UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY TAGORE LAW LECTURES 1875-6. 1875-6, THE LAW OF MORTGAGE IN INDIA. BY RASHBEHARY GHOSE, M.A., D.L., SOME TIME TAGORE LAW PROFESSOR, CALCUTTA. S IE C O IsT ID CALCUTTA: TH ACKER, SPINK AND Co. BOMBAY. THACKER & CO., LD. LONDON: W. THACKER & CO. 1889. r CALCUTTA : PRINTED BY THACKER, SPINK ANp C3. PREFACE TO THE SECOND EDITION. THE following lectures were originally delivered by me as Tagore Professor of Law in the year 1876, and were published in the succeeding year. Nearly a dozen years have since passed away, and in the interval the Transfer of Property Act containing a special chapter on mortgages has been added to the Statute-book. The Courts of Justice too have not been idle and the law reports have furnished a mass of material, the value of which, if not always in proportion to its bulk, is still very considerable. In bringing out the present edition I have endeavoured to in- troduce the various alterations which have been made in the law since the date of the first publication of these lectures. The Transfer of Property Act with notes has been added as a supple- ment, while the new cases as a rule have been worked into the text. I have also taken this opportunity to introduce a larger number of decided cases than was compatible with the original design of the work as a course of lectures intended for the instruction of law students. This new feature will, I trust, render the book more acceptable to the profession without detracting from its usefulness to the class for whose benefit it was originally composed. Owing to the numerous changes which have taken place during the last twelve years, I have been obliged to re- write some por- tions of the work, while large additions have been made nearly to every part. The original design and mode of arrangement of the former edition have been however retained, although both are no VI PREFACE TO THE SECOND EDITION. doubt susceptible of a great deal of improvement. I can only plead in extenuation the daily interruptions of professional life which seldom leave the practising lawyer much leisure for the labours of an author. A few hours, it should be remembered, occa- sionally stolen from business is all that he can hope to bestow on his work. The alterations made by recent Statute-law, not being of a retrospective character and the Statute itself having at present a somewhat limited territorial operation, I have thought it proper to retain the exposition of the old law which was contained in the former edition, and which has not yet become wholly obsolete. In conclusion, I have to thank Mr. S. P. Sinha, advocate, for the preparation of the index to the present edition. My thanks are also due to Babu Ashutosh Mookerji, M.A., F.R.A.S., F.R.S.E., for passing the sheets through the press. CALCUTTA, ~i 1st May 1889. J RASHBEHARY GHOSE. TABLE OF CONTENTS. LECTURE I. PAGE. Early history of institutions Doctrine of evolution in Law, illustrated by the Hindu Will Early notions of security Early law of distress Mortgage in early law Possessory lien Powers of sale and foreclosure Real security, how distinguished from real right Historical sketch of the Roman law of securities Similar notions traceable in early Hindu and Mahomedan law Fiducia Pignus Improvements in the Romau law of pledge, by the Praetorian jurisdiction, the actio serviana, and the quasi-Servian action External influences which modified the Roman law Growth of real security Power of sale History of the Fiducia The lex commissoria Fore- closure in Roman law Three-fold division of securities by Roman jurists, into conventional, legal, and judicial Rights of pledger and pledgee in Roman law Sale by mortgage Right of redemption Tacking Priority determined by time Potestative and non-potestative conditions Exceptions to the rule of priority Salvage liens Privileged liens Tacit hypothecation in Roman law Hypothecation how extinguished Extinc- tion by merger Marshalling in Roman law Effect of the mortgagor subsequently becoming the owner Right of subrogation, how acquired Extinction of pledge Pledge when redeemable Antichresis Liabilities of the pledgor and of the pledgee Pledge in systems founded on Roman law Important deviation in continental law English law of mortgage Equity of redemption Bill of foreclosure Decree for sale Remedies of mortgagee may be pursued concurrently Insufficient security English remedy foreclosure, but sale the more equitable remedy Who may redeem Equity of redemption cannot be restrained even by express contract Equity of redemption in the case of a second mortgage without notice Power of sale Liabilities of the mortgagee Influence of civil law Note giving tabular view of the classification of securities in Roman law 1 LECTURE II. Hindu law of bailments Conflicting texts Early notions of pledge in Hindu law and gradual modification of these primitive notions Relation of Hindu law to Comparative Jurisprudence Tradition originally essential to validity of pledge Validity of pledge, unaccompanied by delivery of possession, acknowledged in fiib Chunder Ghose v. Hussick Cfiunder Neogy Importance of Tradition in early law Real and personal rights Possession not neces- sary in later Hindu law Priority of mortgage Possession important when any questions touching priority arose Conflicting texts cited side by side in Jagannath's Digest Mr. Justice Grant's judgment observed upon Jus gentium of the Roman law Pactum Prsctorium Hypothecation in Hindu law Early notions of security in Hindu law Pledgee had in early times only a right of detention Foreclosure, and power of sale, innovations Classification of pledges by Hindu lawyers Rule of Hindu law, interest not to exceed principal Development of Hindu law of mortgage Rule requir- ing tradition gradually fell into disuse Commentaries on Manu Hindu mode of interpi-etation Text of Vrihaspati Equity of redemption and sale by judicial process Gradual improvement of Hindu law Hindu law of mortgage in its maturity Beneficial pledge and pledge for custody Im- portant distinction between mortgage with and mortgage without possession viii TABLE OF CONTENTS. PAGE. Nature of Dristi-Bandhak Priority of mortgages in Hindu law Right of pledgee to sue when pledge is destroyed without his default Analogous rule in the Code Napoleon Equity of redemption of a usufructuary mort- gage Rights of mortgagor Validity of second mortgage Character of Hindu law of mortgage 26 Mahommedan law of mortgage Gradual assimilation with Hindu law Differ- ence between Mahommedan law and Hindu and English law Analogy between Mahommedan law and Roman law Rahn, literally detention Pledge invalid unless followed by transfer of possession Conflicting opinions of Mahommedan lawyers on the point Possession being essential to the validity of a pledge, things incapable of seizin cannot be pledged Things which could be sold, but of which possession could not be given, could not be pledged The contrary opinion held by Shafei Pawnee lending the pledge to the pawnor, is freed from responsibility during the loan, but he may resume it at pleasure, and then his responsibility reverts A debtor may transfer his debt upon a property in the hands of another person Seizin not neces- sary under the Maliki law An equity of redemption cannot be the subject of a gift, though it can be sold Observation that this is probably a narrow construction of the Hanafi law Power of sale in Mahommedan law Rights of pledger Rights of pledgee Consequences of loss or destruction of pledge The expenses of custody of the pledge rest upon the pawnee, and those of preservation upon the pawnor ; taxes are defrayed by the pawnor Tithes must similarly be paid by the pawnor Pledge must be only for ex- isting debt Case of pledge for contingent debt Pledgee bound to produce the pledge on receiving a partial payment Destruction of the pledge by the pawnor and by a stranger Interest unlawful Influence of this rule in retarding development of law of pledge Qualified power of sale Must be given by contract itself Bye-bil-wufa, a comparatively modern innovation Conflicting opinions of Mahommedan lawyers as to its legality Opinion of Mahommedan law officer in Bussunt Ally's case Recognition of validity of Bye-bil-wufas in India Bye-bil-wufa really a security, not a sale Gradual recognition of hypothecation Probable influence of Hindu law No distinction between pledges of land and pledges of moveables Move- ables, originally the subject of pledge Gradual extension of pledge of land Hypothecation Gradual relaxation of the rule rendering tradition essential 43 LECTURE III. Different kinds of mortgage Three principal kinds of conventional mortgages Simple mortgage Mortgage by conditional sale Usufructuary mort- gage Local mortgages Mortgage how created Writing not essential Oral agreements valid in Hindu and Mahommedan law Parol mortgages invalid in English law, but valid here, though the effect of the Indian Regis- tration Act is to give preference to registered instruments Two aspects of a mortgage Debt secured by mortgage on a bond how to be sold in execu- tion Mortgagee's interest, under English law, merely that of a security Specific performance of a mortgage not always allowed Conflict of laws Mortgage of immoveable property governed by the lex rei sitce This rule not recognized by the French Code Parol mortgage accompanied by posses- sion protected by the Registration Act, but constructive possession not suffi- cient Admissibility of parol evidence discussed Kassinath Chatterjee v Chutuly Churn Banerjee For qualifying the terms of a written instrument parol evidence inadmissible Parol evidence of " agreement," and of " acts " and " conduct" No real distinction between the two Provisions of the Evidence Act on the point Authorities for and against the admissibility of parol evidence of "acts" and " conduct " Parol defeasances ought to be held inadmissible Parol evidence when admissible in case of fraud or mistake - Justice Melvill's judgment True rule on the point formulated in the Specific Relief Act History of English law on the point Taltarum's Case Judges usurping the functions of the legislature and relaxing the Statute of 1 rauds Two kinds of consensual mortgages, express and impli- ed Mortgage by deposit of title-deeds Equitable mortgage in English