CH. XXIII. 9. In Vermont, (h) the only State in New England where the rule has been expressly sanctioned, the Court remark : — " It is a highly equitable doctrine, and eminently consistent with the most perfect notions of moral justice. It has ex- isted in the English equity courts for centuries. It has been adopted in most of the American States, whose equity systems may be regarded as at all settled, and in the national courts." ' 10. Judge Story says : ^ — "It has often been objected, that the creation of such a trust by courts of equity is in contravention of the policy of the statute of frauds. ( Snpra, sec. 8.) But whatever may be the original force of such an objection, the doctrine is now too firmly established to be shaken by any mere theoretical doubts. Courts of equity have proceeded upon the ground, that the trust,* (z) being raised by implication, is not within the purview of that statute, but is excepted from it. It is not, perhaps, so strong a case as that of a mortgage implied by a deposit of the title-deeds of real estate, which seems directly against the policy of the statute, but which nevertheless has been unhes- itatingly sustained." The same author further remarks : ^ — " The true origin of the doctrine may with high probability be ascribed to the Roman law, from which it was imported into the equity jurisprudence of England, (j) By the Roman law, the vendor of property sold had a privilege, or right of priority of payment, in the nature of a lien on the property, for the price for which it was sold, not only against the 1 Per Rcdficld, J., Manly v. Slason, ^ 2 Story's Eq. § 1218. 21 Verm. 271. .8 lb. 1221. (h) By a late statute (1851, 42,) the lion is abolished. (i) Sec Minis v. Macon, &c. 3 Kelly, 341. (_/) Ace. Glower v. llawlings, 9 Sm. & M. 122; Atwoocl v. Vincent, 17 Conn. 583. One ground of the rule is, that payment is jxirt of the con- tract, lb. It is also rested upon the ground of (jood conscience. Minis v. Macon, &c. 3 Kelly, 342. CH. XXni.] EQUITABLE MORTGAGES. — VEJTOOR'S LIEX. 619 vendee and his representatives, but against his creditors and also against subsequent purchasers from him. For it was a rule of that law, that although the sale passed the title and dominion in the thing sold, yet it also implied a condition that the vendee should not be master of the thing so sold, unless he had paid the price, or had otherwise satisfied the vendor in respect thereof, or a personal credit had been given to him without satisfaction." 11. As might be supposed, however, from the anomalous character of this doctrine, it has been made the subject of some severe strictures in the American courts. 12. In Bayley v. Greenleaf,^ (see sec. 47,) Marshall, C. J., remarks substantially as follows. Whether the lien of a vendor be established as a natural equity, or from analogy to the principle, that a bargainor holds in trust for the bargainee till the price is paid ; it is still a secret, invisible trust. The vendee appears to hold, divested of any trust, and gains credit, upon the confidence that he is the owner in equity as well as at law. A vendor ought to take a mortgage, for the purpose of general notice ; otherwise, he is in some degree accessory to a fraud. It would seem inconsistent with the principles of equity and with the general spirit of our laws, that such a lien should be set up in a court of chancery, to the exclusion of bond fide creditors. In the United States, the claims of creditors stand on high ground. There is not perhaps a State in the Union, the laws of which fail to make all conveyances not recorded, and all secret trusts void, as to creditors, as well as subsequent purchasers without notice. To support the secret lien of a vendor against a creditor, who is a mortgagee, would be to counteract the spirit of these laws. Judge Marshall examines the conflict- ing English decisions upon the subject, and also the remarks of Mr. Sugden, apparently contradictory to the opinion of the Court in this case ; and draws a distinction between a conveyance made by the debtor himself, to secure one or 1 7 Wheat. 46. See Gill v. M'Attee, 2 Md. Ch. 255 ; Ott v. King, 8 Gratt. 224. 620 THE LAW OF MORTGAGES. [CH. XXIII. more creditors, or creditors generally, and an assignment under an insolvent or banlaupt law, which the law does not regard as made for valuable consideration, but as merely substituting the assignee in place of the debtor, (k) 13. In Maine, the Court remark as follows: — "Such a doctrine may be unobjectionable in a country where the lands have been cultivated for a great length of time, and where the change of property is comparatively infrequent. But ill this State, where so great a portion of them are un- cultivated, and where titles are subject to such constant change, the doctrine would be so un suited to the actual con- dition of things, as to act unfavorably, if not oppressively upon our citizens. The policy of our law is opposed to that of Great Britain in this, that it encourages the distribution of estates and property among all the people ; and any rule of law suited to restrain it cannot be received as a part of our law merely because it has been long the established law there. In this State, the public registry is designed to ex- hibit to all persons the state of the title, while in that coun- try such means of information have not existed except to a limited extent. To admit such a lien, would tend greatly to diminish the confidence held out by the law, as fitting to be reposed in such records." ^ 14. In North Carolina, in a case overruling some prior decisions, which had recognized the rule as part of the law of that State, the Court remark : — " Every rule adopted by the Courts, whereby the titles to real property shall be affected, should be plain and perspicuous. A system, then, complex in its nature, and leading to uncertainty and confusion, ought not to be adopted unless imperiously demanded, either by natural justice or necessity." ^ 1 Per Sheplcy, C. J., Philbrook v. 3 Ired. Eq. 186; ace. Cameron d. Ma- Delano, 29 Maine, 414, 415. sou, 7 Ired. Eq. 180. ^ Per Nash, J., Womble v. Battle, (k) Ace. Marine, &c. o. Early, Charl. Jl. M. 279 ; Shirley v. Sugar, &c. 2 Edw. Ch. 505 ; Van Dorcn v. Toad, 2 Green, Ch. 397. CH. XXIII.] EQUITABLE MORTGAGES. — VENDOR'S* LIEN. 621 15. In Pennsylvania, in the case of StoufFer v. Coleman,' a writing was executed between two parties, called an article of f^reemenl^ with a covenant for a subsequent conveyance by a good and sufficient deed, but also conveying by words of actual grant. A bond was given for the price of the land. It was stated by the Court, that these facts presented two questions for their consideration ; first, whether the party did seU and convey, or only agree to do it ; second, whether the lien was not waived by taking security for the price. In the later case of KaufFelt v. Bower,^ the same Court remarked, that in the former case the doctrine of equitable lien could not apply, because the vendor still retained the legal title. They proceed to disavow the English doctrine upon the sub- ject, as a rule of law in Pennsylvania, upon the ground that it was first adopted three years after the charter to Penn ; that it was impracticable, for want of full equity powers in the Court, and contrary to the general understanding and practice, and to the universal policy of the law concerning the registration of deeds, the liens of mechanics, judgment creditors, creditors of deceased persons, &c., and would in- volve the greatest confusion and uncertainty of titles. The Court further remark, that the doctrine had been recognized in only two cases in that State ; Stouffier v. Coleman, and Irvine v. Campbell, which was merely a purchase of the equi- table title, the instrument being in form executory, and con- taining a covenant for further assurance, [l) 1 1 Yeates, 393. 2 7 g. &. r. 64. (J) Agreement in writing for the sale of land, a certain sum to be paid on the vendor's death, and certain duties to be performed by the vendee dur- ing the vendor's hfe. The vendor made a deed of the land, " subject to the reserves mentioned in the article, which reserves are to continue during the grantor's life." Held, the agreement and deed, construed together, created no lien for the purchase-money. Zentmyer v. Mittower, 5 Barr, 403. In the same State (Pennsylvania,) it is held, that an agreement between grantor and grantee, executed and recorded the same day with the deed, 622 • THE LAW OF MORTGAGES. [CH. XXIII. 16. But notwithstanding these dissenting views, the lien of a vendor for the purchase-money must undoubtedly be considered as a settled principle of American law, so far as this depends upon the weight of authority. It appears to have been sanctioned in the States of New York, New Jer- sey, Maryland, Virginia, [m) Tennessee, Texas, Mississippi, Georgia, Alabama, Missouri, Michigan, Illinois, Indiana, Ohio, Kentucky, and Vermont ; but rejected in Massachu- setts, Maine, Pennsylvania, (w) and North Carolina, (o) Whether it is adopted or rejected in South Carolina [p) and Delaware, seems somewhat doubtful.' It is said never to have been adopted in its extent in Connecticut, and to exist 1 2 Siigd. (Amer.) 324, n.; Manly v. v. Ives, 1 Sm. & M. 197 ; May v. Lewis, Slason, 21 Venn. 271; Weed v. Beebe, 22 Ala. 646; Harring. _Ch. 225; Biuld ib. 49.5 ; Moore v. Holcombe, 3 Leigh, v. Bush, 1 Harring. 69'; Brinkerholf v. 597 ; Conover v. Warren, 1 Gilm. 498; Vansciner, 3 Green, Ch. 251. Howard v. Davis, 6 Tex. 1 74 ; Stewart that the purchase-money should be a lien upon the land ; does not interfere with the title of subsequent judgment creditors of the grantee. McLanahan V. Reeside, 9 Watts, 508. (m) It is now provided by statute (Code, 510,) that the lien shall not exist, unless expressly reserved. (n) See Hepburn v. Snyder, 3 Barr, 72. (o) The following is a summary view of the course of decisions in this State : — Whether a vendor has a lien, as against volunteers and purchasers with notice, qucEve. Johnson v. Cawthorn, 1 Dev. & Bat. Ch. 32. But such lien does not exist after a sale on execution, or a sale under a decree of Court, under the act of 1789, for debts of the vendee. lb. Harper v. Wil- liams, 1 Dev. & B. Ch. 379. Nor as against a bond fide purchaser from the vendee, without notice, if it exists in any case. Gahee v. Sneed, 1 Dev. & Bat. Ch. 333. But where land was sold, to be conveyed upon payment of the price, and, after the death of the vendor, the purchaser filed a bill against his heirs for a conveyance, which being taken pro confe.'iso, the Court de- creed a conveyance, without noticing the non-payment of the purchase- money ; held, such decree did not destroy the vendor's lien for the price. Winborn v. Gorrell, 3 Ired. Ch. 117. The vendor of land has not an equi- table lien thereon for the price. AVamble v. Battle, 3 Ired. Ch. 182; Hen- derson V. Burton, lb. 259. v. (/)) See Wragg i'. Comptroller, &c., 2 Desaus. 509. CH. XXIII.] EQUITABLE MORTGAGES. '.— vendor's LIEN. 623 only where the vendor's object is money, and he has no other security.^ (q) In a later case, in the same State,^ Church, J., says, " in this State, we have not yet had occasion to resort to it." 17. It is mmecessary, and would be useless, to cite all the numerous cases, which recognize or establish the doctrine in question. In Fish v. Howland,'^ Chancellor Walworth gives the following valuable abstract of the most important among them : 18. In Chapman v. Tanner,* the earliest case, which occur- red in 1684, Lord Guilford held, that where the purchaser had become bankrupt, the vendor had a lien for the price of the land, upon a principle of natural equity, and did not stand on the footing of a general creditor, (r) In Bond v. Kent,'^ a mortgage was given for part of the price, and a note for the rest. Held, there was no lien for the amount of the note. In Coppin v. Coppin,^ Lord King held there was a lien, though a receipt for the price was indorsed upon the deed. In this case, the question of lien was a subordinate and incidental one. In Pollexfen v. Moore,^ the conveyances being retained. Lord Hardwicke held the land chargeable with a lien in the hands of the heir. In Burgess v. Wheat,^ 1 Meigs V. Dimock, 6 Conn. 464. ^ i p^jge, 24-30. ^ 2 P. Wms. 291. 2 Atwood r. Vincent, 17 Conn. 583. * 1 Vern. 267. " 3 Atk. 272. See Watson v. Wells, 5, 468; Dean v. ^ 2 Ibid. 281. ^ 1 Ed. 211. Dean, 6, 285. (^) The plaintiff sold and conveyed land to Watson, taking notes of hand and a mortgage for the price. One of the witnesses to the mortgage acci- dentally omitted to sign his name, but it was dnly recorded. The defendants, being partners and creditors of Watson, afterwards took from him a deed of the land, one of them having actual notice of the facts of the case. The plaintiff" brings a bill in equity, setting forth this defect in the mortgage, and praying for confirmation of his title. It was held, in part upon the ground of a vendor's equitable lien, that the plaintiff was entitled to a decree. Watson V. Wells, 5 Conn. 4G8. (r) In this case, however, it is said, (Fawell v. Heells, Amb. 726 ; Tar- diffe V. Schrugan, 1 Bro. 424, n. b,) that there was a special agreement for the vendor's retaininjr the title-deeds. 624 THE LA^ OF MOETGAGES. [CH. XXIII. the general principle is sanctioned. In TardifFe v. Schrugan,^ a conveyance was made to two daughters of the grantor, in consideration of an annuity, for which they gave him their joint bond. One of them having married and died, her hus- band, who had a life-estate in a moiety of the land, refused to pay any part of the annuity. The other sister and her husband then filed a bill in equity against them. Held, by Lord Camden, that a moiety of the annuity was a lien upon the land in the defendant's hands ; and decreed, that he pay a moiety of the arrears, and keep down a moiety of the future payments. In Fawell v. Heelis,^ {^s) Lord Bathurst held, that the lien was discharged, by taking the purchaser's bond, pay- able at a future time. In Blackburn v. Gregson,^ the same point Avas raised, but not decided. In Austen v. Halsey,* which was a claim of lien by a legatee. Lord Eldon ruled that the vendor has such lien, unless the contract clearly shows a contrary intention. In Nairn v. Prowse,^ Sir Wil- liam Grant recognized the general rule, but remarked, that if the vendor does not trust to the lien, but carves out a secu- rity for himself, it is doubtful whether the lien is or is not waived. In Elliot v. Edwards,^ the holder of a lease assigned it, with a proviso, that the assignee should not transfer, &c., till payment of the price, and took security from a third person. Held, the vendor still had a lien for the price. In Hughes v. Kearney,'' the purchaser gave a note for the price, which was delivered to a third person as trustee, tiU the incumbrances could be ascertained and paid off therefrom, the balance to be paid to the vendor. Held, the amount of the note was a lien, as against an heir of the purchaser. In Mackreth v. Symmons,^ a lien was held to exist, though a bond had been given for the price ; and Lord Eldon suggested, that taking a mortgage upon another estate, as security, might not be a 1 Cited 1 Bio. 423. * 6 Vcs. 47.5. '' 1 Sch. & Lef. 132. '^ Ami). 724. ^ Ibid. 7.'j2. « 15 Ves. 329. 8 1 Bro.420; 1 Cox, 90. « 3 Bos. & P. 181. (.v) This case is said to have been often overruled. CH. XXIII.] EQUITABLE MORTGAGES. — VENDOR'S LIEN. 625 waiver. In Grant v. Mills,i the purchaser had drawn bills upon himself and his partner, which were accepted, payable on time, and delivered them to the vendor. Held, such bills were to be regarded as a mode of payment, not as security, and the lien still continued. In Ex parte Peake,^ it was held that a bill, and in Ex parte Loaring,^ that a negotiable note, on time, which w^as discounted and afterwards dishonored, was no waiver. So in Saunders v. Leslie,^ in regard to a note or bond, payable on time. But in Winter v. Lord An- son,5 where the purchaser gave his bond, payable at the death of the vendor, with interest annually, and a receipt for the money was indorsed upon the deed ; held, there was no lien, the vendor evidently intending to part with the estate imme- diately, and to wait for payment of the price. 19. With regard to the general nature of the lien in ques- tion, as has been already remarked, it does not depend on possession, and exists alike in the cases of an actual sale and a mere executory contract. So in case of an exchange of lands. 6 (^) Nor does it depend on any express assent or agreement of parties, though sometimes said to rest upon this foundation. It is incident to the contract.^ The lien is presumed to exist primd facie, but may be negatived by special circumstances, (u) Thus it is said not to exist, where 1 2 Ves. & B. 30G. ^ 1 Sim. & St. 434. 2 1 Mad. 346. ^ Burns v. Taylor, 23 Ala. 255. 8 2 Rose, (Bankr.) 79. " Brinkerlioff v. Vausciven, 3 Green. *2Bail&B. 514. Ch. 251. (t) Upon an exchange of farms between A. and B., A. covenanted to discharge a mortgage upon the farm given in exchange by him, and after- wards loaned the money of a third person, to discharge the mortgage, under an agreement afterwards performed, that the mortgage should be assigned to the lender as security. Held, the assignee was entitled to a preference, for the amount advanced by him, over a person to whom -B. had subsequently mortgaged the land, to secure a preexisting debt. White v. Knapp, 8 Paige, 173. (ii) On the other hand, it is said, there must be clear proof oi the intention of the parties, and of the sum due. Williams v. Stratton, 10 Sm. & M. 418. VOL. I. 53 626 THE LAAV OF MORTGAGES. [CH. XXIII. the object of tFie sale was not money, but some collateral benefit.' A special contract for payment of the purchase- money must be explicit, to defeat the lien ; and though the contract is stated in the conveyance, evidence may be given of the true bargain, and a subsequent purchaser is bound to inquire whether it was intended to waive the lien.^ 20. Judge Story says : — " The lien of a vendor for the purchase-money is not of so high and stringent a nature as that of a judgment creditor, for the latter binds the land according to the course of the common law, whereas the former is the mere creature of a court of equity, which it moulds and fashions according to its own purposes. It is, in short, a right which has no existence, until it is established by the decree of a Court in the particular case ; and is then made subservient to all the other equities between the par- ties, and enforced in its own peculiar manner, and upon its own peculiar principles. It is not, therefore, an equitable estate in the land itself, although that appellation is loosely applied to it." ^ It gives no claim to the profits of the land ; ^ nor to the back-rents, when enforced.^ But the vendor may claim rents paid to a receiver, pending the bill.'^ It has been held an insurable interest." 21. This lien, like most other equitable rights or claims, exists only in a court of equity, (y) It is said, " It is a relief afforded only there on the ordinary ground that the claimant is remediless in a court of law. If the vendor can, by any proceeding at law, recover the amount due him, chancery never interferes to enable him to. assert his equitable lien. 1 1 Hill. E. P. 474; Sears v. Smith, '^ Oilman v. Brown, 1 Mas. 191, 221. 2 Mich. 24.3 ; Tiennan v. Beam, 2 Ilam. ■* Little v. Brown, 2 Leigh, 353. But 383; Van Dorcn v. Todd, 2 Green, Cli. see Irwin v. ])avi(lson, Ircd. Ch. 311. 397. ■ '" INIedlev v. Davis, 5 Humph. 3S7. ■^ Frail v. Ellis, 7 En-. Law & Eq. « Ibid. 457 ; see ^ 8, n. ^ '' Tyler v. iEtna, &c., 16 Wend. 385. (d) At law, the clause acknowledging receipt of" the purchase-money is held conclusive, except in case of fraud. Rowntrec v. Jacob, 2 Taunt, 141. CH. XXIII.] EQUITABLE MORTGAGES. — YEXDOR's LIEN. 627 His remedy at law must be first exhausted, or it must be shown that none exists there. When, therefore, a vendor goes into equity, seeking to enforce such a lien, he must show that he has no redi'ess at law." ^ Hence it was held insufficient to allege, without proving, a seizure on execu- tion of other property; and necessary to show, that the debtor had no other property.^ So it is held, that a vendor can enforce his lien only in case of a deficiency of personal estate of his debtor ; and a bill to enforce such lien, it not appearing that the debt cannot be made at law, will be dis- missed.^ But if the vendee lives out of the State, it is not necessary first to bring a suit at law.* So it has been held that a vendor, without proceeding at law, may enforce his equitable lien.^ So, where the bond for a title has been assigned, he is not bound first to proceed against the vendee at law for the price ; and, though he might maintain ejectment for the land, that remedy is not complete, as a recovery would not affect the' contract of sale, but leave it in full force; and he could retain possession, only until the rents and profits had discharged his lien, when chancery would compel a reconveyance ; and a recovery even might be pre- vented by a bill to redeem.^ 21 a. A person directed his solicitors to loan certain money for him on mortgage, after examining the title. After such examination, the plaintiff", one of them, advanced part of the money, and received the mortgage, but the defendant, the other, refused to complete the loan or advance the money to the mortgagor. The plaintiff brings a bill in equity to compel an assignment of the mortgage to him. Held, the plaintiff was not bound to sue at law for his advances ; that he alone had a lien on the mortgage, and the defendant, holding the legal title in trust for him, was bound to assign 1 Per Dorse V, J., Pratt v. Van Wvck, * Green r. Fowler, 11 Gill & J. 103. 6 Gill & J. 498; ace. Evler v. Crabbs, ^ Richardson v. Baker," J. J. Marsh, 2 Md. 137. " 323. ~ Ibid. 6 Ilalev v. Bennett, 5 Port. 452. '^ Bottorf f. Conner, 1 Blackf. 287. 628 THE LAW OF MORTGAGES. [CH. XXIII. the mortgage to him ; and that the case was one of equity jurisdiction.^ 21 b. A. sells land to B., obtains judgment on the notes given him for the purchase-money, and levies on the lands in the possession of C, a purchaser from B. ; and C. puts in his claim. Held, upon trial of the claim, A. cannot set up his lien as vendor, but must go into equity to establish it, and there obtain a decree that the land be sold.^ 21 c. The assignee of a bond, given for the price of part of a tract of land, failing to obtain payment from the pur- chaser, has no lien on the unpaid purchase-money in the hands of the grantee of the other part.^ 22. It has been made a question, whether an equitable lien upon land can be maintained in favor of a vendor, who has himself never had a legal title, his vendee taking a title directly from the person of whom the vendor purchased."* But where a vendee by parol sold in the same way, and the first vendor then gave a deed to the sdbond vendee ; held, he had a lien for the price.^ ' 22 a. A vendor conveying to purchasers from his vendee, and receiving payment from them, and partial payments from his vendee, still retains his lien upon the remainder of the land, for the balance of the purchase-money.*^ 22 b. A. having title, executed a bond to B., who, having paid therefor, assigned the bond to C, who assigned to D., with notice of the non-payment of the purchase-money due from C. to B., and of the lien of the latter on the land. Held, B. had a lien.^ 23. It seems, in Indiana, a valid title to real estate may pass by a mere agreement, accompanied by delivery of pos- session. But in such case, the vendor may reserve an ex- press lien for the price. 24. Agreement under seal, to sell certain land and a steam- 1 Mount * Suydiim, 4 Sandf. Cli. '' Briscoe v. Bronangli, 1 Texas, 326. 399. ''Taylor v. Alloway, 3 Litt. 216; 2 Colquitt V. Thomas, 8 Geo. 258. Marsh o. Turner, 4 Mis. 2.'J3. " Kagsdalc v. Ha<^fr, 9 Gratt. 409. " Ligon v. Alexander, 7 J. J, Marsh. * Bayley v. Greenleaf, 7 Wheat. 50. 288. CH. XXni.] EQUITABLE MORTGAGES. — VENDOR'S LIEN. 629 engine, the price to be paid in three years ; the purchaser to have immediate possession of the land, and, after erecting a mill-house, to have the engine also, which was to remain on the land till payment of the price, when a title should be made. The vendee took possession of the land, built the house, and put the engine in operation. In September, 1821, the vendor assigned the agreement, and in July, 1824, the assignee re-assigned it to another person. In March, J823, a judgment was recovered against the vendee, and the land sold on execution. The second assignee brings a bill in equity against the execution purchaser, claiming a lien upon, and praying a sale of the property, to satisfy the claim for the purchase-money. Held, the doctrine of implied lien was not applicable to this case ; that the agreement not to remove the engine gave an express lien upon it, and the express covenant that the vendor should retain his title till payment, created a lien upon the land ; that the lien was assignable, and after the first assignment, the vendor re- tained only a bare legal title, held in trust for the purposes of the contract ; and that the defendant, having notice, took the estate, subject to the same trust. A sale was decreed, with the proper injunction to the persons in possession,^ &c. 25. ' The doctrine of equitable lien does not apply to the assignment of a mortgage and the debt secured by it. The assignor has no such lien.'"^ But the assignor of a bond for a title has the same lien upon the land, as a vendor who con- veys by deed.2 25 a. Where a grantee, in consideration of the conveyance, agrees to pay debts of the grantor, and support him and his daughters ; the grantor has no lien to secure such support.* 25 b. So, where A. conveys land to B., who, in considera- tion thereof, covenants with A. to support and maintain him and his lunatic son during their lives, and the life of the sur- vivor ; such covenant creates no lien in favor of either A. or 1 Lagow v. BadoUct, 1 Blackf. 416. ^Wiseman v. Reid, 7 J. J. Marsh. 2 Pratt V. Van Wyck, 6 Gill & J. 498. 249. 1 Brawley v. Catron, 8 Leigh, 522. 53* 630 THE LAW OF MORTGAGES. [CH. XXIII. his son ; the covenant being substituted for the purchase- money, or a mode of payment of the price of the land.^ 25 c. A father conveyed to his son, taking back a bond for the support of himself and his wife for life, and a lease of part of the land for the same term. Held, the grantor, had no lien. 2 25 d. A deed was made by a grandfather to his grandson, in consideration of love and affection and divers other good considerations, and with the purpose of disposing of thg grandfather's property after his death, and securing a legacy to his son ; and that he in the mean time might retain con- trol of the land so far as to secure a support. For this purpose, the grandfather took back a life lease at a nominal rent, and a bond conditioned (virtually) that whenever the grandson neglected to provide a support for him, he might resume possession or claim rent. Held, these facts showed, that the vendor did not rely upon any implied lien, but carved out his own security for his support by a direct in- cumbrance upon the land, and that this express lien for a part of the consideration negatived the right of any implied lien for the residue.^ 26. The doctrine applies to forced sales, by operation of law, as well as to those made by the voluntary act of the owner. It is said by the Court in Maryland, " No reason occurs to us why it should not apply equally to a forced sale under the law, as to a voluntary conveyance by the party himself. Indeed, the reason is stronger for maintain- ing it in the former case than in the latter. In voluntary sales, the vendor might perhaps be left to suffer the conse- quences of his own want of caution without just ground of complaint. But this cannot be affirmed, where he is de- prived of his property against his will by the strong arm of the law, under the stern plea of State necessity." ^ 27. A railroad corporation being authorized by their char- ter to take lands for the use of the road, and not able to 1 McKillip V. McKillip, 8 Barb. 552. * Per Lumpkin, J., Mims v. Macon, 2 Meigs V. Dimock, 6 Conn. 458. &c., 3 Kelly, 342. 3 Fish V. Ilowland, 1 I'aige, 20. CH. XXIII.] EQUITABLE MORTGAGES. VENDOR'S LIEX. 631 agree with the plaintiff, an owner of land, upon the price to be paid him ; commissioners awarded the amount, which was tendered but refused. The plaintiff afterwards sued the contractors of the road for trespass, but, failing in such suit, received a certificate of deposit for the amount awarded by the commissioners ; the company, however, at that time being utterly and notoriously insolvent, and no deposit being actually made. The road was afterwards sold under a de- cree in chancery to the defendants, the plaintiff not being party to the proceedings, and his agent giving notice at the time and place of sale, that the plaintiff would claim a lien on the land seized for the price awarded. Upon a bill to enforce such lien, by a sale of land, held, the plaintiff was entitled to a decree.^ 27 a. Commissioners appointed by the Court to sell land, who sell the same, and take a note of the purchaser for a part of the price, cannot file a bill to have the land sold to pay such note.^ 28. Where a conveyance was made, which was intended as a trust, but on the face of it appeared to be a purchase, and, the trust not being in writing, the party lost his estate ; held, he still had a lien for the purchase-money stated in the deed.3 29. Where a husband completed a contract of purchase entered into by the w4fe before marriage ; held, his assignee had a lien for the purchase-money, and interest, and lasting improvements, from the time of completing the contract, he accounting for the rents and profits from that time.'^ 30. The question has often arisen, against what parties, claiming an interest in the land, the lien of the vendor for the purchase-money may be enforced. Such lien is said to be valid against the purchaser, his heirs, &c., and widow, and' all subsequent purchasers from him without considera- tion or with notice ; so, against devisees, purchasers under a 1 Lumpkin, J., Mima v. Macon, &c., ^ Leman v. Whitley, 4 Euss. 423. 3 Kellv, 342. * Xeesom i'. Clarkson, 4 Hare, 97. - West V. Thornburgh, 6 B^fickf. 542. 632 THE LAW OF MORTGAGES. [CH. XXIII. sale for payment of debts after the vendee's death,^ subse- quent general liens, and, it seems, an execution purchaser ;2 but not against creditors holding under a bond fide convey- ance, or subsequent purchasers, or mortgagees, without notice, [lo) Notice is sufficient to charge a purchaser, if received at any time before payment of the price.