law, as opposed to a legal mortgage Equitable mortgage in the mofussil TABLE OF CONTENTS. ix PAGE. Equitable mortgagee has only a decree for sale in the mofussil, but may fore- close in the original jurisdiction of the High Court Mortgage implied by delivery of the title-deeds, and, if further accompanied by an agreement, to create a charge : the transaction is an express conventional mortgage Var- den Seth Sam's Case Growth of equitable mortgage in England Memo- randums, true nature of Mortgage of the equity of redemption is an equi- table mortgage Registration Equitable mortgage in England, how creat- ed Mortgage of future crops What cannot be the subject of mortgage The expression " equitable mortgage" not properly applicable to a trans- action between natives of this country Defence of purchase for value with- out notice Equitable defence not available here In case of wilful neglect or fraud, such defence available Durga Prosad v. Shumbu Nath Memo- randum not the contract between the ^parties, but simply an evidence of the deposit of the title-deeds Kedernath Dutt v. Sham Lull Khetlry Bombay cases on the point Summary of decisions Registration of memorandum not necessary Equitable mortgage not an oral agreement within the mean- ing of the Registration Act Proper subjects of mortgage General hypo- thecation invalid Accidental destruction of object of pledge Capacity to mortgage Rights of a trustee with limited powers Persons under dis- ability incapable of creating a mortgage Case of a minor Rights of guardian Accessions to pledge Mortgagee's right to the accessions only a qualified right Leading case on the point, Rajah Kishendatt v. Raja Mumtaz All Mortgagor having defective title bound to make good mort- gage out of property subsequently acquired Right of the mortgagee, being in the nature of a right to claim specific performance, plea of purchase for value without notice is a good defence Frauds by the mortgagor and mort- gagee Doctrine of estoppel Right of the mortgagee does not extend to things not pledged to him Rights of mortgagor and mortgagee when pledge assumes a new form Byjnath Lull v, Ramdin Ghowdry Mortgagee not a party to a suit for partition of mortgaged joint family property Mortgage of joint estate in Roman law Mortgagee not estopped by a previous judg- ment Bonomally Nag's Case Question of estoppel discussed in Stturam v. Amir Begum Resjudicata Mortgagee when bound by the acts of the mortgagor Rights of the mortgagee Mortgagee entitled to detain title- deeds, and mortgagor to inspect them at all reasonable times Liability of the mortgagee of a lease-hold for rent Mortgage of a whole term in English law Power of sale in mofussil mortgages Validity of power of sale dis- cussed Bhowani Churn Mitter's Case Power of sale not allowed in the French Code 5o LECTURE IV. What constitutes simple mortgage Simple mortgage an equitable lien, and really comprises two transactions Questions of construction Miller v. Eanga Nath Personal liability of the mortgagor Noratum v. Sheo Perqush No particular form of words necessary to constitute simple mortgage Inten- tion of the parties Cases on the point Power of sale Nature of security possessed by simple mortgagee Simple mortgage how made available Agreement as to rate of interest Nature of decree for sale Mortgage decree Right of mortgagee to sue Period of grace allowed by some courts to mortgagor Rights of a purchaser under a decree not for sale Conflict- ing views of the Allahabad and Madras, and the Calcutta and Bombay High Courts What passes in a sale under a money-decree Doctrine of merger as explained in Venakata v. Ramiah Difference between money-decree and decree for specific enforcement of lien Rights of puisne incumbrancers Cases on the point Case of more than one incumbrancer Law of Proce- dure Knowledge of subsequent incumbrances not essential Who ought to be made parties to the suit ; case of mortgagor, owner of equity of redemp- tion, person with contingent interest, execution-purchaser and Mitakshara father Doctrine of virtual representation Cases on the point Rights of an absent transferree of equity of redemption Gopibundhoo v. Kalipodo Sale by puisne incumbrancer Rights of the first buyer of the equity of redemption Bwjnath v. Gobardhan Right of redemption of an absent interested party Account of mortgage debt Practice of mofussil courts X TABLE OF CONTENTS. PAGE. Mortgagee not entitled to sell equity of redemption under money-decree Right of transferree to redeem purchaser Cases on the point Mortgagee sells the property discharged of his own lien Nature of a simple mortgage Purchase by mortgagee Criticism of Bombay cases on the point Law of, execution Practice of Continental courts Right passing under a sale Relation of second to subsequent mortgagees Effect of clause against alienation in mortgage deed Breach of such a clause valid to what extent Roman law on the point Lis Pendens Provisions of the Procedure Code Right of prior mortgagee to sue for re-sale of property Mortgagee not bound to proceed against pledge Relative rights of the parties Prac- tice of the Court of Chancery Exceptional cases Case of portion of mort- gaged premises converted into money Joint mortgage by two or more mort- gagors English law on the point Right of one of several mortgagees to sue Suit for foreclosure Mortgagee free to proceed against any property to what extent Limitation of this right Section 271 of Act VIII of 1859 Mortgagee may waive his rights Fakir Bux's case Decree upon a simple mortgage a decree for money Right of court to restrain mortgagee in case of collusion Section 287 of the Civil Procedure Code Section 295 how construed Remedies of mortgagor Sale of property " subject to mortgage" Section 271 of Act VIII of 1859 Defence of bonA fide pur- chaser for value without notice not available Roman law on the subject Cases on the point Right of simple mortgagee a real right Statutes of limitation Period within which security must be enforced Court in which mortgagee must sue Conflicting decisions Question of pecuniary juris- diction 118 LECTURE V. Mortgage by conditional sale Differences in form between conditional sale and English mortgages Differences between mortgages by conditional sale and sales with clause for re-purchase Question of intention Covenant by the moi-tgagor upon which he might be sued by the mortgagee True rule of con- struction No personal liability of the mortgagor Nature of the Dristi- bumlhuk and Gahen Lahen Rights of the mortgagee Personal liability of mortgagor not to be presumed in the absence of express covenant Con- struction of the Sudder Dewany Adalut Implied warranty of title by mort- gagor Remedy for breach of warranty Leading case on the point Measure of damages in England Remedy for defective title of mortgagor Remedy when security is insufficient Remedy of mortgagee when pledge is accidentally destroyed Principle upon which damages should be assessed Right of mortgagee to prevent waste when security is insufficient Failure to pay by appointed time Regulation XVII of 1806 Process of foreclosure in Bengal Stipulated period Shoroshee Bala Dabee's Case Forfeiture for breach of any condition Application to follow demand for payment The mortgage must be foreclosed as a whole Case of joint mortgagors Court to which application must be made Duty of court on receiving appli- cation Meaning of " Legal representatives " Notice Purchaser of part of property and attachment creditor, both legal representatives Notice to be served on whom Case of intestacy Case of more than one mortgagor Who are not entitled to notice Provisions of the Regulation mandatory and not merely directory Distinction between mandatory and directory enact- ments View of the Allahabad High Court What the notice ought to contain Proceedings under the Regulation merely ministerial Regular suit Forbes v. Amerunessa Title of the mortgagee Right to recover rents Nature of the restrictions imposed by the Regulation Denonath Gangooly's Case Process of foreclosure elsewhere than in Bengal, moulded on the practice of the English Court of Chancery Whether a mortgagee can pm*sue his remedies concurrently Right of mortgagee to possession immediately on default, how far qualified in Bengal by Regulation XVII of 1806 Limitation Act XIV of 1859 Cause of action what Pos- foreclosure mortgagor when permissive Mortgagee's cause of action before session of the Rights of mortgagor transferred to third party Trcs- l>a^scr holding adversely to both mortgagor and mortgagee Act IX of 1871 and XV of 1877 ..194 TABLE OF CONTENTS. xi PAGE. LECTURE VI. Equity of redemption Origin of expression Position of mortgagor before foreclosure Right to redeem Bengal Regulation XVII of 1806 Recog- nized by Courts of Justices in other Provinces Opinion of the Privy Coun- cil Puttaveramierv, Vencatta Row Naiker " Once a mortgage always a mortgage " Meaning of maxim Persons entitled to redeem Regulation XVII of 1806 Practice of English Courts of Chancery Mortgage security indivisible Effect of mortgagee's purchasing portion of mortgaged pro- perty Contribution Redemption under Bengal Regulations Deposit or tender What is a good deposit Rukea Begum v. Prannath Roy Chowdry Time within which deposit must be made Practice in Bombay and Madras Limitation Acknowledgment Effect of acknowledgment by one of several mortgagees Difference between English Statute and Indian Act ... 