^ So, if it is such notice as ought to put him upon inquiry^ The lien need not be recorded, and is not within the registration acts.^ Notice to an agent is sufficient,^ or a solicitor." 31. Knowledge that a part of the price is unpaid, but not how much, or how secured, is sufficient to put a purchaser on inquiry.^ 32. If the purchaser might learn the existence of the lien, by examining the first vendee's title-deed ; he is chargeable with notice of such lien.^ 33. If the vendor remains in possession, the purchaser is bound to inquire into the title,'^ more especially if the vendor has not actually conveyed, even though he had notice of the proposed transfer and failed to disclose his lien.^' 34. A recital that the consideration remains unpaid has been held sufficient notice.'^ But the vendor cannot claim a larger sum.^^ 1 Wliite V. Casanave, 1 Har. & J. * Briscoe v. Bronaugh, 1 Texas, 326 ; 106. Frail v. Ellis, 17 Eng. Law & Eq. 457. ^ Kilpatrick v. Kili^atrick, 23 Miss. '^ Ibid. 124. ^ Mounce v. Bvars, 11 Geo. 180. '^ 4 Kent, 151-153; 2 Story, 461-471 ; "^ Frail v. Ellis," 17 Eng. Law & Eq. Hallock V. Smith, 3 Barb. 267 ; Esk- 457. ridge v. McClure, 2 Yerg. 84; Magru- » Manly v. Slason, 21 Verm. 271. der V. Peter, 11 G. & Johns. 218 ; Graves ^ Honore v. Bakewell, 6 B. Mon. 67. V. McCall, 1 Call, 414; Handley v. i'^ Hopkins y. Garrard, 7 lb. 312. Lyons, 5 Munf. 342; Duval v. Bibb, " Dyer u. Morton, 4 Seam. I4G. 4' Hen. & M. 113; Stewart r. Ives, i- 7 B. Mon. ; Thornton w. Knox, 6 lb. 1 Sni. & M. 197; Webb v. llobinson, 74; Woodward ?;. Woodward, 7 lb. 116. 14 Geo. 216; Patterson v. Johnson, "^Kilpatrick v. Kilpatrick, 23 Miss. 7 Ham. 225 ; McKnight v. Brady, 2 Mis. 124. 110; Patterson v. Johnston, 7 Ham. 225. [w) But clianceiy will not interfere to forbid a Stale without notice. It can only sell the land, to satisfy the hen. TayWr v. Hunter, 5 Humph. 569. CH. XXIII.] EQUITABLE MORTGAGES. VENDOR'S LIEN. 633 35. Where the vendee conveys to secure a preexisting debt, the creditor having no notice of the lien ; it is not lost.i A bond fide purchaser is one who, at the time of his purchase, advances a new consideration, surrenders some security, or does some other act which, if his purchase were set aside, would leave him in a worse than his original position. ^ 36. An administrator's deed showed that the land had belonged to his intestate, and was sold by order of Court, and that part of the price had not become due. Held, a purchaser was justly chargeable, with notice of a lien for the price.-^ 36 a. A testator devised his real estates to A. in fee, charged with his debts. A. in 1811, contracted with C. to sell part of the real estate, the purchase-money to be paid two months after. C. was immediately let into possession. The purchase-money was not paid. In January, 1812, A. was declared a bankrupt. In October, in the same year, C. contracted to sell part of the same real estate to E., who was let into possession, but his purchase-money was not paid. C. made his will in 1817, by which he devised his real and personal estate to trustees upon trust to pay his debts, and then ppon trust for his children, and died in 1827. The trustees refused to act, and the widow of C. and her children filed a bill for the appointment of trustees, and in that suit, F. and G. were appointed new trustees. In 1834, the at- torney for F. and G. gave notice to the assignees of A., that the purchase-money for the property comprised in the con- tract of 1811, and interest or rent in respect of the land, were ready to be paid, for the express purpose of completing the agreement. In 1844, the money not having been paid, the assignees filed a bill against F. and G., the trustees of the will of C, and against the parties beneficially interested thereunder, and against E., the sub-purchaser, and others, praying a declaration that the plaintiff had a lien on the 1 Brown y. Yanliei, 7 Humph. 239. ^ Boon v. Barnes, 23 Miss 136; 8 Hoggatt V. Wade, 10 Sm. & M. 143. Shirley r. Sugar, &c 2 t( v. Ch. oOo ; "" Mynne v. Alston, 1 J)cv. Ch. 163. 634 THE LAW OP MOETaAGES. [CH. XXIII. estate for the unpaid purchase-money. Held, the notice from the attorney for F. and G. was an acknowledgment in writing within the meaning of the 40th section of the statute 3 & 4 Will. 4, c. 27 ; that a person by whom " the money is payable," means, in the case of a claim by equi- table lien, the person entitled to the land on which the charge is sought to be fixed, and that this acknowledgment being by devisees in trust for payment of debts, was good as against the cestui que trust under the same will.^ 86 b. There being no proof as against the cestui que trust that the attorney who wrote the notice was in fact the agent of the devisees in trust, the Court granted an inquiry .^ 37. A bill to enforce the lien of a vendor alleged, that the deed set forth a description of the bills given for the con- sideration, and by whom they were drawn and indorsed, but also alleged, that such description was given in order to give notice that the price was unpaid, and to retain the vendor's lien. Held, the bill was not bad on demurrer.^ 37 a. A writing at the foot of a deed, signed by one of the grantees, stating that one instalment of the purchase-money, recited in the deed to have been paid, still remained unpaid, is notice to a purchaser of the grantees, of the lien of the grantor, though the lien has not been recorded.'^ 37 b. A. sold land to B., executed his bond for title, and afterwards died. The Probate Court, upon the application of B. before the purchase-money was paid, directed the ad- ministrator of A. to convey the land to B. He did so, and afterwards sued B. for the unpaid purchase-money, recovered a judgment, and caused his execution to be levied upon the land, which was sold, and purchased by C, who sold it to D. Held, the administrator had no lien.^ 37 c. One who purchases bond fide from a fraudulent pur- chaser will be protected against the lien of the vendor.*^ 1 Toft V. Stephenson, 9 Eng. Law ■* Scott v. McCullock, 13 Miss. 13. and Eq. Rep. 80. ^Boon v. Baines, Ti Miss. 136. '^ Ibid. « Ibid. » Campbell v. Baldwin, 2 Humph. 248. en. XXIir.] EQUITABLE MORTGAGES. — VENDOR'S LIEX. 635 37 d. Where a settler upon the public lands of the United States, under a preemption right, sells his land, and his grantee sells it again, subject to the original vendor's claim for the purchase-money, which the second grantee assumes ; the original vendor has a lien for such purchase-money, which' he may enforce in equity against the second grantee, even after the latter has taken out a patent to the land in his own name, under a subsequent preemption lawJ 38. The plaintiff purchased land, but took no conveyance. He afterwards sold it, and his grantee, still owing part of the price, conveyed the land, with general warranty, but referring to the agreement with the plaintiff, to trustees for the benefit of creditors. The plaintiff then brought a suit against the heirs of his grantor to obtain the title, and a decree was made, appointing a commissioner to convey to the plaintiff; but the commissioner, by the direction of the plaintiff, con- veyed to the purchaser from the plaintiff. The trustees then sold the land, and the plaintiff files a bill to subject it for the balance of the purchase-money due him from his vendee, being insolvent. The trustees and purchaser from them denied having notice that the purchase-money was due, at the time of conveyance to the trustees, and there was no proof of notice. Held, the land was liable for the purchase- money due the plaintiff.^ 39. A purchaser of land paid $1,000, and gave a bond for $2,000, payable in two years, and containing a memorandum below the seal, that the land should be liable for the $2,000 till paid. The obligee assigned the bond, but a few days previously the purchaser conveyed the land to one who had loaned him $1,200, taking back a bond of defeasance. The sub-purchaser had notice of the bond first mentioned, and of its indorsement. The assignee of the bond brings a bill in equity against the obligor, praying a sale of the land. Held, the sub-purchaser, having notice, was chargeable with 1 Thredgill v. Pintard, 12 How. U. - Beirne v. Campbell, 4 Gratt, 125. S. 24. 636 THE LAW OF MORTGAGES. [CH. XXIII. the lien ; and, on a similar principle, the plaintiff should have the benefit of it ; that an equitable lien was assignable, as well as a legal mortgage. Decreed, that the plaintiff should recover the sum due, or, if not paid in a certain time, the land to be sold.^ 40. In a suit, brought by an assignee of the note made to the vendor for the purchase-money, to enforce the lien against a purchaser with notice, it is no defence, that the original vendor had not a good title at the time appointed for a con- veyance, the contract being unrescinded, and a title having been obtained and tendered by him before the suit was com- menced.^ 41. Bill to enforce a lien against three persons, alleging a sale to two of them, who gave their notes for the price, one payable to the plaintiff's wife, for release of dower ; a con- veyance made to one in trust for him and the other ; an ex- press agreement that the notes should be a lien ; and a pur- chase by the third defendant from the plaintiff's grantee, with notice. The answers of the two alleged vendees denied such trust, and such agreement for a lien, and alleged a con- veyance to the grantee alone, on condition that the other alleged joint purchaser should sign the notes as surety. The third defendant admitted his purchase, and notice of the non- payment of part of the price ; but alleged, that he ascertained the notes were signed by the second joint purchaser as surety, and were not therefore a lien, and that he had paid all the price. Held, there was no sufficient evidence of the alleged trust, or of an express lien ; and the bill was dismissed.^ 42. A purchaser, not having paid for the land, conveyed it, taking back two mortgages, of equal date, for parts of the consideration ; with the intention that one of them should be assigned to the original vendor, as security for the original purchase-money, and have priority, accotding to the agree- ment between them. The mortgages were simultaneously 1 Eskridf^e i'. McClure, 2 Ycrg. 84. ^ Way v. Pattv, 1 Smith, 44. - Brumficld v. Palmer, 7 Blackf. 227. CH. XXIII.] EQUITABLE MORTGAGES. — VENDOR'S LIEN. 637 recorded, but the one designed for the original vendor was first assigned to him, and afterwards the other was assigned to another person hand fide^ and for full value. Held, this assignee took his mortgage, subject to the original vendor's equity against his vendee ; that the statute of registry had no application to the respective titles of the two assignees ; that the first purchaser took the vendor's mortgage as trustee for him ; that the principle, by which a lien is waived by the taking of collateral personal security from a third person, did not apply, the mortgagor being the real vendee, and the mortgage upon the land itself; that the implied waiver of a lien (it seems) can be set up only by purchasers without notice ; and that the title of the vendor should prevail.^ 42 a. Where a vendor has a lien, and his vendee sells part of the land without disclosing the lien, the second vendee may compel the first vendor to enforce his lien on the residue of the land, or else to proceed at once in the collection of his debt.2 So a vendor, like a mortgagee, may lose his lien by any concealment or misrepresentation, through which a third person is induced to purchase the land, as unincumbered.^ But the lien of the first grantee, who himself sells the land, wiU not be affected by representations of the grantor to a subsequent purchaser, that he will take an unincumbered title.'i 42 b. D., the vendee of two tracts of land, part of the orig- inal purchase-money for which remained unpaid, sold one tract to A., with notice that this balance was still due. On appeal by A., from a decree ordering the sale of both tracts, for cash, to satisfy the original vendor's lien, it was held, that such balance was properly regarded as a lien on both said tracts, that A. had a right to insist on the original vendor's coming upon the tract of land remaining in D.'s hands, and 1 Stafford r. Van Rensselaer, 9 Cow. ^ g^c p], oi ; Burns v. Tavlor. 23 Ala. 316; Van Rensselaer I'. Stafford, 1 Ilopk. 255. 569. * Rowland v. Day, IT Ala. G81. 2 Ammerman v. Jennings, 12 B. Men. 135. VOL. I. 54 638 THE LAW OF MORTGAGES. [CH. XXIII. to insist that the proceeds of its sale should first be applied in discharge of the lien aforesaid, before any resort should be had to the tract purchased by him, and that a sale should be decreed for reasonable credit, and not for cash.^ 43. The death of the vendee does not defeat the lien. It is said, the heir cannot be permitted to hold what his ancestor unconscientiously obtained. And, after recovering a judg- ment at law against the administrator of the vendee upon a note given for the purchase-money ; upon a deficiency of personal estate, the vendor may have a decree in Chancery to have the estate sold.- {x) 44. The widow's right of dower has also been held subject to the vendor's lien for the purchase-money ; more especially where there has been only a bond for a deed.^ 45. Land was sold and a part of the price paid, the vendor giving bond to convey upon payment of the balance. The purchaser having died, held, his widow's right of dower was subject to the vendor's right of having the land sold for pay- ment of such balance ; and that the purchaser, at such sale, under a decree in equity, took a title clear of the claim of dower, she being entitled, however, to one third of the sur- plus proceeds for her life.* [ij) 46. In the case of Nazareth, &c. v. Lowe,^ one Kelly bought a lot of land for a certain price, payable at a future time. Subsequently, the vendor conveyed to him, reserving 1 Alford V. Helms, 6 Gratt. 90. ^ Crane v. Palmer, 8 Blackf. 1 20. 2 Garson v. Green, 1 Johns. Ch. 308 ; * Williams v. Woods, 1 Humph. 408. Hughes V. Kearney, 1 Seh. & Lef. 132; M jj. Mon. 257. White V. Casanane, 1 Har. & J. 106. (x) In Tennessee, wliere lands are liable for the debts of one deceased, it "was contended that the rule, by which a vendor's lien binds the estate in the hands of the heir, did not apply ; but the Court decided otherwise. Eskridge v. McClure, 2 Yerg. 84. {y) On the other hand, it seems, that if the title of the husband to real estate, in which his widow is seeking to have dower, became divested by the enforcement of his vendor's equitable lien for the purchase-money, the widow will not be entitled to dower. Bisland v. Hewett, 11 S. & M. 1G4. CH. XXIII.] EQUITABLE MORTGAGES. VENDOR'S LIEN. 639 in the deed a lien for the consideration, no part of which was paid. Held, after his death, his widow's right of dower was subject to this lien. Robertson, C. J., says: ' — " The lien was coeval with the inception of Kelly's equitable right to the lot. Kelly acquired the equity subject to that lien, and his wife's initiate right of dower could not have been better or greater than her husband's original right to the lot. The title and the lien being connate, there never was any right in Kelly or his wife, unincumbered by the lien ; and the con- veyance to Kelly having expressly reserved the lien, his legal right, and that of course also of his wife, were subject to that incumbrance, just as their equitable rights had always been. Her claim to dower is posterior, in fact and in law, to the reserved lien for the original consideration." 46 a. Where land of a deceased person is sold, as incapa- ble of division, and purchased by one of his children, who gives bond for the purchase-money, but never procures a conveyance, the widow of the purchaser cannot be endowed to the prejudice of the other children, who retained a lien on the land for their share of the purchase-money .2 46 h. Upon the same principle, as bearing upon the rela- tion of husband and wife, where land was purchased by a husband with money bequeathed to his wife, it was held, that the vendor had a lien on the land for his purchase- money, whether it was bought for the separate use of the wife or not.^ So where the deed is made directly to the wife, she is not regarded as a purchaser^ but a mere volun- teer, subject to the vendor's lien.* 47. It has been held, that the lien of a vendor for the pur- chase-money of the land shall not prevail over the claims of the vendee's creditors. The leading case upon this subject is Bayley v. Greenleaf.° The forcible remarks of Chief Jus- 1 1 B. Mon. 258. 5 7 Wheat. 46 ; see Aldridge v. Dunn, - Miller v. Stumi), 3 Gill, .304. 7 Blackf. 249 ; Taylor v. Bakhvin, 10 3 Lynam v. Green, 9 B. Mon. 363. « Barb. 626 ; Webb v. Robinson, 14 Geo. * Upsliaw V. Hargrove, G Sra. & M. 216. But see Lewis i\ Caperton, 8 286. Gratt. 148. 640 THE LAW OF MORTGAGES. [CH. XXIII. tice Marshall, in that case, applying to the whole subject now under consideration, but more especially to this particu- lar point, have been already cited. (§ 12.) The facts of the case were as follows. 48. In 1792, a person purchased land, and sold it to one of the defendants, who took his title from the first vendor, giving the second vendqr a bond for the price. In March, 1796, this bond was surrendered, upon the obligor's accept- ing bills for the amount, some of which were never paid. In September, 1796, the second purchaser conveyed the land, with other lands, in trust for one who was a surety for him, and to secure him for future advances and liabilities. In March, 1797, the trustee conveyed to the other defendants, in trust, for the purposes mentioned in the deed to the trus- tee. In June, 1797, the second purchaser, with two others, conveyed the land, with other lands, to the other defendants, for payment of their debts. Some doubt arising concerning the registration of these deeds, the latter defendants brought a suit against the second purchaser, and recovered judgment, and the land was bought upon execution for them, and after- wards conveyed to them upon the former trusts. Both the first and second purchasers had become insolvent, and been discharged in bankruptcy or insolvency. The first purchaser, and a trustee for his creditors, bring a bill in equity against the defendants, to subject the land to payment of the orig- inal purchase-money. One of the defendants, the trustee above-named, alleged that he had contracted to sell the land to the other, but, the price not being paid, that he still re- tained the title. Held, the plaintiff's lien should not prevail over the claim of the trustee on behalf of creditors.^ 49. So in Gann v. Chester,^ it was held that a vendor cannot assert his lien against other creditors. Catron, C. J. says : ^ — " In Tennessee, our uniform policy has been to per- mit the most unrestrained alienation of lands, and to hold them 1 Baylcy ?>. Grccnlcaf, 7 Wheat. 4G. ^ 5 Ycr 3 Ibid. 207. 2 Humph. 147. CH. XXIII.] EQUITABLE MORTGAGES. — VENDOR'S LIEN. 641 liable for the payment of debts, the same as personal prop- erty. No lien exists on the slave or other personal property, for unpaid purchase-money ; and the rule that the vendor of land has such lien, ^vas adopted from the British courts, grounded on a policy in reference to the liabiKty of real estate, essentially dissimilar to ours. By our statutes, where a regular mortgage is taken, and the lien created in the most formal manner, if it be not registered in the time prescribed, it does not affect the creditors of the mortgagor. They may seize and sell the estate. It would be most inconsistent to sa34j that a secret lien for unpaid purchase-money, could be set up, ten years after the vendee had been in the visible occupancy and ownership. The attempt to enforce the lien against the creditor's legal title, is now made for the first time in this State. That the like has been done in any American court, we are not informed." The learned Judge adds, the case of Bayley v. Greenleaf " meets the decided and unanimous approbation of this Court." ^ 50. These decisions are sustained by the following English case, in which some apparently contradictory authorities are examined, and held not to be really inconsistent with the doctrine as above stated. 51. In FaweU v. Heelis,^ it was held, that where the vendor takes a bond for the price, he has no lien against the vendee's creditors, for whose benefit the estate has been assigned. Lord Apsley, Chancellor, says,^ " Q. Whether plaintiff has an equitable lien against the creditors. It was laid down as a general rule, that the seller has such a right, not only against the purchaser, but against his creditors. Three cases cited. Chapman v. Tanner, 1 Vern. 267 ; accqrding to the report it is in point ; but it appears by the Uegister's book that the seller was to keep the title-deeds till he was paid. The Court said, that a natural equity arose from his having the deeds in his custody. PolLxfen v. Moore, 3 Atk. 272, very inaccurately 1 5 Yerg. 205 ; ace. Roberts v. Kose, ^ Ambl. 724. 2 Humph. 147. 3 jb. 726. 54* 642 THE LAW OF MORTGAGES. [CH. XXIII. reported. J. P. seized in fee, after the death of his mother, of Orchard's farm, agreed to sell for £1,200, and delivered possession to Moore ; afterwards P. let the farm, and received the rents ; but by reason that the purchase-money was not paid, he kept the title-deeds. Bill to have the purchase com- pleted, he offering to account for the rents, and to deliver up the deeds. The question in the cause was, How to secure the legatee. FordifT v. Scrugham, 8th December, 1769, be- fore Lord Camden. The decree is right, but did not proceed on this notion of equitable lien upon the estate. In this case it does not appear that it was the intention of the parties, that the vendor should have such a lien, but a receipt taken for the consideration-money, on the back of the deed, and the bond was accepted as a satisfaction for the purchase-money. II the vendor parts with his estate, and takes a security for the consideration-money, there is no reason for a court of equity to assist him against the creditors of the purchaser. Dismiss the bill." 52. An agreement by a debtor to execute a mortgage does not create a lien prior to that of a judgment, where both attach at the same time.i 53; A mortgagee, having obtained a decree of foreclosure and sale, agreed with a creditor to give him a mortgage within ten days after he should acquire a title under the sale ; which he accordingly did ; but before the agreement another creditor had a judgment docketed against him. Held, the former creditor was not entitled to priority over the latter.^ 54. Contrary to the general doctrine above stated, where land was sold by parol, the vendor retaining the title-deeds, and the vendee took possession, and commenced building a house ; held, the vendor was entitled to the consideration- money against the lien creditors.^ 55. So, in distributing the proceeds of a sheriff's sale, a lien for the balance of the purchase-money, subject to which 1 Dwight V. Newell, 3 Comst. 185. ^ Kline v. Lewis, 1 Aslim. 31. ■^ Ibid. CH. XXIII.] EQUITABLE MORTGAGES. VENDOR'S LIEN. 643 the land was conveyed to the defendant, shall have priority- over subsequent judgment creditors." 55 a. A. sold land to B., and retained the title as security for the p^chase-money, and a balance remained unpaid. Judgment was rendered, and execution issued against ,B., and the land purchased from A. was levied upon. After the execution was returned, and before a venditioni exponas was issued, B. paid the balance of the purchase-money. Held, B.'s interest in the land, before he paid the balance of the purchase-money, could not be sold under execution, neither could land, to which he acquired title after the return of the execution, be sold under the venditioni exponas.^ 55 b. The vendor's lien will prevail against a voluntary conveyance, made by the vendee, in trust for the benefit of his creditors, in consideration of preexisting debts ; where a bill has been brought to enforce such lien, before the creditors have signified their acceptance of the assignment, by some distinct affirmative act, indicating their election to claim or take benefit under the deed.^ 55 c. A father conveyed to his son, but remained in pos- session of the land. About a year afterwards, he entered into a written agreement with the son, that the father should retain and improve the land during his life, at a nominal rent, with a provision for his widow, if she should survive him ; the son agreeing to execute his bonds to his brothers and sisters for four fifths of the value of the land, to become due after the father's death, being for the balance of the purchase- money. The son executed the bonds, and 'the father remained in possession till the son became insolvent, and conveyed the land to trustees for benefit of creditors. The agreement was not acknowledged or recorded. The father and the obhgees file a bill to prevent a sale, pending which the father dies. Held, there was a lien on the land for pay- 1 Barnitz v. Smith, 1 W. & S. 142. ^ Qreen v. Demoss, 10 Humph. 371. 2 Badham v. Cox, 11 Ired. 436. 644 THE LAW OF MOKTGAGES. [CH. XXIII. ment of the bonds from the proceeds of the land, as against the son, trustees, and judgment and general creditors^ 56. The lien in question may be enforced by, as well as against, other parties than those originally concerned in the sale. 56 a. Where the original vendor has died, an agreement of doubtful import between one of his executors and a second purchaser, the first vendee being insolvent, will not have the effect of discharging the vendor's lien. Any agreement of this nature would not so operate even against the party making it, and still less against his co-executor.^ 56 b. It will be seen {infra, § 59,) that, in many of the cases where the question of waiver of the vendor's lien has arisen, the claim has been made by an assignee of the security taken for the purchase-money. The same right has been allowed in favor of parties, claiming, not by express assignment, but by mere equitable substitution. 57. "Where sureties were bound for the price of land sold, and had filed a bill for the sale of it to pay the debt, the pur- chaser having died insolvent, and pending the suit paid the debt ; held, they should be presumed to have paid with an understanding that they should be substituted to the lien of the vendor ; and, though the land had been repeatedly sold after the original sale, as the lien of the first vendor was an elder equity than that of either of the subsequent purchasers, it should prevail over them ; they having neither paid a con- sideration, nor taken deeds.^ But one person cannot acquire a lien upon land purchased by another under an executory contract, by an unauthorized payment of the purchase-money.* And it has been held, that where a vendor gives a deed and takes the note of the vendee, indorsed by a third person, the indorser is not entitled to have the land set aside for the pay- ment of the purchase-money, where he has not made it.^ 1 Ilcpp D. Ilcpi), 12 Ciill & J. 341. see Foster v. Trustees, &c. 3 Ala. 2 Stuiirt V. Abbott, '.) Griitt. 252. 302. 5 Kleiser v. Scott, G Dana, 138; Gliis- "' Triicsaell v. Callaway, 6 Mis. 605. elin V.' Fergus, 4 liar. & J. .522. But ^ Bradford v. Marvin, 2 Florida, 463. CH. XXIII.] EQUITABLE MORTGAGES. — VENDOR'S LIEN. 645 58. Where a purchaser discharges the lien, equity will sub- stitute him in place of the vendor, as against another incum- brancer.' 58 a. Bill in equity, to foreclose a mortgage for ^6,000. Pending the bill, other parties were brought in as defendants, and in their answers, which they made cross-bills, alleged that the land mortgaged was conveyed to the original defend- ant, by a deed which recited payment of the purchase-money, when in fact a credit was given, and the notes for the price had never been paid, but had been assigned to them, thus giving them the lien of the vendor, in preference to the plain- tiff's mortgage. The plaintiff alleged in reply, that the potes were given upon a joint sale of the land and a stock of mer- chandise ; that he was a purchaser for valuable consideration, without notice, and that the purchase-money remained unpaid when he took his mortgage. Held, it not appearing what portion of the notes were given for the land, no decree could be made to establish the alleged lien ; and, the mortgagee being ignorant, when he took his mortgage, that the purchase- money was unpaid, and the deed alleging it to be paid, the lien was invalid against him.^ 58 b. The lien of a vendor is the proper subject of a mort- gage ; and a purchaser under a decree of foreclosure acquires all the vendor's title, as against him and the mortgagee.^ 58 c. If the land is sold to one person, and the price received from another, who takes the note of the former therefor, the latter has no lien.* 58 d. One of two joint purchasers having died, the other paid the whole price, and a conveyance was made to him and the heirs of the deceased, in common. Held, there was ' no lien on the share held by the heirs.^ 58 e. So, a third party, who advances money to a purchaser to enable him to buy lands, cannot claim the benefit of the vendor's lien.^ 1 rianters,' &c. v. Dodson, 9 Sm. &. * Skagfs v. Nelson, 25 Miss. 8S. M. 527. 5 Crane v. Caldwell. U lllin. 468. ' Crowning v. Behn, 10 B. Men. 383. '^ StanscU v. Roberts, 13 Ohio, 148. ^ Trammell v. Simmons, 17 Ala. 411. 646 THE LAW OF MORTGAGES. [CH. XXIII. 59. It may have been gathered from many of the author- ities already cited, and more particularly from the series of cases collected in Fish v. Howland, {Svpra, § 17,) that the question of a vendor's lien has generally arisen, not from a denial of the general doctrine, but only of its appli- cation to the particular case under consideration, in conse- quence of an alleged waiver of the lien by some act of the party claiming it.^ In reference to this particular branch of the subject, the cases will be found peculiarly uncertain and inconsistent, {z) So far as any settled rule can be deduced from them, it may be stated as follows : The law presumes an intention to retain a lien, and imposes upon the vendee the burden of proving the contrary. As evidence of such contrary intention, it was once held, and such seems to have been the rule of the civil law, that the lien is defeated by the giving of an express and distinct security for the purchase- money, such as a bond or note;^ but it seems to be now well settled, that in order to discharge the lien, the vendor must take collateral security, either in property (a) or the engagement of some third person. A receipt upon the deed 1 See Coote, 266. 