237 LECTURE VII. Usufructuary mortgage What constitutes usufructuary mortgages Personal liability of mortgagor Zuripeshgec leases Difference between Zuripeshgee and ordinary leases Hanuman Persad Pandey's case Origin of Zuripesh- gee leases Rights and liabilities of usufructuary mortgagee before and after repeal of Usury Laws Liability to account Right of redemption of mort- gagor Simple usufructuary mortgagee not entitled to decree for sale Limitation 271 LECTURE VIII. Liability of mortgagee in possession to account Regulation XV of 1793 Meaning of "gross receipts " Mortgagee not competent to create middle- men Allowance for expenses of collection Practice of our Courts Nature of accounts which mortgagee is bound to produce Verification of accounts Right of mortgagee to interest not exceeding 12 per cent Shah MakhunLoll v. SreekiissenSliuj Liability of mortgagee since Act XXVIII of 1S55 Zuripeshgee leases Allowance for necessary repairs Improvements how far allowed Payment of Government revenue Mode of taking accounts Liability of mortgagee after notice of subsequent incumbrance Mortgagor not liable to account Mortgagee not a trustee for mortgagor Wassilat distinct from usufruct Mortgagee chargeable with occupation rent Suit for redemption Practice of the Courts in Bengal Procedure in such cases elsewhere 287 LECTURE IX. Liens Legal and Judicial Distinction between Statutory liens Regula- tion VIII of 1819 and Act VIII of 1869 (B.C.) Act XI of 1859 Salvor's lien Lien of co-sharer for revenue paid by him Unpaid vendor's lien Mwkft'tli. \. Summons What constitutes waiver of lien Objections to legal liens Registration Purchasers without notice Practice of English Court of Chancery Purchaser's lien Lien of partners and agents Tenants in common No lien for dower in Mahomedan law None in favour of credi- tors on assets of deceased debtor in Hindu or Mahomedan law Judicial lieu Attachment before and after judgment Operation of Section 240 of Act VIII of 18.39 Alienation by debtor not absolutely void Aniiiul Molnm J)asfi v. Badha Mohan Shah Striking off attachment Effect of Piuhlo- tuoneij v. Roy Mothuranath Chomlhry ... ' 314 LECTURE X. Subrogation Application of rule Rights of puisne incumbrancers Rights of surety Entitled to benefit of securities held by creditor How far dis- charged by relinquishment of security Security not relinquished by pay- ment Rule of English law Followed in India Co-debtors How far entitled to benefit of securities Purchasers of mortgagor's rights redeeming a mortgage, how far entitled to benefit of subrogation Other cases illustra- Xll TABLE OF CONTENTS. PAGE. tive of the rule Contribution Principle on which founded Doctrine followed in India Marshalling" of securities Rule of English law Adopted by our Courts Distinction between purchasers and incumbrancers Notice immaterial in the case of a mortgage 339 LECTURE XI. Pledge of moveables Paucity of authority Contract Act Definition of pledge Validity of hypothecation of moveables Danger of fraud Dis- tinction between a pledge and a mortgage of chattels Power of sale Pawnee's lien extends to interest and necessary expenses Extraordinary expenses Right of pawnee to tack subsequent advances Rule of English law Right of pawnee to make use of pledge Degree of diligence imposed on pawnee Differences between Indian law and English and Roman law on the point Pawnor's right to accessions Right of redemption Passes to the lega'l representative Possessory heirs General and special Unpaid seller's lien May be varied Right of resale Differences between Indian and English law Lien of artificers Banker's and attorney's lien for general balance of account 355 LECTURE XII. Extinction of securities Consolidation Merger of debt Right of prior mortgagee how far extinguished Rule of Roman law Doctrine of English Court of Chancery Conflicting decisions in India Extinction of security by dischai'ge of obligation Novation Substitutionary and cumulative Extinction of security by destruction or sale of pledge or prescription and renunciation Priority Generally determined by order of time How affected by registration Notice immaterial Priority how far affected by possession Rule of Hindu law Privileged liens Salvor's lien Tacking Extent to which recognised in Roman law Doctrine of English law Origin of doctrine Not followed in India Consolidation of securities Rule of English law Partial recognition by our Courts Mortgage to secure future advances How priority is forfeited Fraud, actual or constructive, of mortgagee Laches Effect of allowing title-deeds to remain in custody of mortgagor Allowing mortgagor to receive rents after notice of incum- brance Deeds of further charge Practice in India Waiver of security not presumed Lis pendens Application of doctrine in relation to priority of securities 369 TRANSFER OF PROPERTY ACT, 1882- CHAPTER I. PRELIMINARY. Preamble Short title Commencement Extent Repeal of Acts Saving of certain enactments, incidents, rights, liabilities, &c. Interpretation- clause " immoveable property": "instrument": "registered": - " attached to the earth" "Notice." Cf. sec. 36 A., 1882 Enactments relating to contracts to be taken as part of Act IX of 1872 ... ... ... 403 CHAPTER II. OF TRANSFERS OF PROPERTY BY ACT OF PARTIES. " Transfer of Property " defined What may be transferred Persons compe- tent to transfer Operation of transfer Oral transfer Condition res- training alienation Restriction repugnant to interest created Condition making interest determinable on insolvency or attempted alienation Trans- fer for benefit of unborn person Rule against perpetuity Transfer to TABLE OF CONTENTS. XI ii PAGE. class some of whom come under sections 13 and 14 Transfer to take effect on failure of prior transfer Transfer in perpetuity for benefit of public Direction for accumulation Vested interest When unborn person acquires vested interest on transfer for his benefit Contingent interest Trans- fer to members of a class who attain a particular age Transfer contin- gent on happening of specified uncertain event Transfer to such of certain persons as survive at some period not specified Conditional transfer Fulfilment of condition precedent Conditional transfer to one person coupled with transfer to another on failure of prior disposition Ulterior transfer conditional on happening or not happening of specified event Fulfilment of condition subsequent Prior disposition not affected by invalidity of ulterior disposition Condition that transfer shall cease to have effect in case speci- fied uncertain event happens or does not happens Such condition must not be invalid Transfer conditional on performance of act, no time being spe- cified for performance Transfer conditional on performance of act, time being specified Election when necessary Apportionment of periodical payments on determination of interest of person entitled Apportionment of benefit of obligation on severance Transfer by person authorized only under certain circumstances to transfer Transfer where third person is entitled to maintenance Burden of obligation imposing restriction on use of land, or of obligation annexed to ownership, but not amounting to interest or ease- ment Transfer by ostensible owner Transfer by person having authority to revoke former transfer Transfer by unauthorized person who subse- quently acquires interest in property transferred Transfer by one co-owner Joint transfer for consideration Transfer for consideration by persons having distinct interests Transfer by co-owners of share in common pro- perty Priority of rights created by transfer Transferee's right under policy Rent bond fide paid to holder under defective title Improvements made by bond fide holders under defective titles Transfer of property pend- ing suit relating thereto Fraudulent transfer ... ... ... ...411 CHAPTER III. OF SALES OF IMMOVEABLE PROPERTY. " Sale" defined Sale how made Contract for sale Rights and liabilities of buyer and seller Sale of one of two properties subject to a common charge Provision by Court for incumbrances, and sale freed therefrom 436 CHAPTER IV. OF MORTGAGES OF IMMOVEABLE PROPERTY AND CHARGES. " Mortgage," " mortgagor " and " mortgagee " defined Simple mortgage Mort- gage by conditional sale Usufructuary mortgage English mortgage Mortgage when to be by assurance Right of mortgagor to redeem Redemption of portion of mortgaged property Right to redeem one of two properties separately mortgaged Right of usufructuary mortgagor to recover possession Accession to mortgaged property Accession acquired in virtue of transferred ownership Renewal of Mortgaged lease Implied contracts by mortgagor Waste by mortgagor in possession Right to foreclosure or sale Right to sue for mortgage-money Power of sale when valid Accession to mortgaged property Renewal of mortgaged lease Rights of mortgagee in possession Charge on pro- ceeds of revenue-sale Right of subsequent mortgagee to pay off prior mortgagee Rights of mesne mortgagee against prior and subsequent mort- gagees Liabilities of mortgagee in possession Loss occasioned by his default Receipts in lieu of interest Postponement of prior mortgagee Mortgage to secure uncertain amount when maximum is expressed Tacking abolished Marshalling securities Contribution to mortgage debt Power to deposit in Court money due on mortgage Right to money deposited by mortgagor Cessation of interest Parties to suits for foreclosure, sale and redemption Procedure in case of payment of amount due Order absolute for foreclosure Power to enlarge time Decree for sale Power to decree xiv TABLE OF CONTENTS. PAOE. sale in foreclosure suit Procedure when defendant pays amount due Order absolute for sale Recovery of balance due on mortgage Who may sue for redemption Decree in redemption-suit In case of redemption, possession In default, foreclosure or sale Power to enlarge time Costs of mort- gagee subsequent to decree Charge of one of several co-mortgagors who redeems Sale of property subject to prior mortgage Application of pro- ceeds Mortgage not described in sec. 58 Attachment of mortgaged pro- perty Charges Extinguishment of charges Service or tender on or to agent Notice, &c., to or by person incompetent to contract Power to make rules ... ... ... ... ... ... ... ... ... ... ... 