428 ; Williams v. Eoberts, 5, 35 ; Fol- 2 See Wagham v. Coomcs, 14 Ohio, lett v. llccse, 20, 548. (z) Lord EldoD, in Mackreth v. Sjmmons, (15 Ves. 344,) expresses a strong regret as to the condition of the question in the English courts. He says : — " The more modern authorities upon this subject have brought it to this inconvenient state, that the question is not a dry question upon the fact, ■whether a security was taken, but it depends upon the circumstiinces of each case, -whether the Court is to infer whether the lien was intended to be re- served, or that credit was given, and exclusively given, to the person from whom the other security was taken." (a) Where a certain sum is to be paid in cash, and the rest secured upon the property by a deed of trust ; and half the cash payment is made, and the deed given as agreed ; there is no lien for the remainder of the cash payment. Phillips v. Sanderson, 1 Sra. & M. 4G2. The lien is not affected by taking other security, u«l4!ss given in pursuance of the original agree- ment, and not by the vendee's voluntary act. Van Doren v. Todd, 2 Green, Ch. 307. CH. XXIII.] EQUITABLE MORTGAGES. VENDOR'S LIEN. 647 for the price does not destroy the lien ; being not conclusive evidence of payment ; ^ more especially where the vendor re- mains in possession under a parol agreement that he shall do so until payment.^ The taking of independent collateral security is said to be, " to some extent inconsistent with the continued existence of the lien." ^ But taking other specific security or a surety is no waiver where no actual conveyance is made."^ So it is held, that if a surety pay the debt, he shall be substituted to the lien of the vendor, if a lien were expressly reserved.^ 60. More especially is the taking of personal security held to be no waiver, where there has been a mere sale, but no actual conveyance.^ Thus it is held, that a vendor, retaining the title as security, retains the lien as long as he continues to have a right of action for the purchase-money." So, although a vendor m^y waive his lien by taking security and making the deed, yet, when he has not made a deed, he may refuse to do it tiU payment ; and by bill in equity may subject the land to such payment.^ 60 a. Where an equitable interest in land was sold, and security taken for the purchase-money, by which the vendor's lien was extinguished, and the legal title afterwards came to the vendor by a deed of trust, held, he could not retain as security such title for his debt.^ 61. In Tennessee, the following view is taken of this par- ticular branch of the subject : " By the established rules in England, which have been recognized and acted upon in New York, Virginia, North Carolina and Georgia, and also 1 1 Hill. R. p. 474, 475 ; Honore v. 2 Mich. 243 ; Vail v. Foster. 4 Comst. Bakewell, 6 B. Mon. 67: Thornton i?. 312. Knox, ib. 74 ; Palmer, 1 Doug. (Mich.) - Duval v. Eibb, 4 Hen. & M. 113. 422; Campbell v. Baldwin, 2 Humph. 3 Manly v. Slason, 21 Verm. 271. 248; Glower i'. Rawlings, 9 Sm. & M. * Lewis v. Caperton, 8 Gratt. 148. 122; John-son r. Sugg, 13ib. 34G; Man- 5 xjzzell v. Mack, 4 Humph. 319; ly V. Slason, 21 Verm. 271; White v. Shav r. Pattv. 1 Cart. 102. Dougherty, Mart. & Y. 309; Roon v. ^ Clower i-' Rawlings, 9 Sm. & M. 122. Murphy, 6 Blackford, 272; Howlett v. ' Hanna v. Wilson, 3 Gratt. 243. Thomp"son, 1 Ired. Eq. 369; Halleck i-. « Kleiser v. Scott. 6 Dana, 137. Smith, 3 Barb. 267 ; Sears v. Smith, » FoUett v. Rcesej 20 Ohio, 546. 648 THE LAW OF MORTGAGES. [CH. XXIII. in this State, on a former occasion, there is such a lien raised by the law, upon the supposed intention of the parties, that it should not be in the power of the vendee to keep the lands and not pay the debt, or to transmit them to heirs or assigns, and disappoint the vendor of the price engaged to be paid for it. This presumed intention, like all other presumed matters, gives way to proof which establishes the contrary of what is presumed ; but is so strongly raised, that it cannot be displaced but by clear evidence to be adduced on the part of the vendee, which also must clearly show that the parties had a different intention. A bond, note, or covenant given by the vendee, will not amount to such evidence, but will only be deemed an additional security, like a bond accom- panying a mortgage, and may be necessary to control the receipt indorsed on the deed, or admitted in the body of it. A bond by a third person for the purchase-money, or with a third person as security ; or a lien agreed upon by keeping the deed of conveyance as an escrow for part of the purchase- money, and an agreement when that was paid to deliver the deed, and to take bonds or negotiable paper indorsed for the residue, evince a design to release the lien for the residue. So would a mortgage upon other lands of the vendee, than those purchased of the vendor ; and so might other facts which manifest that a lien was not intended by the par- ties." 1 62. The lien is not waived by taking notes, for the price, though payable on time;^ more especially if worthless, and if there be any fraud.^ So, though a note may be paid in leather.'^ So the taking of an indorser is held not conclusive evidence of waiver, but liable to be rebutted by other proof.^ So the lien may continue, notwithstanding a renewal of the notes originally given.*^ And the taking of a bank check for 1 Per Haywood, J., Eskridge v. Mc- * Plowman v. Riddle, 14 Ala. 1G9. Clure. 2 Yerg. 84. " ' ^ Campbell v. Baldwin, 2 Hnm])h. 248. 2 Manly w. Slason, 21 Verm. 271. '^ Aldridge v. Dunn, 7 Blackf. 249; 3 Shelton v. Tiffin, G How. 163. Thornton v. Knox, G B. Mon. 74. CH. XXIII.] EQIHTABLE MORTGAGES. — VENDOR'S LIEN. 6-19 the price, has been held to be no waiver.^ Otherwise, where an order on a third person is given, and the vendor is guilty of laches in notifying the vendee of non-payment ; thereby subjecting him to loss.^ But if A. sells to B., and B. to C, and, by an agreement between all parties, C. mortgages to A. to secure the purchase-money due him, B. has no lien.^ So it has been held that the lien is not waived by taking a mortgage for security, but shall prevail over a judgment re- covered between the making and recording of the mortgage."* Othervsdse, where a mortgage is taken on the land sold.^ So where the vendee of land gave his notes to creditors of the vendor, and afterwards a mortgage ; held, the vendor had no lien.^ 63. Where a vendor takes a bond for the price, retaining the title, he does not lose his lien by surrendering the bond and taking an order upon a thnd person, payable at a future day, which is not accepted. And he may enforce the lien before the order falls due.' (See § 62.) 64. A vendee sold a portion of the land, with notice of the vendor's lien, and with an agreement that the purchaser might arrange with the vendor for the purchase-money, pro- vided he would procure from the vendor a release of the vendee to that amount. The purchaser accordingly gave the vendor his note, and the latter released the vendee for that portion of the price. Held, the vendor still retained a lien on the land for the whole purchase-money .§ (See § 63.) 65. Where a vendor retains the title, and receives collat- eral securities with an agreement to collect them, and em- ploys the vendee to make such collection ; he still retains his lien for the price, notwithstanding the payment of the secm-i- ties to the vendee, until the vendee accomits for the amount received, even as against judgment creditors whose lien accrued before the payment. And the assignee of the ven- 1 Honore v. Bakewell, 6 B. Mon. 67. 5 Young v. Wood, 11 B Mon. 123. '- Fowler v. llust, 2 A. K. Mar. 294. ^ McClure v. Harris, 12 B. Mon. 261. 3 Taylor v. Adaius, Gilm. 329. ' Kniscly v. William?. 3 Graft. 265. * Boos V. Ewing, 17 Ohio, 500. ** Honore v. Bakewell, 6 B. Mon. 67. VOL. I. 55 650 THE LAW OF MORTGAGES. [CH. XXIII. dor succeeds to his rights as existing at the time of assign- ments 65 a. Where a vendor brings an action for the first instal- ment of the purchase-money, recovers judgment, and levies execution upon the land, his lien is gone ; and equity vviU compel him to convey the legal title to the execution pur- chaser.^ 65 h. A judgment against a vendee, by articles of agree- ment, binds only his interest in the land to the extent of the purchase-money paid ; the balance is a lien on the prem- ises. So, although after judgments obtained against the vendee, the latter, by a parol agreement, gives up the articles of agreement, absolutely, to one to whom he had previously transferred the same as collateral security, and the latter receives a deed for the premises from the vendor.^ 66. A vendor took notes for the price, and gave bond to convey on payment thereof. For these notes, the notes of another person, guaranteed by the purchaser, were afterwards substituted. Held, the vendor had still a lien for the price.* 67. Where «in administrator sells land by order of Court, and takes personal security for the price, he does not thereby discharge his lien.^ But where a testator directs that his lands be sold, and the proceeds divided among his children, and they sell their interest, taking bonds for the price ; they have no lien on the land.^ 68. It is sometimes held, that an assignee of a claim for the price has a lien." Thus if the vendor assigns notes given for the purchase-money, the lien has been held to pass with them. So although a deed is subsequently made to the ven- dee, the lien is held to be good against a judgment recovered after the deed.^ So where a vendor assigns notes given for the purchase-money, without indorsement, it is held that 1 Watson V. Will.ird, 9 Barr, 89. ^ Hojjgatt v. Wade, 10 Sm. & M. 143. 2 Tliompson v. M(:Gill, 1 Frecm. Ch. ^ sharp v. Kerns, 2 Grutt. 348. 401. ■^ Ilonorc t'. Bakewell, G B. Mou. 67. » Russell's Appeal, 15 Penn. 319. ^ parkcr v. Kelly, 10 Sm. & M. 184, * Anthony v. Smith, 9 Humph. 508. CH. XXIII.] EQUITABLE MORTGAGES. — VENDOR'S LIEN. 651 the assignee may enforce a lien against a purchaser with notice, (b) So also may the vendor, when the notes are returned to him. (c) But not a holder of collateral security for the notes.' 69. Where a memorandum was made upon the face of the bond given for the price, that the land should be liable for the debt ; held, an assignee of the bond had in equity the same lien which the assignor had.^ 69 a. Land was conveyed by deeds, in which there was recited a consideration of ^800, " paid and secured to be paid." The vendee gave his note for part, which the ven- dor's agent assigned to A. Held, on a bill by the vendee, to enjoin A. against enforcing his judgment until the lien was releaffd, that as the lien, if there were any, passed with the note to the assignee, it would be extinguished by payment of the note.^ 69 b. Judgments were recovered in several actions by the vendpr of land, upon two notes of equal amount, given for the purchase-money. The vendee sold an undivided moiety of the land to A., and the other to B., when each agreed to pay one of the judgments. C, at the request of A. and B., took an assignment of the judgments, A. promising C. to pay him one of the judgments, and B. the other. The judgment which A. was to pay was paid to C. On a bill to enforce 1 White V. Stover. 10 Ala. 441 ; Nor- ^ Eskridge v. McClure, 2 Yerg. 84. veil I'. Johnson, 5 Humph. 489 ; Kelly ^ Wilder v. Smith, 12 B. Man. 94. V. Pavne, 18 Ala. 37 ; Roper v. McCook, 7 Ala. 318. (h) The lien of a vendor for the purchase-money passes to the devisee of the vendee's notes. Tierman v. Beam, 2 Ham. 383. (c) A vendee of land, having taken a bond for conveyance, to be made on payment of the price, and, before such payment, assigned the bond ; brings a bill in equity against the assignee to enforce a lien for the purchase- money, not making the original vendor a party. Held, the suit could not be maintained. Thompson v. Williams, 10 Sm. & M. 173. See Briggs v. Hill, 6 How. (Miss.) 362 ; Claiborne v. Crockett, 3 Yerg. 27; Green v. De- moss, 10 Humph. 371 ; Wellborn v. Williams, 9 Geo. 86. 652 THE LAW OP MORTGAGES. [CH. XXIII. the lien of the vendor upon the land, it was held, that an undivided half of the land could be subjected to the payment of the outstanding judgment.^ 70. The plaintiff advanced money to another person, to enter at a land office a tract of land for him, which the re- ceiver of the money did in his own name, and a patent was issued accordingly. Afterwards the patentee was authorized by the plaintiff to sell the lands for him, which he did, taking notes for the price, payable to the patentee. The notes were delivered, but not indorsed, to the plaintiff, who recovered judgment upon them for his own use, in the payee's name, which remained unsatisfied. Held, the plaintiff might en- force a lien for the purchase-money .^ 71. It has been held in other cases, however, that^ the vendor assigns his security for the price absolutely, the lien is lost. So, also, that the lien does not pass with the note given for the price.^ Otherwise, if he assigns merely for pay- ment of his debts, so far as the security is sufficient for that purpose,* or as collateral security for a debt. In such case, the assignor and assignee must join in a suit to enforce the lien.^ So where the vendor has given bond for title, from which, of course, he cannot be released without consent of ■fefee vendee.^ 71 a. Where an agent sells land of his principal, and fraud- ulently takes a note for the purchase-money in his own name, which he assigns, the vendor's lien does not pass to the assignee of the note.'^ 71 b. A. agreed, in 1840, to sell a lot of land to B., who gave his note for the purchase-money, payable in 1846. On the same day, A. indorsed the note to C, and guaranteed the payment. A., with others, absconded to Alabama, where 1 Wilkins v. Humphreys, 23 Miss. 14 Ohio, 437 ; Dixon v. Dixon, 1 Md. (1 Ctish.) 311. Ch. 220. '^ GriiL'j:,^s V. Bailey, 10 Ala. 344. * Hiillock v. Smith, 3 Barb. 267. a Wehb V. Bohiiison, 14 Geo. 216; i^ Plowman v. Riddle, 14 Ala. 169; Jackmiin v. IluUcck, 1 Ham. 318; Betton y. Williams, 4 Flor. 11. Brush V. Kinsley, 14 Ohio, 20 ; Taylor v. ^ Ibid. Foote, Wright, 356 ; Ilorton v. Horner, ^ Dciblcr v. Barwick, 4 Blackf. 339. CH. XXIII.] EQUITABLE MORTGAGES. VENDOR'S LIEN. 653 C. pursued him, and sued him on B.'s note, with others, and compelled him to compromise, by conveying to C. enough property, by mortgage, to secure all the debts. C. agreed to extend the time of paying B.'s note five years, and, on A.'s making a clear title to the land agreed to be sold to B., either to B. or C, to relieve him from his liability as guarantor. A. offered C. a deed of the land, which he refused, and A. sold it to D.J against whom C. brought his bill to enforce his lien, as assignee of the vendor's security. Held, C. did not, by taking B.'s note with A.'s guaranty, acquire any lien on the land, but that the transaction was a waiver of any lien, as the guaranty was a substitution of personal for real security, and that as against D. the lien had been waived by all these proceedings, if C. had ever had a lien, which he, as assignee, could enforce.! 71 c. The assignee of a note given for the purchase-money of land, with surety, is not, after discharging the surety, enti- tled to enforce the vendor's lien on the land.^ 72. A purchaser cannot avoid the vendor's lien on the ground of tvant of title in the latter, unless he alleges and proves the specific defects.^ 73. Nor on the ground of an outstanding mortgage, unless it be shown to have been made by a party having authority to execute it.'^ 73 a. T. leased a tenement to K., and afterwards sold the same to M., agreeing that the rent reserved should be received by T. as so much of the purchase-money. Held, if, in conse- quence ^of the sale, the right of the vendor to collect the rents was lost or impaired, the vendee could not release or collect them without accounting for them to the vendor ; and that the stipulation in regard to the rents did not waive the lien for any part of the purchase-money .'^ 74. Bill in equity against the widow and heirs of a deceased 1 Woods V. Bailey, 3 Florida, 41. * Ibid. - Martin v. Lundie, 6 Ala. 427. ^ Kyles v. Tait, 6 Gratt. 44. 3 Glasscock v. Robinson, 13 Sm. & M. 85. 55* 654 THE LAW OF MORTGAGES. [CH. XXIII. purchaser, to enforce the vendor's lien. The "widow sets up in defence ; 1. That the plaintiff had no title, and the pur- chaser had consequently abandoned the purchase ; 2. That he had ^aid the purchase-money ; 3. That since his death she had acquired a title, under a deed of trust made by him. Held, the grounds of defence were inconsistent with each other, and that the plaintiff was entitled to enforce the lien.^ 75. Where land is sold under authority of the Orphans' Court, and a part of the price remains unpaid, the interest of which goes to the widow for life, remainder to the heirs ; the lien for the price is not discharged by a sheriff's sale under a judgment against the purchaser. Hence, all prior liens are unaffected.^ 76. An infant purchaser of land paid a part of the price ; in a suit for the balance, set up his minority as a defence, and prevailed ; and after coming of age conveyed the land to one having notice of all the facts. Held, the vendor retained a lien for the price, and might enforce it in equity without restoring, or offering to restore the amount received by him ; although, after his conveyance to the infant, but before the latter had avoided it, the plaintiff had quitclaimed the land to another person.^ 77. Sale of several lots on credit. The vendee sold two of them to diflerent purchasers, the first vendor agreeing with one of them to release his lot upon payment of a certain sum, but not being then informed that the latter had sold to a sub- purchaser. The vendor obtained a decree in Chancery for a sale, to satisfy his lien, and assigned the decree. Held, the decree charged the land held by the sub-purchaser, notwith- standing the above arrangement for a release ; and could not be discharged by payment of a sum corresponding with what was paid under this arrangement, taking into view the rela- tive value of the two lots.'* 78. A vendee gave his note for part of the price to a cred- 1 Glasscock v. Eobinson, 13 Sm. & ^ Weed v. Beebe, 21 Vt. 495. M. 85. * Kirkscy v. Mitchell, 8 Alab. 402, '■^ Lauman, 8 BaiT, 473. CH. XXIII.] EQUITABLE MORTfti.GES. — VENDOR'S LIEN. 655 itor of the vendor, who gave credit to the vendor for that amount. Upon the subsequent failure of the vendee, the vendor took back the land for a lower price, and sold it to the creditor, also for a lower price than the vendee had agreed for. Held, in the absence of an express agreement, such creditor had no lien upon the land, which was not subordinate to that of the vendor.^ 79. A vendee sells to one without notice, taldng a note for the price, which is assigned for value, before the maker has notice of the non-payment of the original consideration. Held, the vendor could not assert a lien against him, and that the assignee was entitled to payment of the note, although, after notice of the non-payment, the maker said he would not pay his note, unless he were made safe. Nor will the assignee's right to retain the money be impaired, by his giving the maker an indemnity as an inducement to pay the note.2 80. Where land is sold under articles, and the vendor after- wards sells it upon a judgment for the price, the judgment purchaser acquires a legal title, discharged of the vendor's lien for the purchase-money, and the latter is entitled to pay- ment, in preference to liens prior to his judgment upon the title of the vendee.^ 81. A vendor, after two years from the sale of the land, took other secuiity, and conveyed the land to the vendee for the express purpose of enabling him to raise money on it by mortgage. Held, the vendor thereby lost his lien.* 82. A., a trustee under a decree in Chancery, to invest trust funds, agreed with B., the surety in his trust bond, to lend him a part of the trust funds, taking a mortgage as security. He accordingly advanced half of the sum agreed, undertaking to apply the balance to pay a judgment against B. B. subsequently executed a mortgage to secure the whole amount. A. did not pay the judgment, and the mortgage 1 Colcord V. Seamonds, 6 B. Mon. ^ Horhach v. Riley, 7 Barr, 81. 265. ■* Glower v. RawUngs, 9 Sm. & M. 2 Houston V. Stanton. 11 Alab. 412. 122. 656 THE LAW OF HORTGAGES. [CH. XXIII. was never recorded, nor reported to the Chancellor for ap- proval, but was returned to the mortgagor and destroyed. A. received trust money, which he failed to invest, and was removed from office, and a new trustee appointed. The lands were sold by the sheriff to the defendant for one twelfth part of the amount advanced by A. to B., subject to prior judgment liens, of nearly their full value. The cestuis que trust file a bill, claiming a lien on the lands. Held, the bill could not be maintained, the circumstances not proving a certain, distinct, and consummated contract, for such lien between A. and B.^ , 83. The lien wiU be barred by the lapse of twenty years ; but not by a limitation which is sufficient to bar the per- sonal claim of the vendor. An acknowledgment, that the purchase-money has not been paid, will prevent the limitation.^ 84. The mode or form of enforcing a vendor's lien for the purchase-money, seems to be substantially the same as that of enforcing an ordinary mortgage ; by bill in equity against the vendee or those claiming under him. (d) 85. The rule, that the mortgagee may pursue all his reme- dies at once, does not apply to a vendor having a bond and equitable lien for the purchase-money .^ 86. Where a vendor, who has merely given a bond for title, brings a bill to enforce his lien, he need not join as a party defendant an execution-purchaser of the vendee's in- terest, although he is in possession ; unless he is also owner of the vendee's title under the bond ; the execution sale having passed nothing.^ 87. Where a vendor seeks to subject land sold, but not 1 Gill V. McAttec, 2 Md. Ch. 255. Driver v. Hudspeth, 16 Ala. 348; Er- '■^ Lingan v. Henderson, 1 Bland, 282 ; ving v- Beauchamp, 6 B. Mon. 422. Magruder v. Peter, 11 Gill & J. 218; =^ Barker y. Smark, 3 Bcav. 64. Moreton v. Harrison, 1 Bland, 491 ; * Driver v. Clark, 13 Ala. 192. {(1) In Indiana, a vendor is not required to attach the property of the ven- dee, though he has absconded. He may enforce his lien in equity. Russell V. Todd, 7 Blackf. 239. CH. XXIII.] EQUITABLE MORTGAGES. — VENDOR'S LIEN. 657 conveyed, to payment of the consideration, the Court may order him to exhibit, by a certain day, a sufficient convey- ance, with a relinquishment of dower, if he has a wife, warn- ing the vendee to deposit in Court, on the same or a succeed- ing day, the amount due ; and on the filing of such conveyance, and failure to make the requu'ed deposit or payment, to subject the land to sale.i 87 a. If- a vendor has a lien, and a mortgagee under the purchaser brings a bill to foreclose, the Court should decree a sale, and appropriate the proceeds, first to the payment of the lien, and next of the mortgage.^ 87 b. Claim by an equitable mortgagee against the mort- gagor, asking for a sale, and that other mortgagees might be summoned before the Master, or a decree made to ascertain what mortgages there were and their priorities. Order refused.'^ 88. A bill to enforce a lien should fully describe the con- tract of sale, and the non-payment of the price.'^ 89. The usual decree in a suit of this nature is for a sale of the land, unless the debt be paid by a certain day.^ In justification of this course of proceeding, as applied to a purchaser from the first vendee, the Court in Georgia remark as follows : — 90. " The title to his land has been vested in the company by operation of law. The corporation having complied strictly with the provisions of its charter, he cannot maintain trespass or ejectment. A suit upon the certificate would be wholly unavailable, owing to the insolvency of the company. He is consequently wholly remediless, unless equity will interpose for his relief, by decreeing a sale of the property for the payment of the purchase-money. And we are of the opinion that he is entitled to this relief. Nor will this judg- ment serve in the least to impede or obstruct the great enter- 1 Clark V. Bell, 2 B. Monr. 1. » Burgess v. Sturgis, 8 Eng. Law & - Mosely v. Garrett, 1 J. J. Marsh. Eq. 270. 212. * Hough V. Canby, 8 Blackf. 301. & Eskridge v. McClure, 2 Yerg. 84. 658 THE LAW OF MORTGAGES. [CH. XXIII. prise. The present proprietors, who bought with notice, have only to pay to this citizen the price put upon his property by commissioners appointed for that purpose, upon their own application." ^ 90 a. A decree to enforce the vendor's lien has been held erroneous, if it does not name a day for the appellants to redeem the property .^ 90 b. So also is a decree, directing a sale for cash, instead of allowing a reasonable credit.^ 91. In a suit to enforce his lien, the vendor of land will be compelled to do equity. Hence, if the vendee bids off the land upon an execution sale against the vendor, issued upon a judgment recovered after the purchase, he shall be allowed the amount paid to the officer.* 92. So, the principle of equitable apportionment of the debt, among different parcels of land subject to one incum- brance, is held applicable to the lien of a vendor. It is said, " There is no difference in principle between the lien of a vendor, under an agreement for the sale of land, part of which is subsequently sold by the vendee, and that of a mortgage to secure the purchase-money after a conveyance by the mort- gagor under similar circumstances. In either case, equity would require that the lien should be satisfied by sale of the different parcels in the inverse order of their alienation." ^ 1 Per Lumpkin, J., Mims v. Macon, * Foreman v. Hardwiek, 10 Ala. 316 &c. 3 Kelly, 342. 5 pgr Gardiner, J., Crafts v. Aspin- 2 Kyles V. Tait, 6 Gratt. 44. wall, 2 Comst. 291, 292. 3 Alford V. Helms, 6 Gratt. 90. CH. XXIV.] EQUITABLE MORTGAGES. — VENDEE'S LIEN. 659 CHAPTER XXIV. EQUITABLE MORTGAGES. LIEN OF A VENDEE FOR THE PUR- CHASE-MONEY. 1. A LIEN has been sometimes upheld, which is the pre- cise converse of, but treated as analogous to, that described in the last chapter ; to wit, the lien of a purchaser^ who has paid the purchase-money punctually, prematurely^ or by surprise, before receiving an actual conveyance.^ 2. Upon this subject Judge Story remarks as follows : — 3. " In Burgess v. 'Wheate,^ Sir Thomas Clarke, M. R., said, ' Where a conveyance is made prematurely, before money paid, the money is considered as a lien on that estate in the hands of the vendee. So where money was paid prematurely, the money would be considered as a lien on the estate of the vendor for the personal representatives of the purchaser ; -which would leave things in statu quo^ Mr. Sugden seems • to have doubted whether this lien exists in favor of the ven- dee, who has paid the purchase-money. For, alluding, as it should seem, to such a case, he says, ' Where a lien is raised for purchase-money under the usual equity in favor of a ven- dor, it is^or a debt really due to him, and equity merely provides a security for it. But in the case under considera- tion, equity must not simply give a security for an existing debt ; it must first raise a debt against the express agreement of the parties. The purchase-money was a debt due to the vendor, which, upon principle, it would be difficult to make him repay. What power has a court of equity to rescind a 1 Payne v. Atterbury, Harring. Cli. tual. &c. 8 Cush. 132 ; iEtna, &c. v. 414. See Coote, 265; Lowell v. Mu- Tyler, 16 Wend. 385. 2 1 W. Bl. 150, 1 ed. 211. 660 THE LAW OP MORTGAGES. [CH. XXIV. contract like this ? The question might perhaps arise, if the vendor was seeking relief in equity. But in this case he must be a defendant. If it should be admitted that the money cannot be recovered, then, of course, he must retain the estate also, until some person appears, who is by law entitled to require a conveyance of it.' (Sugden on Vendors, p. 258, 7th ed.) Lord Eldon cited the same position of Sir Thomas Clarke, in his very words, without objection or observation, in Mackreth v. Symmons, 15 Ves. 345. And afterwards, in the same case, p. 353, he used language importing an approval of it. ' This,' said he, ' comes very near the doctrine of Sir Thomas Clarke, which is very sensible, that where the con- veyance or the payment has been made by surprise, (meaning, it is supposed, prematurely^ in the sense of Sir T. Clarke,) there shall be a lien.' The ground asserted by Mr. Sugden for his doubt, does not seem sufficient to sustain it. He assumes, that there is no debt between the parties, which is the very matter in controversy, for in the view of a court of equity, the payment of the purchase-money may well be deemed a loan upon the security of the land, until it has been conveyed to the vendee. At least, there is quite as much reason to presume it, as there is reason to presume the land, when conveyed, to be still a security for the purchase-money due to the vendor. In the latter case, though there is a debt due by the vendee, it does not follow that it is a debt due by the land. In the former, if the estate cannot be conveyed and is not conveyed, the money is really a debt di|e to the vendee. At all events, in equity it is not very clear, what principle is impugned, by deeming the money a lien upon the ground of presumed intention." ^ 3 a. It has been held, that in case of a bond, conditioned to give a title on payment of the purchase-money, equity views the transaction as in the nature of a mortgage.^ 1 2 Story's Eq. § 1217, n. 4. See Ox- low v. Grayall, 11 Price, 58; Finch v. enham v. Esdaile, 3 Y. & Jer. 264 ; Liid- Winchelsea", 1 P. Wms. 282. - Conner V. Jianks, 18 Ala. 42. CH. XXIV.] EQUITABLE MORTGAGES. VENDEE' S LlEN. 661 S b. If a note is given for the price, an assignment of such note passes the lien also.' 3 c. The lien will not be lost, by extending the time of payment, and taking a new note payable directly to the assignee.2 3 d. So, a vendee of land under a parol contract, though he cannot have specific performance, may enforce a lien on the land for the purchase-money and his improvements.^ 3 e. A purchaser of land, who has paid part of the pur- chase-money, but has only a bond for title when the purchase- money is paid, has an interest which he may convey absolutely or in mortgage, subject, however, to the first ven- dor's lien.* 3/. Where one, having only a bond for a title, transfers it to a surety for the purchase-money ; this is an equitable mortgage, which may be foreclosed.