444 CHAPTER V. OF LEASES OF IMMOVEABLE PROPERTY. Lease defined Lessor, lessee, premium and rent defined Duration of certain leases in absence of written contract or local usage Leases how made Rights and liabilities of lessor and lessee Rights of lessor's transferrec Exclusion of day on which term commences Duration of lease for a year Option to determine lease Determination of lease Waiver of forfeiture Waiver of notice to quit Relief against forfeiture for non-payment of rent Effect of surrender and forfeiture on under-leases Effect of holding over Exemption of leases for agricultural purposes 502 CHAPTER VI. OF EXCHANGES. "Exchange " defined Right of party deprived of thing received in exchange Rights and liabilities of parties Exchange of money 509 CHAPTER VII. OF GIFTS. " Gift" defined Acceptance when to be made Transfer how effected Gift of existing and future property Gift to several, of whom one does not accept When gift may be suspended or revoked Onerous gifts Onerous gift to disqualified person Univei-sal donee Saving of donations mortis cuityti and Muhammadan law 509 CHAPTER VIII. OF TRANSFERS OF ACTIONABLE CLAIMS. Actionable claim Transfer of debts Notice to be in writing signed Debtor to give effect to transfer Warranty of solvency of debtor Discharge of person against whom claim is sold Incapacity of officers connected with Courts of Justice Liability of transferree of debt Mortgage-debt Saving of negotiable instruments 511 TABLE OF CASES CITED. ** All titles prefixed to the names of the parties, such as Babu, Maharaja, Syud, &c., have been, as a rule, discarded. A. Abadi n. Asa Abbas v. Sahib ... Abilar lluhman v. Kisto Abdool o. Jaunali v. Sadik Abdoolah v. Abdoolah ... Abdul v. Knslii ... v. Zibnn ... Abernmtxn Works v. Wickons Abool v. Raphn Achumbit v. Keso Achut Ram v. lion Achuta v. Kali Adams v. Angell v. Claxton ' v. Scott ... Adjoodhya . Girdhnree Adjudhya Ham v. Ashootosh Adnam . Earl of Sandwich Agra Bank v. Barry 389, 390, 391, 393, 398, 399, 406, Ahmed v. Kunhamed ... - v. How Nakhar . Jowhir Ahmedbhoy v. Vulleebhoy Ahollya v. Shama Ajid Hossein . Hafiz Ajoodbya v. Moracha Ajndharam v. Shama Akhernm v. Nnndkishore Akoba v. Shnkha Aleock, In re ... Alderson v. White Ali v. Lulta v. Nillakanden Aliba . Nanu 1 Page. Page. Alihnsan r. Dhiija, 134, 158, 3".'!, ... 499 416,476 ... 290 Alikhan r. Mahomed (Bom P. ,]. ... 262 1881,319) 252 ... 139 (I L. R., X Bom., 658) 258 ... 249 Ali Muhammad v. Turab ... 171 140, 144 Ali Shah v. Husain 435 278, 284 Allah Buksh v. Sada Snr ... 261 ... 530 Allen v. Knight ... ... 90 ... 440 Alln v. Roshan ... ... 244, 386 ... 397 Alu Prosad v. Snklian ... ... 197 ... 303 Amanat ??. Bhnjan 193, 251, 528 ... 317 Amanee v. Meher ... ... 33 j ... 519 Ambala v. Naduvakat ... ... 523 370, 374 Ambu v. Hainan ... ... 520 ... 361 Auneer-ood-deen o. Ramchand 292 ... 461 Ameeroolah v. Hamdass ... 299 ... 289 Amidi v. Debi ... ... ... 192 ... 302 Amu v. Rama 231 ... 524 Anachnla v. Zemindar of S ... 112 90, Anagi v, Dhundliud ... ... 247 406, 408 Analcaran v. Saidamadatli ... 59 ... 518 Anand v. Panchilal ... ... 435 ... 345 Anandrav v. Ravji ... ... 299 254. 255 Anderson v. Pignet ... ... 370 ... Ill Angell v. Bryan ... 322, 382 ... 527 Anna v. Narran ... ... 447 ... 344 Annapa v. Ganpati ... 128, 529 ... 159 Annopurna v. Gunganarian ... 333 ... 145 Anonymous case ([. L. R., VII ... 119 Ma-3., 209) 525 1 A(\ /T T 1> VTTT ... I i" ... 451 Mad., 104) 525 ... 197 a I, T? vri ~\ia,i ... 270 203) ... 525 ... 520 (\ 1 P Y P il - 405, 445 : 274) 525 XVI TABLE OF Page. Anonymous case (I. L. R., VII Mad., 421) 525 (I. L. R., V Mad., 18) 525 CASES CITED. Page. Balaji v. Dnji 276 v. Kbusbalji ... 396, 435 v. Nana 299 Balambhat v. Sitaram 250 Balfleo v. Gokal 191, 236, 480 Balkissen v. Run Bahadur 481, 482 Ballcrishna v. Nagvekar 526, 528 Baloji v. Tainan 308 Bamasoonduree . Bamasoon- duree ... .., ... 293 Banapa v. Sundardas ... 65, 67 Bandarn v. Atcbayamma ... 126 Bani . Rith Bhanjau 158 Bank of Bengal v. Nundolal ... 172 (-[ T, P V Pole 92,) '... 525 i (I. L. R., V Mad., 287) 527 Anrudb . Sheo Persbad ... 267 Auund c. Siibul 277 Anundmoyee v. Dbonendro 219 225, 230, 435, 477 Apaji v. Kavji ... ... ... 374 Appasami v. Scott ... ... 59 Arrann v. Norruton ... ... 196 Arijaputri v. Alamelu ... 477, 493 Aijan - Asgar ... ... ... 481 Armstrong v. Garnett ... .. 370 Arulu v. Waku 482 Asansab v. Vamana 250,258,347 Asapal p. Nunkoo ... ... 245 Ashbtirner v. Macguire ... 359 Ashton v. Corrigan ... . . 59 Asliutosh v. Mohesh 93 Ash worth v. Lord ... 468, 479 Assnmatbein . Lucbmiput ... 140 Atbil, In re 347, 349 Atkinson v. Jones ... ... 126 Att.-Genl. v. Biphospbated G. Co. 410 Aubindro v. Cbannoo ... 142, 305 AveralU. Wade 351,352,474 Azim-un-nessa v. Dale ... ... 435 Azimut AH v. Zoobur .. ... 258 B. Hnbnji v. Vithu 268 Baboolall v. Jamal 308 Bacbu v. Madad 177 Badri v. Daulut 200, 378, 446 . Murali 288 Bajibelin v. Matbura 276 Bahadur v. Nawabjan ... 251, 527 Bahraicbi v. Surju 162 Baijan v Brijbbookun ... ... 139 Baijnath v. Gobordbon ... 143,248 of Hidnstan v. Shoroshibala 220 Bankhead's Trust, In re ... 76 Bansi v. Buali . ... 480, 481 Bansidhar v. Santlal 414 Bunwari . Muhammad 388, 481, 482 Bnpirazu v. Kainarazu ... ... 242 Bapu v. Ramji ... ... 227 Bapnji v. Sattyabbama 32, 353, 529 v. Sena 198, 199, 200, 241 Bapusabin v. Ramjibun ... 299 Barker v. Smart ' ... 131,226 Barnes v. Racster ... 472, 486 Barnett . Weston 391 Barnbart . Greenshields 65, 530 Barrett v. Hartley 297 Bartholomew v. May ... ... 474 Basant v. Kanauji ,, ... 305 v. Tapeswari ... ... 271 Basavayya v. Subba ... 481, 482 Basawa v. Kalkapa ... .. 529 Basdeo v. Matadin 220 Batchelor v. Middletou ... 523 Bavaji v. Ram ... ,,. ... 530 Baynard v. Woolley ... ... 75 Bazayet v. Dooli ... 428,435 Beattie r. Jetba 114 Beavan . Earl of Oxford .. 353 Bebee Jaun . Mirza ... ... 191 Beclioo v. Sbeosahoy .. ... 304 Beejoy v. Bbeekoo ... ... 144 Beetben, In re. ... ... ... 449 Beevor v. Luck 340 Bebari v. Ganpat ... ... 492 v Pbckoo ^75 v. Shah Ali 481 Baikesar . Dullabb 345 Baikesserbai v. Narranji ... 230 Baker v. Gray ... ... ... 386 Bakshi v. Darku 94 Baksu r. Govinda ... 65, 67, 68 Beharilal v. Benilal ... ... 213 Belding v. Read ... 413. 414 Bell v. Sutherland, B. S. ... 104 Bellamy v. Sabine ... 396, 433 TABLE OF CASES CITED. XV11 Page. Bengal B. Corp. v. Mackertich ... 75 I. Co. v. Koylns ... 524 Bennett v. Cooper 414 Bentbara v. Haincourt ... 308, 394 Bentinck v. Willink 114 Bhagirath 0. Naubat ... 344, 347 Bhagun v. Holloway ... ... 177 Bhagvan v. Hatibbai ... .... 177 Bhagwan . Nathu .., ... 435 v. Sbeo Sahay ... ]77 Bhairob v. Sowdamini ... ... 138 Bbajan v. Musbtak 200 Bbanumatee v. Preinchand 117, 155 219,435 Bbapul v. Jagrain 90 Bhaudin v. Ismail 477 Bbawani v. Gulab ... ... 59 v. Dalmardan ... 113 Hlieeman v. Eeranab ... ... 524 Bbeekbun v. Bhecbun 221 Blieri v. Maddiputu ... . 90 Bliikaji v. Yoshvantraw ... 353 Bhobani v. Shibnath 529 Bbobosoondaree . Issur ... 32 v. Rakhiil 405 Bhoirub v. Nudearcband ... 345 Bbola v. Baldeo ... ... 530 v. Fatetb 482 Bbolauatb v. Aunnoda 117 Bhoop 0. Nursing 477 Bbora v. Abila 214 Bbowani v. Joykissen ... ... 115 Bhowanicluu-n v. Gooroopersbad 219 Bliugobutty v. Shama 146, 435 Bhugwan v. Govind ... 202 v. Mabomed ... 250 Bbup v. Mubammadi ... 200 v. Zain-ul-abdin ... ... 378 Bliurrut v. Gopal ... ... 388 Bhyrub 0. Gogaram .,. 313 Bickerton v. Walker 514, 515 Bimaraz v. Papaya . . ... 397 Binda 0. Madbo 177 Bir v. Maboraed 159 Bircbunder v. Afsaroodeen 127 Bisbandial v. Manni Ram, 213, 214, 476 Bisbendayal v. Uditnarain 125, 127 Bishesbar v. Bhagi Rattu ... 523 v. Liiik ... 214, 252 Bishonauth v. Kisto ... 351, 354 Bishop of Winchester v. Paine 219 Bissen Doss v. Sheoprosad ... 373 Bissonath v. Radba 435 Page. Bit tli ul v. Toolseeram ... ... 258 Blacklock o. Barnes 289 Blnquiere 0. Ram Dhone ... 477 Bolakeelal v. Bangsee ... 124 Boloram v. Damoodur ... 106 Hun ham v. Newcomb ... ... 244 Bonomalli 0. Koylash ... 109,110 Botbamby v. Sberson 359 Bowman v. Blytb ... ... 221 Boykuntb Nntb v. Ameeroonissa 1 1 1 Bradeley v. Consolidated Bank 5 12 Bradford B. Co. v. Briggs 383, 471 Bradshaw, Exp. ... ... 471 Brahannayaki v. Krishna ... 435 Brabmoraoye v. Diunobundbu, 233, 234 Briggs v. Jones ... .. 391 Brijnatb v Juggernath 330 Brijo v. Radba ... .. 218 Brijoolall v. Mutty 313 Bromomoyee v. Boykunt ... 170 Brojo v. Bbugobutty, 292 0, Khelat . ' ... 225, 477 v. Mabomed 143 - v. Nobakishen 216 Broughton . Binks 163 Browne v. Bisbop of Cork ... 525 Brown v. Cole ... 268, 282 0. London, &c., Co. ... 113 v. Story 463 Bruce, Exp. .. ... 85 Brumley v. Fanning' ... 455 Budnn v. Ram .. 127, 170 Buldeen v. Golab .. 211,229 Buldeo v. Mulkoer 192 Bull v. Hutcbins .. ... 435 Bungsee v. Soodist .. ... 162 Bunsbeedbur v. Heera .. ... 78 Bunwaree v. Mahomed .. ... 271 Burke, In re. .. ... 450 Burnomoyee v. Benode ... 266 Burrows v. Molloy ... ... 282 Busunt Ali v. Ram Koniar 52, 199 Buxton, Exp. 113 Buzlool 0. Gunput 328 Byjonath r. Doolbun ... 172,350 Byjnatb v. Ramadin 105 C. Caledonian Ry. Co v. Carmicbael 480 Campbell 0. Holyland ... 476, 489 0. Roth well 342 Carter v. Wake 358 b XV111 TABLE OF CASES CITED. Casburne v. Inglid Cave o. Cave Chambers r. Howell Cbandika v. Pukkur Chandra v. Iswar ... Clmrles v. Jones Charta v. Poornu Cbatliu v. Aku ... Cbetoosee v. Bany Chetti v. Sunday-am 191, Chliab v. Kaiuta Cbidatnbara v. Munikya Chinuayya v. Cbidatu Cbinto v. Lakshman Cliinumau v Subram ... Chissum v. Dewes Chobi v. Pitoin Chockkalinora v. Subbanaya Cbokey . Kalian Cbolmondeley v. Clinton Chonneeu. Pubulwan Choti v. Kalka Cliotoolal v. Miller Cluulu v. Mabant Chubar v. Mir Cbujjoo v. Nasir Clmnder v. Godroo Cliunder KisLore, Exp. ... Kuifiar v. Gdpikisto Cbumlra N;itl v. Nilakanta Clmni v. Tlmkur 156, 1.57, Cbunilal v. Banaspat Cbuiuiy v. Pallowun Cburaman v. Balli Chutoorbbooj v. Doorga Chutterdharee v. Uamdoulun Clack v. Holland Clarke, In re v. Palmer ...389, Cleary . M* Andrew Clegg v. Edmondsoh Clements v. Matthews ... Cockburn v. Kd wards ... v. Thompson ... Cogun v. Pogose Coggs v. Bernard Coleman v. Llewellm ... Collydus v. Sbibchunder Collyer v. Isaacs ... Colyer v. Finch 391, Coming, Exp. Constable v. Howick Cook . Field Page. Page. ... 309 Cook v. Fowler ... 126 379, 410 Coomb, Exp. 75 ... 410 Coombe v. Carter ... * 413 214, 250 Copis v. Middleton 110, 343 268, 284 Corbett v. Plowden 289 ... 479 Cotterell v. Purchase 65 ... 267 Court of Wards v. If am pat ... 139 ... 5-24 Cracknall v. Jans on 104, 386 ... 354 Craytborne v. Swinburne 340 446, 447 Ore we v. Kddleston 113 ... 480 Crofts . Fenge 59 ... 200 Cummins v. Fletcher 386 305, 514 Cutts v. Brown '"65,67 ... 286 94 D. ... 461 Dabee v. Mann 217 ... 290 Daia v. Sarfraz ... ... 523 ... 167 Daimoddee v. Kaim . . . 65 ... 290 Dalip '. Durga ... 529 ... 525 Damodar v. Mobadev ... 142, 151 ... 90 n . XT...^ 136, 145 ... 290 v. Vamanrav ... 302, 525 ... 483 Damodhar v. Kahan Dass ... 477 ... 286 Daniell v. Sinclair ... 479 ... 480 Dtmlat v. Mebr ... 476 ... 523 Davani v. liatna 191, 236 ... 90 Davirawoot v. Heeraraon ... 265 ... 123 Davis v. Dendy ... ... 22 ... 434 Dayacband v. Heuicband ... 178 162, 435 Dayal v. Jivraj ... 85, 410, 449 158, 416 Deans v. Richardson ... ... 357 ... 161 De Caux v. Skipper ... 489 ... 124 De Nicbolls v. Saunders ... 