^ 3 g". A., the owner and keeper of a hotel, agreed with B., his son-in-law, to sell it to him, and assist in conducting it, receiving half the profits. The wife of B. afterwards assisted in conducting the hotel. B., not having the funds required for the business, wrote to A., " you must mortgage or sell the premises." He afterwards applied to A. for a mortgage, to secure sums claimed by him, and brought an action, in part for the services of his wife. A. having become bankrupt, B. files a bill against the assignees, praying for specific perform- ance of the agreement, or that he might be declared to have a lien for his advances. Held, although he might have had a lien if the contract had failed through the fault of A., such lien was defeated by his own abandonment of the purchase.^ 4. In the case of Small v. Attwood,'' the purchase-money was followed into the stock in which the vendor had invested it, even notwithstanding a transfer to a third person. The 1 Conner v. Banks, 18 Ala. 42. 5 Hayes v. Hall, 4 Port. 374. 2 Ibid. ^ Dunn v. Grant, 17 Eng. Law & Eq. 8 Brown v. East, 5 Morir. 405. 526. * Fenno v. Sayre, 3 Ala. 458. " 1 Younge, 507. VOL. I. 56 662 THE LAW OF MORTGAGES. [CH. XXIV. case, however, was reversed on other grounds, and has been questioned.' 5. The following cases seem to be founded upon p^nciples somewhat analogous to that above stated. 6. An advance of money to a mortgagee, under an agree- ment that the mortgage shall be assigned to the lender, substitutes the latter, in equity, in place of the former.^ 7. A son advanced money to pay off a mortgage against his mother ; no assignment was executed, and the securities were lost ; but the title-deeds were found in his hands. Held, he had an equitable lien.^ 8. A married woman, having conveyed land by a defective conveyance, represented to a purchaser from her vendee that the title was good, and thereby induced him to pay out money. After her death, her heirs sought to avoid the con- veyance, and eject such purchaser. Held, in equity, they were bound to reimburse the sum paid by him, and, being non-residents, that he had a lien upon the land therefor.^ (e) 1 Coote, 265 ; Sug. Vend. 281 . * Blackburn v. Pennington, 8 B. Mon. '^ Rockwell V. Hobby, 2 Sandf. Ch. 9. 217. 3 Ibid. (e) As to an equitable title in government lands, growing out of a payment of the purchase-money, see Regan v. Walker, 2 Chand. (Wise.) 133. As to equitable mortgages, in general, see Northrup v. Cross, Law Rep. August, 1853, p. 232. CH. XXV.] REGISTRATION. 663 CHAPTER XXV. REGISTRATION OF MORTGAGES. 1 General requisition of registration in the United States. 3. Xot necessary belioeen the parties, &c. ! such notice. 4. Operation of an unrecorded mort- gage, as against other incumbrances. 6. Registration, how far notice. 12. Not necessary, as against parties having notice; what shall constitute 1. In the foregoing chapters, incidental reference has been often made to the registration or recording of mortgages, as an indispensable requisite to their perfect validity and effect ; in conformity TAdth the prevailing American system of noto- riety in the title to real property. In all the States, express provision is made for the recording of deeds ; applying as well to mortgages as to absolute conveyances. The plan of the present work does not include a statement of the minute statutory regulations upon this general subject, but only of such as apply specially to mortgages ; which are compara- tively very few. 2. Where statutory provisions, as to the recording of deeds generally, differ from those relating specially to mortgages ; the latter shall prevail.^ 3. In general, a mortgage, like an absolute conveyance, is valid betiueen the parties.^ without registration.^ (a) So, a 1 Weed V. Lyon, Barring, Ch. 363. 126 ; Andrews v. Burns, 11 Ala. 691 : '^ See Salmon r. Clagett, 3 Bland, Hartl. Dig. (Texas,) 83.5. (rt) The following statutory provisions and judicial decisions may properly be cited under this head : — In Vermont, where the assignee of a mortgage brings a bill to foreclose, he need not aver that the assignment is recorded. King v. Harrington, 2 Aik. 33. See Norton v. Stone, 8 Paige, 222. 664 THE LAW OF MOKTGAGES. [CH. XXV. mortgage defectively registered is a good equitable mortgage, and has precedence of subsequent judgments.^ So an unre- 1 Bank, &c. v. Carpenter, 7 Ham. (1st part) 21. The registration of the assignment of a bond and mortgage is not notice to the mortgagor of the assignment. Reed v. Marble, 10 Paige, Ch. 409; Wolcott V. SulHvan, 1 Edw. Ch. 399. In Pennsylvania, an act of 1715 provided, that any mortgage, or defeasible deed in the nature of a mortgage, should be invalid, unless recorded in six months from its date. By an act of 1820, mortgages take effect in the order of registration , except those given back to secure the price of the land con- veyed, for the recording of which sixty days are allowed. A mortgage, though not recorded within six months, has been held valid against the mort- gagor and a purchaser with notice, 2 Hill. of4 R. P. 448. In Delaware, mortgages lodged for registry at the same time have priority according to their dates ; if made for the purchase-monej', sixty days are allowed for recording. lb. 449. Priority is according to the date of registry. Dela, Rev. Sts. 269. A mortgage for the price, if recorded in sixty days, has precedence of a judgment. !!• In Arkansas, a mortgage gives no lien till filed for record. Ark. L. 745. In North Carolina, a mortgage is void against creditors or purchasers, un- less proved or recorded, like other deeds, within six months. As against such creditors, &c., a title passes only from registry. A mortgagee in an unrecorded mortgage may redeem one which is recorded ; but the mortgagor loses his right of redemption. 2 Hill, on R. P. 459. As to the law in Maryland, see Pannell v. Farmers', &c. 7 Har. & J. 202. In Ohio, a mortgage takes effect either in law or equity only from the time it is left for record. The statute makes the recording a part of the execu- tion. Doe V. Bank, &c. 3 McLean, 140 ; Holliday v. Franklin, &c. 16 Ohio, 533; Brown v. Kinkman, 1 Ohio, State R. 116 ; White t'. Denman, lb. 110 ; Magee ?'. Beatty, 8 Ilam. 396. A prior unrecorded mortgage is postponed to a subsequent recorded one, though the second mortgagee had notice. Stansell v. Roberts, 13 Ohio, 148; Mayham v. Coombs, 14, 408. In ]\Iississippi, mortgages recorded more than three months after execu- tion, take effect from their delivery to the recorder. Missis. Rev. C. 453, 454. Of two deeds delivered to the recorder on the same day, the one first executed has priority. lb. The Statute of Mississippi, giving validity to mortgages upon delivery for registry, docs not apply to mortgages executed out of the State of property out of the State. Prcwctt i'. Dobbs, 13 Sm. & M. 431. In Indiana and. Texas, a mortgage shall be recorded in ninety days from CH. XXV.] REGISTRATION. ' 665 corded mortgage has been held to take precedence of a sub- sequent judgment.' Especially if not docketed.^ So, as against one afterwards taking the property as security for an existing debt.^ But if the land should be sold by the sheriff under the judgment, prior to the registry of the mortgage, a bond fide purchaser would be protected against the mortgage^ ■^ Otherwise in South Carolina.^ But a mortgage, not legally recorded within the time prescribed by law, is invalid against 1 Sclimidt V. Hayt, 1 Eclw. Ch. 652. * Tiithill v. Dubois, 4 John. 216. 2 Tuthill V.Dubois, 4 John. 216. 5 Ash v. Ash, 1 Buy, 304 ; Ashe v. 3 Manhattan, &c. i-. Evertson, 6 Livingston, 2 Bay, 84 ; Penman v. Hart, Paige, 457. 251. its execution ; otherwise it is deemed fraudulent and void against a subse- quent mortgagee or purchaser, unless recorded before the deed of the latter. 2 Hill. 4G0 ; Hartl. Dig. 834, 835. In North Carolina, a mortgage, not recorded seasonably, is invalid against purchasers subsequent to the mortgage, whose conveyances are recerded before the mortgage. Cowan v. Green, 2 Hawks, 384. So with executions issued prior to registration. Davidson v. Beard, 2 Hawks, 520. See Pike v. Armstead, 1 Dev. Ch. 110 ; Fleming v. Burgin, 2 Ired. Ch. 584. Under the pi-oviso of the Pennsylvania statute of March 28, 1820, mort- gages given for the price of the lands mortgaged are liens from the time of their execution, if recorded within sixty days therefrom. Bratton, &c. 8 Barr, 1G4. In Kentucky, a mortgage is invalid against creditors, unless acknowledged and deposited for record within sixty days from its execution. Stephens v. Barnett, 7 Dana, 257. If proved or acknowledged, and recorded within sixty days, a mortgage proves itself Bibb v. Williams, 4 Monr. 579. As to registration in Michigan, see Beals v. Hale, 4 How. U. S. 37 ; Thomp- son V,. Mack, Harring. Ch. 150. In South Carolina, a mortgage is good against subsequent judgment cred- itors, without registration or notice. Coleman v. Bank, &c. 2 Strobh. Eq. 285. See Ross v. Bank, &c. 3 Strobh. Eq. 245. A mortgage, executed and delivered before a general assignment of the mortgagor for creditors, though not recorded till after, takes precedence of such assignment. WyckofFr. Remsen, 11 Paige, 564. Non-registry of a separate declaration of the trusts of a mortgage does not affect it, except as to such trusts. Skinner v. Cox, 4 Dev. 59. As to the law in Alabama, Herbert v. Hanrick, 16 Ala. 581 ; Harbrison v. Harrell, 19 Ala. 753. 56* 666 THE LAW OF MOKTGAGES. [CH. XXV. a trustee for creditors.^ Scire facias lies upon a mortgage, though improperly recorded.^ 4. In general, a subsequent mortgage, duly recorded, to a party having no notice of the former one, has precedence of such prior mortgage.^ 4 a. Where three mortgages were successively made, at the same time, of the same property, by the same person, and handed in this order to the register ; held, the first had priority.^ 4 &. A person holding the legal title to land, in trust for his father, sold the land, at the request of the father, and took two mortgages upon the land for the purchase-money, one for the portion of the purchase-money belonging to the father, and the other as a compensation to an agent for effect- ing the sale. Both mortgages were executed to the son at the same time, but with the understanding that the mort- gage for the benefit of the father was to take precedence, and it was recorded fifteen minutes earlier -fcan the other, for the benefit of the agent ; but the latter was assigned to the agent, before the assignment of the former to the father. Held, that the father's mortgage was entitled to priority, there having been no intervening bond fide purchase from the agent.^ 4 c. If a first mortgagee agrees by a sealed instrument with a second mortgagee, that the second mortgage shall have priority ; this will give it such priority, though the reg- istry remain unchanged.^ 4 d. Separate mortgages were made on the same day to two mortgagees. One of them was entered for record a short time before the other, but on the same day. The first, being in possession under his deed, acknowledged in writing that the mortgages were concurrent, and that his was first recorded by mistake. He afterwards conveyed to a third 1 Bank, &c. v. Herbert, 8 Cranch, 36. * Naylor v. Throckmorton, 7 Leigh, ^ Sohns I'. McCulloch, 5 Barr, 473. 98. •^ Pomet V. Scranton, AValk. 406 ; ^ Douglass v. Pecle, 1 Clark, 563. Clabaugh v. Byerly, 7 Gill, 354. « New York, &c. v. Peck, 2 Halst. Ch. 37. CH. XXV.] REGISTRATION. 667 person. Held, such writing, though not recorded, was ad- missible .evidence against such third person.^ 4 e. 1 trustee, having two sums of money, belonging to different cestins, loaned both to one person at the same time, and took separate mortgages upon the same premises as security, not intending to give priority to either over the other; but one was received by the clerk for registry shortly before the other. The premises being sold, and the proceeds in- sufficient to pay both debts ; held, the two should be paid rate ably .2 4/. Contract to sell certain land for $200. The vendee transferred his interest for $100, of which $10 was paid. Thereupon the vendor, at the request of the vendee, conveyed the land to the assignee, who mortgaged to the vendor for $200, and to the vendee for $90. The latter mortgage was recorded two'hours earlier than the former, and was assigned by the mortgagee for valuable consideration, without notice. On a bill by the assignee of the mortgage to the vendor to foreclose that mortgage, it was held, that the vendee's as- signee should be protected as a bond fide purchaser, and his mortgage, being first recorded, should have priority over the vendor's.^ 5. A mortgage first recorded has priority, although the prior mortgagee, whose deed is subsequently recorded, fore- closes, and himself purchases the estate, the other mortgagee not being made party to the suit* So, the purchaser on the foreclosure of an unregistered mortgage is not such a bond fide purchaser, as to overreach a conveyance by the mort- agor to a bond fide purchaser after the mortgage, and before foreclosure, who was in possession at the time of the fore- closure and sale.^ (&) So, a bond fide purchaser will be pro- 1 Beers v. Hawlev, 2 Conn. 467. * Taylor v. Thomas, 1 Halst. Ch. 331. 2 Rhoades v. Canfield. 8 Paige, 545. ° Hawlev v. Bennett, 5 Paige, C. R. 8 Corning r. Murray, 3 Barb. 652. 104. (b) Pending a suit for foreclosure, the mortgagee assigned an interest in the mortgage, -which assignment was recorded ; and, upon a sale of the 668 THE LAW OF MORTGAGES. [CH. XXV. tected against a prior unregistered mortgage, though the mortgage is subsequently registered before the registration of the deed to the purchaser.^ 6. In general, the recording of a mortgage is notice both of the debt and the lien to all parties. But without legal acknowledgment or proof, it is a nullity.'^ The record of an unsatisfied mortgage is sufficient to put a third person upon inquiry; and whatever puts a person upon inquiry is, in equity, notice to him of all the facts which such inquiry would have disclosed.^ 7. But where a person mortgages lands which he holds under a bond for a deed, he conveys thereby no legal inter- est in the bond, but only an equitable interest ; and the reg- istry of such mortgage is notice to no one.* So, a mortgage without seal or scroll is not constructive notice to subse- quent purchasers and creditors, though on record ; yet it transfer^ an equity to the mortgagee, and, being prior to a mere covenant to mortgage, must prevail against such cove- nant, with or without notice.^ 7 a. Deed with a schedule annexed, describing the prop- erty, as " land, the title to which is in, &c. given as collateral security, to pay certain notes." The mortgage was not re- corded. Held, the mortgage should have priority of the deed.^ 1 Hawley v. Bennett, 5 Paige, C, R. Cli. 319 ; Dean v. De Lezardi, 24 Miss. 104. 424. 2 Work I'. Harper, 24 Miss. 517. s Bolles u. Chauncey, 8 Conn. 389. See Peters v. Goodrich, 3 Conn. * Wing w. McDowell, Walk. Ch. 175 ; 146; Quinebaug, &c. v. French, 17 Farmers', &c. u. Maltby, 8 Paige, 361. Conn. 129; Mix u. Hotchkiss, 14 Conn. But see Parkhurst v. Alexander, 1 33; Miller v. Helm, 2 Sm. & M. 687 ; Johns. Cli. 394. Copeland ;;. Copeland, 28 Maine, 525 ; ^ Portwood v. Outton, 3 B. Mon. 247. ( Knickerbacker v. Boutwell, 2 Sandf. ^ Dunham v. Dey, 15 Johns. 