463 408, 409 D'Epineuil, In re 413, 414 ... 304 : Dearman v. Wycbee ... 234 310 Debendro v. Hnplall ... 5Q ... 382 Debi v. Parbbu ... 127 91, 447 Deen Doyal v. Het Naraiu 447, 480 391, 469 v Jagdeep . . ... 139 ... ' 82 Deeze, Exp . .. 361 ... 453 Def holts 11. Peters ... 178 413, 415 Degg v Mid. lly. Co. ... . . . 408 ... 459 Degumbnree v. Esban ... 343, 435 139 ! Demainbray v. Metcalfe... ... 361 89 Denonnth v. Nursing 220, 224, 228, ... 362 234 ... 490 Deo Dat v. Ram Autar ... 475 34 Deojit v. Pitatnbar ... 90 ... 415 ! Deolie v. Nirbnn ... 100 393, 408 I Deonnrain v. Naek ... 467 ... 449 Deonundon v. Desputty ... 317 489, 490 Dep. Comm. v. Raiupal .< 271 ... 414 Devendro v. Torak ... * 334 TABLE OF CASES CITED. XIX Devi Dyal v. Prob Dyal Dlmrraa v. Govind ... Dlumdo . Balkrislma ... Dhunnoo w Boorhan Dhunpnt v. Gnlnni Dickenson v. Harrison . Dicker v. Aiigusteen Diokiit o Dickin Diorraj v. Dehi Dilownr v. Boliikee Dinendra v. Chniidra Dinkar v. Sheogolam Dinornoye v. Tarnchand Dipnarain v. Dipan Dirgopal v. Bolakee Ditton, Exp. Dixon v. Muckleston v. Parker Doble t?. Manley ... Doddington v. Hallet ... Doe v. Patt d. Fisher . Giles d. Gibbons v. Pott Higginbotham .. 524 ... 523 227, 249 ... 247 ... 126 ... 126 ... 460 ... 443 .. 216 344, 351 ... 405 267. 313 ... 91 ... 480 142, 162 84 ... 65 ... 483 ... 337 ... 96 462, 461 .. 463 w. ... 463 .. Goldwin 463 d. Parsley v. Day 462, 463 d. Roby v. Maisey 462, 463 d. Roylance v. Light- foot Dolphin v. Aylward Doma v. Nathan Donald v. Suckling Doolal v. Goluck Doolay v. Goolain Doole v. Orada Dooma v. Joonarain Doorga v. Issnr ... Dorappa v. Kundulcnri 462 ... 354 ... 221 ... 358 ... 154 ... 477 178, 305, 478 ... 109 ... 287 268, 274, 278 Doss v. Secretary <>f State ... 192 Doucettc. Wise (III Suth. W.R., )57) 461 (II Ind. Jar, 280) ... 241 Douglas v. Collector of Benares 183 v. Culverwell ... 65 Doul v. Runjit 283 Doulat v. Bhukundns 489 D<. Behary ... ... 212 84 Oojooderam . Aushootosh ... 103 ... 523 Oomrao v. Nizam ... ... 243 ... 450 Oo-Noung v. Moung II toon -oo 73, 81 ... 512 Ord v. Skinner 126 ... 345 Otter v. Vaux .. 103, 104, 370, 377 ... 377 ... 342 P. .. 468 Paidal w. Parakal 518 ... 109 Pahnr v. Jaichand ... ... 159 .. 303 Palani v. Selambora ... ... 61 ... 92 Palmer v. Carlisle ... .. 456 ... 310 . v. Hondrie 226 ji 345, Panclii v. Ahmedulla 528 '373, 375 Pattabliiramier v. Vencatarow, 217,240 166, 498 Pandab v. Jennuddi ... ... 406 ... 405 Pandji . SudashSb ... ... 251 ... 167 Parbhu v. Mylne 448 ... 482 Parbutty o. Moliamed ... ... 65 ... 317 Parladh 0. Broughtpn ... 296,313 317.476 Parkar v. Clarke 515 ... 489 1 1?. Watkins ... 302. 464 TABLE OF CASES CITED. XXV11 Parkinson P. Hanbury ... .Parry w Wright ... Parsons, Exp Parsotam p. Mulu ... Parvati p. Kisan Singh ... Patching p. Bull Pearce o. Mori-is - v. Gobind Periandip p. Angapa Perlad p. Chondi Perlathail p. Mankudi Perrin p. Blake Perry-Herrick p. Attwood Perry v. Walker Pertaub p. Ashlam Fetch p. Tutin .. Peter v. Russel ... Peto p. Hammond Phelooinonee v. Greesh ... Phene p. Gillan .. Phillips P. Phillips Phulkuar p. Murlidhur ... Piari p. Khiali ... Pile v. Pile Pinnock p. Bailey ... Pitambur p. Ramsaran v. Vanmali ... Platt v. Mendel Pledge p. Buss Pohpee p. Clieda Ponnappa p. Pappuryyanagar Poorna p. Prosmino Portmore P. Morris Popple v. Sylvester Poran p. Harsaram Poresh P. Anathnath Potlionier v. Dawson Powell P. Wright Praed p. Gardiner Prainntan p. Madutil Pranjivan c. Baju Prannath p. Rookca Prosaddas p. Ramdhone Prasunno p. Hnran Price P. G. W. Ry. Co. ... p. Cooper p Price Probhakar p. Pundurang Proctor p. Cooper Puddotnoney p. Muthooranath Pugh v. Heath Pullukdharee P. Mohabir Pultun v. Reshal Page. 460, 467 ... 370 ... 356 ... 456 ... 435 ... 257 ... 189 ... 268 ... 277 ... 273 ... 124 .. 391 ... 312 ... 73 ... 415 ... 391 138, 389 ... 64 ... 359 379, 410 285, 446 ... 446 94, 461 ... 512 ... 205 23, 117 ... 483 ... 340 ... 275 ... 166 .'.'.' 67 ... 131 ... 375 ... 448 ... 359 ... 139 361. 36-2 ... 517 100, 435 ... 262 ... 211 ... 214 .. 126 ... 525 ... 433 ... 291 ... 408 ,335,336 233, 525 ... 396 ... 281 Punchun p. Aliahmed v. Mangle Punjun v. Ainiu.i Puriag p. Fekoo ... Purmanund p. Jamna - P. Jamabai Punnessari p. Nobin Pursotam p Chiangi Puthen P. Govendam Q. Quarrell p. Beckford R. Radha p. Monohar v. Parbutty Radhabai P. Anantrao p. Shamrav Page. 250, 344, 347 219, 477 282, 287 278 ... 460 .. 233 170, 174 214 269 479 156, 157, 162, 248, 416 205 112 136, 226, 248 Radhabanode v. Kripamayee 288, 304 Radhakant p. Bhagwun ... 313 p. Mirza 170 Radhanath p. Bungo ... 260, 264 . - v. Gisborne ... ... 269 lladhasham p. Shivu 433 liadhey P. Bujah .. 217,247 p. Mahesh ... ... 429 Radhika r. Radhainani ... .. 435 Ilndji p. Kal uram . .. 268 Rafferty p. King .. 525 Ragho v. Anaji ... . 299 p. Balkrishna, 251, 257, 258, 477 - p. Balvant 387 Raghu P. Ashruff 468 Rajrhubar p. Budhiilal 268 Ragunatli p. Jurawan 142, 344, 497 p. Kakan 192 Raghunath v. Luchmnn... 292, 304 Raliiimutoolah p. Shuriatoolah... 89 Raisuddin p. Khadu 223 Rajaram p. Beni ... ... 156 Rajchundra P. Huromohun 184, 186 p. Madhoosoodan ... 366 p. Manorama, ... 213 Iliijkoomur P. Ramsuhaye ... 247 Rajkishen p. Iladhamadab ... 435 Rajkishore p. Bhadoo .. 162, 170, 351 Rajkristo v. Biingshee ... ... 139 Rnjlukhee p. Gokool 388 Itajnarain P. Sheera ... ... 144 Raju P. Krishnarao ... 120, 410 Rakestraw P. Brewer ... .. 96. 97 Rakhal P. Dwarka 488 XXVlll TABLE OF CASES CITED. Ram v. Admed .. - v. Dhanauri ... y. Sadasiv Ramn v. Martnnd Ramakrisha v. Namasivaya llamapa v. Umniia Ramapurath v. Nampurath Ramaraja v. Arunachala Ramasarai w. Maremuttu v. Sauiiya Rambaksh v. Ramlall ... Rambaluk v. Rarnlal Rnmbert v. Colien liambhnt v. Laksman Rambuksh w. Mohunt . - v. Sookhdeo Ranacliandra v. Krishna . In re v. Mahadaji, Raincburn v. Jhahbitr . . v. Raohoobeer Ramcooinur r. McQueen ,. . v. Prosunno Ramdas v. Brijnundun ... Ramdhon v. Mohesli Ramdin v. Kalka Ramdoolal v. Radhanath Ramdoolary v. Thacoor Ramdoyal . Heeralal ... Raindut v. Urn-ruck Ramdyal . Bishendyal ... llamen v. Kandapuni ... Rameshur v. Mewar Rameswar v. Jagjeet ... Ramgopal v. Rajkishore... v. llamdutt ... Ramji . Cbintoo ... Ramkant a. Brindabun llainkaiit.li v. Kalimoban Rarakishen v. Kundun . Ramkishna, In re Rarakristo . Ameeroonesa Ramknraar v. Baikontnath llamlakban v. Randan ... Ramlocban v. Knnbyalal v. Raninarain Rammanick v. Brimlaban Ramnaraiu v. llamcnnny Ramnatli v, Baloram Rampersbad v. Kishen ... Ramroop v. Tbakoor ... Ramruttun o. Umed Page. Page. ... 298 Ramsaran v. Amrita ... 200, 244, ... 397 252, 416, 435 ... 496 Ramsbet, v. Pandbay 299 ... 244 Rarasidb v. Balgobind 91, 189, 191, ... 167 447, 499 ... 529 Ilamn v. Subbaraya 142, 370, 372 ... 520 Rancliflfe v. Parkyns ... ... 472 ... 529 Ranu v. Rninabai ... ... 247 32 Rangasami v. Muttukumarnp 405, 445 51, 242 Ranken v. East, &c 113 .. 477 Rasaji v. Syana ... ... ... 481 ... '250 Rasbmonee v, Prankissen 214, 217 83 Rasmoney v. Illabee ... ... 202 ... 435 Ratan v. Hanuman 498 264, 477 Ratclifle v. Barnard ... 390, 391 ... 90 Rautan v. Kadungot ... ... 519 ... 529 llavji v. Krislmaji ... 145,396 ... 526 Rayner v. Preston ... ... 432 249, 435, Razeeoodeen v. Jbubboo ... 250 495 Redmcyre . Foster ... ... 226 ... 336 Rees 0. Metropolitan, &c. Works 487 ... 131 Reeves v. Capper ... ... 355 ... 410 Rico v. Rice 324, 379 ... 231 Richards v Johnston ... ... 448 ... 523 Richardson, In re ... ... 449 ... 178 v. Younge .. ... 524 190, 446 Rives v. Barlow ... ... ... 415 ... 65 Roberts, In re ... ... ... 448 ... 528 v. Wyatt 356 65 Robertson v. Norris ... 23, 309 ... 317 Rodlnnal v. Ramharakh ... 351 ... 64 Rogers v. Cballis 59 ... 518 v. Humphreys ... 463 ... 138 Roghoonnndon v. Wilson ... 139 ... 216 Rollason, In re ... ... ... 358 ... 219 Rolt v. White 515 ... 124 Rookni v. Brojo ... ... ... 151 ... 299 Rooplal v. Moliima ... ... 93 165, 166 Iloopnarain v. Madhub ... 260, 264 ... 305 Roscarrick v. Barton ... ... 24 ... 292 llujihunath v. Gridhari ... ... 310 525, 526 Runjeet v. Dhookhin ... .. 290 251, 257 Ilupchand v. Balvunt ... 193, 251 ... 334 v. Davlatrav, 136, 163, 530 ... 325 Rtiploll v. Ramlocban ... ... 81 ... 293 Russel v. Russel ... .. 84 354, 435 Rutnessur v. Jusoda .., ... 488 ... 302 llutton . Greedharee ... ... 278 ... 73 Ryesatnlla r. Durga ... ,.. 380 148, 149 a ... 288 o. 244, 284 Saadat v. Collector of Savon 1 13, 447 ... 170 Sadabut v. Fullbash 139 TABLE OF CASES CITED. XXIX Sadagopa v. llnthna 32. Sadagopayyangar . Dorasami Sadasiva v. Sabapathi Sadashiv v. Vitbul Sadler, Exp Safdarali v. Lachinui) Sahib Perhlad v. Budhoo Sahibzada v. Pormeshor... Sakamm v. Gopal ... SakLaram v. Vitliu Sakriarain /. Dliarum Salauiat v. Budh ... Saligram v. Barun v. Bebari Salitn v. Boidonath ... Sam v. Appundi ... Saniarali v. Karimullah ... Samathel v. Mather Sauii v. Krishna ... ... v. Soma Sandon v. Hooper, 301, 302, 312, 464, Sangappahin v. Basappa Satikuna v. Virupakshnpa, 136, Santnji v. Bayaji ... Santi Ram v. Modoo Sarup v. A mi run ... ... Sarwar v. Shazada Satra Kumaji v. Visram... Satrucherla v. Vairicherla Sawaba v. Abaji .. Sawyer v. Goodwin ... Sayet v. Mohamed Scholefiel'l v. Templer ... Scott v. Tyler Seetaram v. llambaksb ... Seetul v. Sooraj ... ... Selwya v. Garfit ... Seth Harlall v. Nanick ... Setra v. Vairri Sevaraai v. Alibakhsh Sha Nagindas v. Halalkore Shamaclinrn v. Anund ... Shamcoomar v. Jotton Shanmarain v. Itaghubar Sliankarapa v. Dnnapa .. Shankarbhai v. Kossibhai Shantapa v. Balapa Shaw v. Foster v. Neale Shearman v. British E. A. Co. Shekari v. Mangalom Page. * Page. 188, 447 Shekbara v. Rnru ... 518 ... 528 Sbeobaksh r. Sheocburn 182,435 ... 435 Sheobart v. Dharee ... 287 95 Sheodinl v. Pragdat ... 120 ... 113 Sheogolam v. I lam nip, 219, 248, 252 396, 529 205,278 32 Sheonarain v. Jai Gobind 276, 285 ... 313 Slieopal v. Deendyal ... ... 244 252,258 Sheo Ratan v. Chotay ... 435 ... 268 7 Rill 11 ID 111 125, 447 ... 261 Sbepard v. Jones 301,467 ... 387 Sheshayya v. Annama ... ... 190 250, 256 Sheshgiri v. Salvador 144, 145 ... 220 Shib Chandra v. Johobux ... 530 ...30,58 Shiblal v. Gangaprasad ... ... 191 ... 435 Shidlingapa v. Chenbasapa ... 529 279, 404 Shi vial v. Ramdas ... 240 ... 246 Shivram v. Genu.. 163,397 ... 498 Shorosheebala . Nundolal 195 ,208,478 ... 267 Shringarpure v. Pethe ...145, 381, 5-29 312, 464, Shropshire &c. Co. v. Queen ... 392 487 Shurnomoyee v. Srinatb, 195, 233, 234 ... 120 Sbyum v. Cheytaloll ... 358 36, 163, Sibchunder v Russick ... ...28,33 248, 305 Sibnarain v. Rassik ... 34 ... 286 Singh v. Dickson .. 326 ... 220 Sirbadh v. Raghu 373, 497 ... 192 Sital v. Lacbmi ... 200 ... 189 Sitanath v. Land M. Bank . 167 ... 528 Sitaraui v. Amirbeguni 110, 134, 476 ... 273 v. Ganesh ... 227 ... 205 Sitaramudu v. Ramanna... ... 530 ... 104 Sitla v. Lalta ... 405 204, 206 Sivaratn v. Soohrah ... 185 ... 396 Sloane v, Mabon ... 382 ... 92 Smith v. Davis ... 489 ... 139 v. Olding ... 483 ... 189 i- v. Sampson 242, 299 ... 460 v. Young ... 83 ... 220 Sobhagcband v. Bbaicband, 32, 136, 529 ... 268 Sobha Sab v. luderjeet ... ... 254 ... 101 Solano v. Moran ... 127, 170 ... 5-25 Somasundnra r. Sakkarai ... 394 ... 103 Soobbal . Nitai 217,247 ... 139 Soor v. Dalby ... ... 312 59 Soorjo v. Bhugwan ... 529 177,312 Soorjnn v. Imam ... ... 284 ... 241 Sotisli v. Nilkomal ... 140 373, 374 Spencer v. Clarke .. 512 ... 86 Spiekernell v. Hotham ... ... 525 ... 383 Spurgeon v. Collier ... 65 . ... 382 Squire v. Ford ... ... 370 ... 520 Sreeinatty v. Tarachund... 93 XXX TABLE OF CASES CITED. Page Sreemunt . Krishna ... 268, 284 Sreenath v. Hurnath 103 Srinath v. Gopal 59 Srinivas v. Vijay... 57 Sriputty v. Mohip ... ,.. 248 Sri ram . Bhagirath ... ... 530 Stafford . Selby 22 Stanley v. Grundy 311 Stansfield v. Hobson 523 Stevens v. Mid- Hants Ry. Co. ... 370 Stewart's Trusts, In re 165 Stowell v. Ajudheya 186 Stringer v. Harper ... ... 349 Subhabhat v. Vasuderbhat ... 198 Subraraanyan v. Maudayan ... 253 Suduth v. Bheenyek ... ... 131 Sumpter v. Cooper ... 87, 90, 440 Sungat . Baijnath 481 Surbomongola v. Sbashi 113 Surjan v. Jaganath 214 Surnouaoye v. Land M. Bank ... 315 Suroop v. Mohender ... ... 222 Surrefunnisa v. Enayet 241 Surwan v. Golara ... 61, 131 Suyeedun v. Zuhoor ... 288, 292 Swan v. North B. A. Co. ... 78 - v. Swan 337 T. Tadigollah v. Lakshmamtna Tadman . D'Epineuil Talbot v. Frere ., Tanji . Nacamma Tappfield v. Hellman Tara Kant v. Puddomoney Tarapershad v. Ramnursliing Tarinee v. Canada Tasaduk v. Beni... Tasker v. Small ... Tawakkul v. Luchman Tayler . Great, &c. Taylor v. Mostyn v. Palmer... Tea<;araya v. Mariappa Tebb v. Hodge .., Tenison v. Sweeny Thaku Beebee, Case of, Thames &c. C<>. v. T Thompson v. Grant Thorne v. Newman Thornecroft v. Crockett Thorpe, In the matter of Thumbusawiuy v. Hossain Tidd v. Lister 353, 472 Tikaram v. Kamiram ... ... 294 Tillet v. Nixon 463 Tilockdhari v. Furlong ... 76, 414 Tippaya . Venkata ... ... 278 Tipton &c. Co. v. Tipton &c. Co. 301, 487 Tirbhobun w. Jhono ... ... 109 Tombs v. Itock ... ... 473 Tomlinson v. Bullock ... ... 512 Tomson v. Bowyer ... ... 623 Tophan v Boothe ... ... 525 Torabali v. Khodabuksh ... 119 Tonlimn . Steere, 370, 371, 372, 373 Townshend v. Stangroom ... 67 Tranqueharsami v. Ammai ... 435 Tremalrav v. Commissioner ... 325 Trustees, &c. v. Bank, &c. ... 79 Tukaram v. Ramchundra 178,529 v. Khandoji ... 120 Tull v. Owen ... ... ... 525 Tulsi p. Mnnu ... ... ... 354 Turner v. Marriott ... ... 440 Tyler . Thomas .. ... 433 U. Ulfutunnissa v. Hossein 76, 120 Umamahaswara v. Siugaperunial 167 Umamoyi v. Tarini ... ... 435 imtna ... 352 Umarkhan v. Mahomed .., 526 447 Umasundari v. Uma ... ... 121 451 Umesh v. Chunchun ... ... 405 270 415 Urnraer v. Abdul ... ... 235 oney ... 434 Urnrao v. Beharo ... 162,166 rsliing ... Ill Umrunnissa v. Muhummad 496, 524 305 Underliay v. Read ... ... 463 ...293, 296 468 Union Bank v. Ingram ... 491 249, 493 Union It. S. v. National B. S. ... 471 ... 222 Unity Bank v. King .,, ... 337 78 Unnian v. Rama ... ... 519 478 Unthank v. Gabbett 370 368 l .. 523 V. 76 Vallaya v. Moorthy 120 394 I Vandaleur v Blagrave 79 f, ... 275 nt&c. Co. 365 Vankata v. Snbrainanya 405, 456 v. Tirumaia ... ... 225 488 Vanneri v. Patan ... 278, 283 ... 337 t ... 487 Varden Seth v. Lnclcpathy (IX Moore's Ind. Ap|>., 307) ... ... 32 of ... 381 ain ... 70 ' 188 TABLE OF CASES CITED. XXXI Page. Page. Yasudev w. Narayan ... 529 West, &c. Bank v. Reliance, &c., 308, Vasudevan v. Keshavan ... 5-20 460 Yatju v. Vatju ... ... 268 Wheatley p. Silkstone &c. Co. .. 471 Vayalil v. Udaya 276,519 Whitbread, Exp. 85 Vellayay v. Tirna ... 113 P Jordon ... 389 Vencatachella v. Panjau ... 142 Whitcouib v. Milichin ... 23 A'enderzee v. Willis 361 Wigney p. Wigney ... 433 Vengid v. Cliatu 481 Wilkes p. Saunion ... 487 Yenkappa v. Akktt 197,200 Wilkinson v. Hall ... 463 - 11. ('annum 136, 156, 163, 416 ii v. Simsi'M ... 370 . r. Keshaba 186, 311 Willett . Winnell 22, 245 r. Krislinasamy ... 165 William p. Hoshiiquet ... .. 114 ,,, 1 J.niii'i ' 1 1 1 '" 16 178 r Owen 197, 340 Venkatarama v. Chinnathatnbu 529 | Willoughby v. Willoughby ... 309 Venkayyar v. Venkata 529 Wilson v. Metcalfe ... 479 Veil kit tu r. Kamba ... 480 Winter p. Lord Anson ... 323 Verner v. Wenstanley ... 197 Withal p. Nixon ... 490 Vernon & (X, In re. 391, 392, 469 Wolverhampton, &c. Co. p. George 483 Yinayak v. Raghi ... 298 Womatul p. Mirunnissa ... 331 Vishnu, In re. ... ... 526 Woiudii P. Ramroop .r. 177 ... p. Tatia ... 100 Wood v. Wheater ... 490 o. Kashi ... ... 493 '' Woodroffe v. Johnston ... 59 Vithal P. Daud 236, 386 Woomasundari v. Raghiinath 182, 435 v. Dhondi ... 483 Worcester &c. Co. p. Blick ... 500 - v. Karson ... 140 Wormald v. Maitland ... 389 -. Vishvasrab 250, 496 Worsley v. Scarborough ... 43-i Vithobu v. Chotalal 457 Worthington v. Morgan 90, 389, 390 Villa v. Klekra ... 368 Wortley v. Birkhead ... 385 Yittobha . Gangarain ... 231 Wragg v. Denhaiu ... 291 Yythi v. Ravana ... 481 Wrixon P. Vize 233, 234 Wazeurunessa v. Saldun ... 258 W. Wyatt P. Barwell ... 433 Wadswortli, In re ... 330 Wynne v. Styan ... 525 Wajed v. Hafez ... 372 Walcott v. Condon ... ... 370 Y. Walker v. Jones ... ft Yakoob . Rnmdulal ... 177 Wallace v. Donegal Wallis v. Smith 440, Ware v. Lord Bernoulli Warner v. Jacob 433 Yashvant p. Vithoba 481 482 Yates v. Aston ... ' 408 Yellappa p. Mantappa 460 Yenkoba . Rambhaji ... 244, 387 ... 445 ... 439 ... 191 309 Young p. Peachy ... 65 Watts, In re '... 61 v. Symes 370, 371 Wazeer v. Jnguioliun ... ... 290 Zaberdust P. Inderman ... 332 Webster v. Patterson ... 490 ' Zulens . Debshapu ... 261 r. Power ... 105 Zamorin v. Narayaua ... ... 527 LAW OF MORTGAGE. ERRATA. Page 113, line 4, from bottom, dele ' Suth. ' 145, line 19, for 'Gal.,' read 'Born. 1 63, line 1 1 , from bottom, for ' L. It., P. 0., ' read ' App. Cas. ' 188, last line, for IV, ' read ' V. ' 192, line 3, for VHI, ' read XVIII. ' 203, line 2, from bottom, for '119,' read ' 199. ' 247, line 23, for ' were, ' read ' mere. ' 270, line 13, for N.- W. P., ' read ' VII All. ' 278, note, line 15, from bottom, for ' All., ' read ' Mad. ' 313, last line, for ' Jjuairab Mondal, ' read ( Boistub . Huro Narain. ' Kennedies of mortgagee may be pursued concurrently Insufficient secu- rity English remedy foreclosure, but, sale the more equitable remedy Who may redeem Equity of redemption cannot be restrained even by express contract Equity of redemption in the case of a second mortgage without notice Power of sale Liabilities of the mortgagee Influence of civil law Note giving tabular view of the classification of securities in Roman law. THE history of archaic institutions shows how very slowly the most familiar juridical conceptions of the present day have been matured. Few persons, I venture to affirm, would think of questioning the truth of this assertion at the present moment; and yet, even a slight acquaintance with legal literature will show, that it is only recently that wild speculation and rash assertion have given place to Early his- sober reasoning and careful observation. Comparative stations." jurisprudence, in a few short years, has accomplished many striking results ; but, not the least important of these, is R. B. G., M. 1 LAW OF MORTGAGE. LECTURE I. Karly history of institutions Doctrine of evolution in law, illustrated by the Hindu Will Early notions of security Early law of distress Mortgage in early law Possessory lien Powers of sale and foreclosure Real security, how distinguished from real right Historical sketch of the Roman law of securities Similar notions traceable in early Hindu and Mahommedan law Ficlucia Pignus Improvements in the Koman law of pledge, by the Prtetorimi jurisdiction, the actio serviana, and the qiiasi-servian action External influences which modified the Roman law Growth of real secu- rity Power of sale History of the Fiducia The lex commissoria Foreclosure in Roman law Three-fold division of securities by Homan jurists, into conventional, legal, and judicial I'.ights of pledger and pledgee in. Roman law Sale by mortgage Right of redemption Tacking Priority determined by time Potestative and non-potestative conditions Exceptions to the rule of priority Salvage liens Privileged liens Tacit hypothecation in Roman law Hypothecation how extinguished Ex- tinction by merger Marshalling in Roman law Effect of the mortgagor subsequently becoming the owner Right of subrogation, how acquired Extinction of pledge Pledge when redeemable Antichresis Liabilities of the pledgor and of the pledgee Pledge in systems founded on Roman law Important deviation in continental law English law of mort- gage Equity of redemption Bill of foreclosure Decree for sale Remedies of mortgagee may be pursued concurrently Insufficient secu- rity English remedy foreclosure, but, sale the more equitable remedy Who may redeem Equity of redemption cannot be restrained even by express contract Equity of redemption in the case of a second mortgage without notice Power of sale Liabilities of the mortgagee Influence of civil law Note giving tabular view of the classification of securities in Roman law. THE history of archaic institutions shows how very slowly the most familiar juridical conceptions of the present day have been matured. Few persons, I venture to affirm, would think of questioning the truth of this assertion at the present moment; and yet, even a slight acquaintance with legal literature will show, that it is only recently that wild speculation and rash assertion have given place to Early hi sober reasoning and careful observation. Comparative ' jurisprudence, in a few short years, has accomplished many striking results ; but, not the least important of these, is R. B. G., M. 