556. premises, under flie decree of foreclosure, he became the purchaser ; where- upon certain judgment creditors levied upon the land, and, at the sheriff's sale, became the purchaMrs. Held, in the absence of any allegation to the contrary, such creditor^* would be presumed to hare purchased in good faith, without notice that the assignee had not received his share of the purchase- money, under the foreclosure. Norton v. Stone, 8 Paige, 222. CII. XXV.] KEGISTRATION. 669 lb. If a registered mortgage mentions the bond intended to be secured by it, though not its contents ; this is sufficient notice to subsequent purchasers.^ 7 c. Registration is notice to a subsequent purchaser from the mortgagor, though the mortgagee neglect for ten years to claim under the mortgage, and the mortgagor has in the mean time become insolvent.^ 7 d. The record of a mortgage is sufficient notice, though not mentioned in the alphabet or index.-^ 1 e. Actual notice of the amount secured by a mortgage is binding upon a subsequent purchaser, though there be a mistake in the register.* If. But where there is a mistake in the registry of a mortgage, as to the amount secured by the mortgage, the registry is notice only to the extent expressed in the registry .^ 8. The inscription, in the office of the recorder of mort- gages, of any act which gives notice to third persons of a mortgage, fulfils the object of the law ; and the notice is equally binding, whether derived from the inscription of the order appointing the tutor or curator, from the certificate of his appointment, or from the bond.^ 9. The record of a conveyance of land in mortgage, which on the records appears to be the land of the mortgagee, is not notice of a prior conveyance thereof from the mortgagee to the mortgagor." 10. A mortgagee need not notice liens or interests ac- quired subsequent to the recording of the mortgage, unless actually notified ; the registration of a subsequent mortgage is not enough.^ 11. In Bushell v. Bushell,^ Lord Redesdale says : — " It is true, the registry is considered as notice to a certain extent ; no person thinks of purchasing an estate without searching 1 Pike V. Collins, 33 Maine, 38. ^ Sauvcraet v. Landreaux, 1 La. Ann. 2 Dick V. Bakh, 8 Pet. 30. Rep. 219. 3 Curtis V. Lyman, 24 Verm. 338. ' Pierce v. Taylor, 10 Shepl. 24G. * Frost V. Beekman, 1 Johns. C. R. ^ King v. McVickar, 3 Santlf. Ch. 288. 192. 6 ibid. 9 1 Sch. &Lef. 103. 670 THE LAW OF MORTGAGES. [CH. XXV. the registry ; and if he searches, he has notice ; but I think it cannot be notice to all intents, on account of the mis- chiefs that would arise from such a decision. For if it is to be taken as constructive notice, it must be taken as notice of every thing that is contained in the memorial ; if a memorial contains a recital of another instrument, it is notice of that instrument ; if of a fact, it is notice of that fact." In another case ' he remarks : — "If it be notice, it must be notice, whether the deed be duly registered or not ; it may be un- duly registered ; and if it be so, the act does not give a pjef- erence ; and thus this construction would avoid all the pro- visions in the act for complying with its requisites." '^ 12. In general, a subsequent mortgagee, having notice of the prior mortgage, though not recorded, takes subject there- to.^ So, though he forecloses his own mortgage and himself purchases the land at the sale.^ 13. The general principle upon this subject is, that regis- tration is a substitute for livery of seizin; and, if the notori- ety intended to be effected by both of these ceremonies is otherwise attained, registration is unnecessary. Upon this ground, not only is an unrecorded mortgage good against the grantor and his heirs, but also against a second purchaser, mortgagee or attaching or levying creditor, who has actual or presumptive notice of the first mortgage ; such party him- self being deemed guilty of a fraudulent act. The same r-ule applies to a purchaser with notice from such grantee. But a second purchaser, &c., with notice, will acquire a good title against the first purchaser, after waiting a reasonable time for the mortgagee to record his deed ; because he may fairly presume that in some way the estate has been restored to the grantor. Open, peaceable, and exclusive possession by a grantee is primd facie, but not conclusive, evidence of 1 Latouche v. Lord Dunsanv, 1 Sch. 409; Solms v. McCiilloch, 5 Barr, 473; & Lef. 157. " Allen v. ]\Ionti,roinery, &c. 11 Ala. 437 ; ^ Sec also Underwood v. Lord Cour- Copdand v. Cojieland, 28 Maine, 525; town, 2 Sell. & L. 64. Woodworth ?'. Goodman, 1 Cali. 203. 3 See Sparks v. State Bank, 7 Blackf. * Harris v. Norton, 10 Barb. 264. CH. XXV.] REGISTRATION. 671 notice to the subsequent purchaser. In case of a deed and defeasance back, notice, in order to have any effect, must be notice of such facts as constitute the transaction a mortgage.^ It is said, the notice which will bind a purchaser, &c. must be either positive or implied. It is not sufficient, that the party is thereby put upon inquiry, or that there is a mere suspicion of notice.2 13 a. An unregistered mortgage is valid in the State where the property is situated, against a purchaser, with notice, though executed in another State.^ But the fact of execution in another State does not dispense with the gen- eral necessity of registration.* 13 b. A. mortgaged land to B., and afterwards released his equity of redemption, by deed in fee duly recorded, and took a bond for reconveyance ; but the bond was not record- ed. B. assigned the mortgage to C, ; but the assignment was not recorded, and was unknown to D., who purchased of B., after the assignment, but in good faith, and for valu- able consideration. Held, that D. took the land discharged of the mortgage.^ 13 c. A. conveyed to B., taking a mortgage for the price, which was not recorded within sixty days. B. then con- veyed to C, taking a mortgage for the price, which he fore- closed by a sale of the premises, being himself the purchaser, through an agent. B. afterwards quitclaimed all his title to D., who had no actual notice of A.'s mortgage. Held, D. took subject to A.'s mortgage.^ 14. If land is conveyed and immediately mortgaged back for the price, and the mortgagee remains in possession, T)ut neither deed nor mortgage is recorded ; such mortgage shall have priority of a subsequent mortgage, duly recorded.' 1 2 Hill, on R. P. 430-432/ * Ilparing v. Lightfoot, 16 Ala. 28. 2 Fort I'. Burch, 6 Barb. 60 ; Fleming ^ Mills v. Comstock, 5 Johns. C. R. V. Burgin, 2 Ircd. Ch. 584; Gill v. 214. M'Attee, 2 Mil. Ch. 255. See Ohio, » Smith v. Mobile. &c., 21 Ala. 125. &c. V. Ross, 2 Md. Ch. 25 ; Dav v. ' McKecUnie v. Hoskins, 10 Shepl. qjlMk, 25 Verm. 397. " 230. ^Bearing v. Watkins, 16 Ala. 20. 672 THE LAW OP MORTGAGES. [CH. XXV. 15. Where a mortgage, with power of sale, is not recorded till after a judgment entered against the mortgagor; the judgment creditor, purchasing under the judgment, has a better title than a purchaser under the power ; even though, it seems, he had notice of the mortgage before his judgment was entered.^ 16. Registration affects only a subsequent, not a prior mortgagee, &c.2 17. Where one who has contracted to sell land gives a mortgage of it, the tenant of the purchaser being at the time in possession ; this is constructive notice to the mortgagee of the sale, and he is bound thereby.^ 17 a. Pendency of a foreclosure suit, after service, is suffi- cient notice of the mortgage.^ 17 b. If a mortgage, duly recorded, recite that the premises are the same this day conveyed by the mortgagee to the mortgagor, and now reconveyed to secure the purchase- money ; this is sufficient notice of the deed to aU claiming under the mortgagee.^ 18. In Georgia, the 4th section of the act of 1827, relating to the recording of deeds and mortgages, does not give pri- ority to a subsequent recorded mortgage, with notice of a prior unregistered lien.^ 19. To charge a party with notice of an unrecorded mort- gage, the notice need not be of the date or amount, but only of an existing lien of a certain description by a certain party." 19 a. Where a recorded mortgage is discharged by one not the mortgagee, a subsequent incumbrancer is bound to inquire into his authority, and chargeable with such facts as he might learn by proper inquiry.^ 20. Conveyance for a certain sum, with an agreement be- 1 Ilulings V. Guthrie, 4 Barr, 123. ^ Center v. P. & M. Bank, 22 Ala. ^ Truscott V. Kinj,', 6 Barb. 346. 743. 3 Bank, &c. v. Flagg, 3 Barb. Ch. « Neal v. Kerrs, 4 Geo. 161. 316 ; Braman v. Wilkinson, 3 Barb. 1.51. ^ jj^rr v. Kinard, 3 Strobh. 73. * Hoole V. Attorncy-Gcncralj 22 Ala. ** Swarthout v. Curtis, 1 Seld. SOlA 190. CH. XXV.] REGISTRATION. 678 tween the parties and a third person, that a part of it should be paid down, he furnishing such part to the grantee, and that, as security therefor, he should receive a first mortgage from the grantee, to be recorded prior to the mortgage to the grantor for the balance of the purchase-money ; which was accordingly done. The grantor assigned his mortgage, and at the time of assignment a certificate of the county clerk was shown to the assignee, stating that the mortgage assigned was the first and only mortgage on record. Held, the mortgage given to the party who advanced the money should have priority.' 21. A first mortgage was not recorded, but a second mort- gage of the same property was recorded, the mortgagee hav- ing notice of the former incumbrance. The second mort- gagee assigned his mortgage to one having no notice of the first, but the assignment was not recorded. The assignee foreclosed, not making the holder of the first mortgage a party. The purchaser at the Master's sale had notice of the first mortgage, and recorded his deed. Held, the first mort- gage should have precedence of the title of such purchaser.^ 22. Bill in equity by the holder of a subsequent mort- gage, against the holder of a prior mortgage, but subsequently recorded. The bill alleged, that the plaintiff had no notice of the defendant's mortgage ; and the answer, that the de- fendant " had always understood and believed " that the plaintiff" had notice. Upon a hearing on bill, answer, and replication, a decree was rendered for the plaintiff".^ 23. K a mortgage is made without consideration, and transferred to a bond fide purchaser, and the mortgagors then convey to a bond fide purchaser, without notice of the mort- gage ; the assignee of the mortgage will hold.* 24. If an estate is devised subject to debts and legacies, and a mortgagee has notice, from the nature of the transac- 1 Lovett V. Demarest, 1 Halst. Ch. 113. » Taylor v. Thomas, 1 Halst. Ch. 331 . 2 Fort y.'Burch, 5 Denio, 187, (Whit- * Andrew Newport's case, Caa. Temp. tlesey, J., dissented.) Holt, 477 ; Skin. 423. VOL. I. 57 6T4 THE LAW OF MORTGAGES. [CH. XXV. tion, that the money advanced by him is not to be applied for the purposes of the trust, he v^ill take subject to the charge. But notice that the debts have been satisfied, will not render him liable, if any part of the trust remains to be performed ; the purchaser's exemption depending upon the state of things at the testator's death, and not being changed by subsequent events.^ 25. In Jones v. Smith,^ it was held, that the doctrine of constructive notice applies in two cases ; first, where the party has had actual notice that the land is in some way charged or incumbered, and has therefore been held by an implied knowledge of facts and instruments, to a knowledge of which he would have been led by an inquiry after such charge or incumbrance. Second, where the party has ab- stained from inquiry, for the very purpose of avoiding notice. In a subsequent case,^ gross negligence, in reference to a knowledge of the prior incumbrance, has been held to be equivalent to fraud.* 26. In Fuller v. Bennett,^ after negotiations extending over five years, an estate was purchased, and nearly two years after such purchase mortgaged by the purchaser. The solicitor of the purchaser in making the purchase was solici- tor of both parties in making the mortgage, and during the treaty for a purchase, he had notice of an incumbrance. Held, such notice charged the mortgagee. But a client is not affected with notice of a fraud which the solicitor him- self has practised with respect to the title, unless the client would have had constructive notice of it through the solici- tor, if practised by a third person.^ 27. If the parties employ one attorney, the mortgagee will be charged by notice to him, even though the sale was made under the direction of the Court, and the purchase 1 Coote, 447. Jones v. Smith, 1 Phill. 255; Stcedman '■i 1 llare, 43. v. Poole, 6 Hare, 19.3 ; Taylor v. Baker, 3 West V. Rcid, 2 Hare, 249. 5 Price, 306. * See Whitbread v. Jordan, 1 Y. & & 2 Hare, 394. Col. (Exch.) 303 j Sugd. Vend. 1054; " Kennedy v. Green, 3 M. & K. 699. CH. XXV.] REGISTRATION. 675 made by trustees on behalf of an infant.^ So, if the mort- gagor act as the mortgagee's attorney, notice to the former will bind the latter, if given in re gestdP- 27 a. A tenant for life, with a power to charge <£ 20,000 for the portions of younger children, mortgaged his life-estate, and covenanted with some of the mortgagees not to execute the power without their consent. He afterwards exercised the power for the benefit of his children, and created a long term to secure the X 20,000 ; and, upon the marriage of one of his daughters, appointed £5,000 to her for a portion. The trustees and appointees had notice of the mortgage and of the covenant. Held, the mortgage should have pri- ority over the title of the appointees.^ 28. Two persons, purchasing land, made a mortgage for the price, which was not recorded. Afterwards one of them, by a deed of trust, conveyed an undivided half for the pay- ment of certain debts ; under which deed a sale was ordered by the Court of Chancery, and made, and the interest of the grantor purchased by one not having notice of the mortgage. Held, the mortgage might be enforced against the residue of the land, for the amount due, and that the other mortgagor must look to the grantor for reimbursement.* 29. A subsequent mortgagee with notice cannot avail himself of any misdescription in the former mortgage, which would be corrected in equity as between the first mortgagee and the mortgagor.^ 30. In Frazer v. Jones,^ it was held, that a statement falsely made by the mortgagor, and recited in the mortgage, that he had -made a prior charge upon the land, did not oblige the mortgagee to inquire into the truth of such charge, and excused him for leaving the title-deeds in the hands of the mortgagor. 31. In Maryland, where an omission to record a mortgage 1 Toulmin v. Steerc, 3 Mer. 210. « Ohio Life, &c. v. Ledyard, 8 Ala. - Drjden v. Frost, 3 M. & C. 673. 866. ^ Hurst V. Hurst, 19 Enj;. Law & Eq. ^ Woodworth v. Guzman, 1 Call. 203. 374. ** 5 Hare, 475. H76 THE LAW OF MORTGAGES. [CH. XXV. has occurred, without fraudulent design, the mortgage will be decreed to be recorded, saving the rights of subsequent purchasers and creditors, without notice ; and, upon a bill by the mortgagee, a sale of the mortgagor's interest at the time of its execution may be decreed, with a like saving.' But where the security afforded by an unrecorded mortgage has been abandoned for other security, given by the debtor and accepted by the creditor, the mortgage will not be decreed to be recorded.^ 1 Sprif,'g V. hyles, 2 Gill & J. 446. ^ 15;^. b '-^W LIBRARY USiVERSlTY OF CALIFORNU LOS ANGELAS UC SOUTHERN REGIONAL LIBRARY FACILITY AA 000 820 407 5 'I.N ^ -'-!)