1 2 LAW OF MORTGAGE. LECTUBE the dissipation of the numerous fallacies which once L clustered round the early history of law. Experience, however, tells us that speculative errors possess remark- able vitality; and it would be rash to suppose that delu- sions once so common, have wholly died out in our time. The tendency to confound the earlier stages of law with its maturity is by no means uncommon even at the present moment; and the warning cannot be given too soon, nor Doctrine of re P ea ^ed too often, that it is only by a careful study of the evolution gradual development of legal conceptions, that we can in law. guard ourselves against mistakes into which we should otherwise be almost sure to be betrayed. In common with the class to which they belong, the delusions of which I speak, point to modes of thought from which we cannot emancipate ourselves without a conscious effort of the mind. We find it difficult to realize the intellectual con- dition of society in its infancy, and are frequently betrayed into transferring to ancient law, conceptions which find a place in some of the latest improvements in jurisprudence. The Hindu The history of the Hindu Will furnishes us with a case in Wlll< point. I do not mean to deny that testamentary succes- sion was known to the Hindu law ; but there can, I think, be no reasonable doubt that we owe the first recognition of the institution by English lawyers to the supposed analogy between a gift and a bequest. The analogy may be very close or it may be merely fanciful. This is not the place to discuss the question, but I may be permitted to observe that an examination of ai'chaic institutions shows, beyond the shadow of a doubt, that testamentary succession belongs to a range of ideas, very much in advance of that which permits the owner to make a gift of his property during his life ; and that in no system whatever, has the law of wills grown out of, although it may have sometimes shaped itself on the model of, the law regulating gifts during life. I trust I have said enough to make it unnecessary for me to insist on the interest which attaches to the early history of those legal conceptions which we now see only in their maturity. We may not in every case be able to trace the outlines distinctly ; but the assertion may be hazarded without rashness, that there is not a single juridical concep- tion which may not be historically examined with advan- tage. A few words therefore on the origin and growth of the law of securities, the immediate subject of the present lectures, will not, I trust, be thrown away. EARLY NOTIONS OF PLEDGE, 3 A learned writer on the law of mortgage lias said that LECTDBE pledges must have come into use as soon as the rights of property were recognized. This assertion, however, must be received with considerable reserve. It is true that E ar]y no _ pledges were known to earl} 7 law, but the conception when tions of it first shows itself, is marked by the crudity peculiar to securit y- the infancy of law ; and, the nearest approach to it, is to be found in the early law of distress, which fills such a large space in all ancient systems of law. The writings of Sir Henry Maine have made us familiar Early law with the important part played by the law of distress of dlstress - in primitive society, an extra-judicial remedy which gradually replaced the barbarous custom of reprisals. A probable legacy from early Aryan usages, it seems at one time to have been the almost universal method of enforcing satisfaction for all claims, and was not confined, as in some modern systems, principally to the demands of the landlord on his tenant. But, as Sir HeDry Maine points out, this extra-judicial remedy, when it is first revealed to us, is both inadequate and incomplete. The distrainer could only extort satisfaction by retaining the property in his custody, and thus forcing his adver- sary, so to speak, to come to terms. He could not sell the property and thus satisfy his claim, nor was the distress forfeited to him in satisfaction of his demand. The dis- trainer acquires this right, but only very gradually in the maturity of jurisprudence, and we find that, even in so pro- gressive a country as England, the power of sale was engraft- ed on the old common law, only towards the end of the seventeenth century. (Maine's Early History of Institu- tions, Lecture X ; Smith's Landlord and Tenant, p. 263.) I have called your attention to the law of distraint, as described in the pages of Sir Henry Maine, because you will find a remarkable similarity between it and the law of pledge, as well in their earlier features as in their later developments, the evolution, if I may say so, having pro- ceeded on almost parallel lines. Let me pause here for a moment to explain that, accord- ing to modern notions, the very essence of a security is the right of the creditor to obtain satisfaction, wholly irrespec- tive of the ability or willingness of the debtor. If the debtor makes default, the creditor may either sell the pro- perty and repay himself out of the purchase-money, or the pledge is forfeited to him in satisfaction of his demand. 4 LAW OF MORTGAGE. LECTURE The debtor may be obstinate or unable to pay, but the creditor can always obtain satisfaction out of the property pledged to him, and is, therefore, wholly independent of the debtor. It is, however, only in the maturity of juris- prudence that the pledgee acquires this right ; a right which is justly regarded as the very perfection of a secu- Mortgage rity. In the infancy of law, a pledge was only regarded in early as a me ans of compelling satisfaction. The creditor, by detaining the pledge, might compel the debtor to fulfil his engagement ; but, beyond the pressure which the pledgee was thus in a position to put on the pledger, the creditor could not turn his security to account. In other words, a pledge only operated on the will of the debtor. The cre- ditor had no authority to sell the pledge, nor was it forfeit- ed to him in discharge of his demand. Modern law furnishes us with an instance of a right closely resembling the right of the pledgee in ancient law. English lawyers have frequently pointed out the unsatis- Possessory factory character of what is called a " possessory lien " in lien. English law, a bare right of detention, unaccompanied by any power of sale or foreclosure. It is no doubt an ano- malous right; and the true explanation of the anomaly lies in the fact that it is a mere survival. We have here an instance, by no means exceptional, in which a conception, distinctly archaic, is found to linger in a system which has shown no mean capacity for expansion with the multiplying wants of an active commercial age. I have said that in ancient law a pledge was regarded simply as a means of extorting satisfaction, and that the Powers oi powers of sale and foreclosure with which we are so sale and familiar at the present day, are improvements which are foreclosure. i r i j TIH only tound in mature jurisprudence. I shall now ask you to test the soundness of the conclusion by an examination of a system of law, which, while it has powerful! }> affected in its maturity the institutions of the greater part of the civilized world, is, perhaps, also the only system which possesses a continuous history of this branch of jurispru- dence. I allude to Roman law, a system which must always possess peculiar attractions for the student of com- parative jurisprudence ; for there you may see legal con- ceptions in the rough as well as in their highest finish, the whole process of evolution unfolding itself as it were before our very eyes, by slow and almost imperceptible gra- dation. " In the history of legal conceptions," as observed REAL SECURITY. by Dr. Hunter, " the Roman law occupies a position unique value. It forms a connecting link between the institutions of our Aryan forefathers and the complex organization of modern society. Its ancient records carry us back to the dawn of civil jurisdiction, and, as we trace its course for more than a thousand years, there is exhibit- ed a panorama of legal development such as cannot be matched in the history of the laws of any other people." (Hunter's Introduction to Roman Law, page 1.) The evidence furnished by Hindu and Mahommedan law is less authentic, and has to be approached with greater caution. I hope, however, to be able to show in the next lecture, that there are passages, as well in our own law as in the Mahommedan law, which fortify, in a remarkable manner, the conclusions suggested by an historical examin- ation of the Roman system ; passages which can only be explained on the hypothesis that a real security, a security which makes the creditor wholly independent of the debtor, finds its place in every system among the latest improvements in jurisprudence. For the present, I shall confine myself to the Roman law. I have not paused to explain with sufficient clearness the meaning of the words " real security," an expression which I have already used more than once. A real security *? eal secu - is a security in which the creditor possesses the right to^iSdn- * satisfy his demand out of the property pledged to him, g and must be carefully distinguished from a real right, which, as I shall have occasion to explain more fully hereafter, is simply a right availing against the world at large, and not merely against a determinate person or persons. A creditor may have a real right in property belonging to his debtor, and yet he may not possess a real security. Thus, if any body should take out of my pos- session property on which I have a bare lien, I have a right to have the property brought back into my posses- sion, but I have no right, the security not being real, to sell the property in satisfaction of my demand. The distinction is a very important one, and must be carefully borne in mind in the discussions in which we shall pre- sently be engaged. Let us now turn to the Roman law for the purpose of Roman law ascertaining the successive steps by which the law of secur- . f securi - ities was gradually developed. The subject has already been investigated by a living German jurist, and the results LAW OF MO11TGAGI5. LECTURE I. FiJucia. Pignus. Pra-torinn law. Improve- mcntsintlic Roman law of pledge. of his labours have been made accessible to English readers by Dr. Markby in his Elements of Law. (See Chapter XI.) The earliest form of security known to the Romans appears to have been the Fiducia. This was a proceeding by which the debtor transferred to the creditor the owner- ship of the property which was intended to be given as a security; the creditor on his part agreeing to restore it to the debtor as soon as the obligation was fulfilled. If the debtor, however, made default, his right to the property was not extinguished. To use the language of modern law, the debtor possessed an equity of redemption, of which the creditor could not deprive him, either by sale or foreclosure (a). I shall pass over, for the present, the successive steps by which the Fiducia ultimately ripened into a real security, and proceed to discuss another mode of giving security; which, although a later invention, was ultimately destined to replace the Fiducia in the juris- prudence of Rome. This was the Pignus which, in its earliest form, was a proceeding by which the debtor transferred, not the ownership, as in the Fiducia, but the bare possession, to his creditor. The pledgee only possessed the right of detention. Even this right, however, was at first extremely precarious. It was not protected by a real action, as the law refused to recognise a real right in the creditor. So long as this was the case, land was rarely given in pledge, as the creditor had no remedy if the debtor made a fraud- ulent alienation. This was, no doubt, a very unsatis- factory state of things. The law, however, was insensibly developed by the Praetorian jurisdiction, to which Roman jurisprudence is indebted for so many reforms. Under the semblance of moulding the procedure of the Courts over which they were called upon to preside, the Roman Praetors, by promising to grant a particular action or plea, re- modelled almost every branch of the law, and owing to circumstances to which I shall presently refer, the law of security seems to have claimed their attention at an early period. The first improvement was effected by a Praetor named Salvius, who allowed the validity of a pledge, although not followed by a transfer of possession, in the () I am bound to state that a somewhat different view has been taken by Dr. Hunter in his Roman Law, but as the Fiducia never occupied an important place in Eoman law, and as it shortly fell into disuse, s not necessary to discuss its precise incidents. IMPROVEMENTS IN THE ROMAN LA.W OF SECURITY. 7 case of a tenant pledging his farming stock as security LECTURE for the rent payable by him. This improvement was followed by the ' actio serviana,' which allowed the land- lord to enforce his claim by a real action, unfettered by the Act ; somewhat inconvenient limitations by which the Praetor serviana, Salvius had sought to fence in the right of the landlord to follow the pledge in the hands of third persons. Origin- ally confined to the security of the landlord on the farm- ing stock of the tenant, the right was extended in course of time to all classes of pledges, whatever might be the nature of the property, and whether the pledge was or was not accompanied by possession. The last improvement was Quasi-ser- accomplished by the ' quasi - Servian action,' which marks viau action, an important epoch in the history of the Roman law of securities. The jealousy with which archaic law guards the creation of all real rights, has now been relaxed. A mortgage may thus be created without delivery of posses- sion, and the " substantial pledge has been refined into the invisible rights of a hypotheca." I have said that there were influences at work from without, which, while they hastened the development of this branch of the Roman law, also determined, in a great measure, the direction of that development. " The most important improvements in the Roman law of External security," says Dr. Markby, " were not introduced until, by jS lces the extension of the Roman dominion beyond the confines modified of Italy, very large estates first became common. From[^ Komaa this time large numbers of slaves, and even of free persons, began to be employed in cultivating these properties. Small estates also were sometimes let out to farm. Hence the necessity that the landlord should have some security for his rent became apparent at Rome, as it has in all places where the land of one person is cultivated by another. " Under the old law it was not easy for the landlord to 'obtain this security from the cultivator. Generally the only property which the cultivator had, was his farming stock (invecta et illata) ; and it was obvious that this could neither be assigned to the landlord by a fiducia, nor given into his custody by a pignus. It was, therefore, necessary to devise some other means of effecting security ; and the mode adopted was, to allow the tenant by a simple agree- ment, without any formalities, to pledge his farming stock to his landlord as a security for the rent." (Elements of Law, 443, 444.) 8 LAW OF MORTGAGE. LECTURE I shall now proceed to state the successive steps by which the creditor gained a real security, which, as I have already explained, is very different from a real right. Growth of This was originally accomplished by the introduction of a a real secu- clause expressly authorizing a sale upon default, a clause which appears to have been suggested by a right possessed by the State of selling land pledged to it. At a somewhat later period, this right was presumed to exist in every pledge in the absence of anything to indicate a contrary intention. The creditor thus acquired the right to realize his money by the sale of the pledge ; in other words, the creditor acquired a real security. The power of sale Power of now came to be regarded as a right inherent in the sale. pledgee, or, as a Roman lawyer would, perhaps, have said, one of the natural incidents of a pledge ; and, it was pro- bably under the influence of this dominant idea, that the law, at a later period, permitted a sale, even when the creditor had expressly agreed not to exercise the power. We have now reached the stage in which the law stood in the maturity of Roman jurisprudence. The bare right of detention originally possessed by the creditor, has now been succeeded by a right of sale, which, as we have seen, could not be controlled even by the express agree- ment of the parties ; while the somewhat cumbrous forma- lities which were originally necessary to the validity of the Pignus (including the transfer of possession) have been replaced by a simple agreement of the parties. In giving an account of the Roman law of security, I did not notice, at the proper place, the improvements which took place in the Fiducia. The gradual progress of the the S Fiducia f Fiducia, from a bare right to compel the debtor to make 'satisfaction, to its latest improvements, when it ripened into something like the mortgage of the English law, or our own conditional sale, is not less interesting than the development of the kind of securities which I have been hitherto considering. The first improvement was the introduction of a clause, the lex commissoria,by which it was agreed that the creditor should become, on default, the absolute owner of the pro- perty pledged to him. Such a covenant, however, if liter- ally enforced, was likely to operate in many cases with considerable hardship upon the debtor ; and the stringency of the condition was relaxed by subsequent legislation. The default of the debtor was not immediately followed coimnis- CLASSIFICATION OF SECURITIES IN ROMAN LAW. 9 by forfeiture, and he was permitted to redeem, if he ful- LECTUBE filled his obligation, withiu a reasonable time. The posi- tion of the creditor now became analogous to that of an English mortgagee, and the conflicting rights of the pledg- er and pledgee were, in some measure, reconciled with justice and equity. Roman lawyers, however, could not bring themselves to accept as final such an imperfect recon- ciliation. It offended their sense of " elegance." A pledge, whatever might be the language used by the parties, was only a security for the debt, and the creditor was not in fairness entitled to anything more. In later Roman law, Foreclo- therefore, the creditor was not suffered to foreclose, but sure in R - could realize his dues only by the sale of the property m pledged to him. You will presently see that the English law is also slowly drifting towards the same point. The power of directing a sale instead of a foreclosure, which used to be exercised so very sparingly by the English Courts of Equity, has been extended by a recent statute, while other indications are also not wanting, that the total abolition of foreclosure is only a question of time. From what I have said, I think it is clear that a real security is the most perfect security. The history of the Roman law shows that it was only very slowly that the right of detainer, the only security recognised in early times, ripened into a real security. An examination of Hindu and Mahommedan law also suggests the conclusion that a security in the infancy of law only operated upon the will of the debtor. I shall, however,as I have already stated, discuss this point in the next lecture, when I propose to give a general outline of the law of security as it is to be found in Hindu and Mahommedan legal treatises. I shall conclude this part of my lecture with a few Threefold general observations on the Roman law of security, and I div i si .o of propose, in the first place, to call your attention to the by Roman threefold division of securities by Roman lawyers a la wyers. division which, although not, perhaps, strictly logical, is eminently convenient for our purpose (6). Roman law divides securities or mortgages into three classes, conventional or consensual, legal, and judicial. A conventional mortgage is one created by the agreement, c express or implied, of the parties, and calls for no remark, ttaud A legal mortgage is, as the name imports, one which is mort gage. (&) See note A at the end of this lecture. LECTURE L Legal mortgage. Judicial lien - Rights of LAW OF MORTGAGE. created merely by the operation of law. A legal ruort- o-ao-e, however, must not be confounded with implied conven- tio'nal mortgages, which are really based upon the voluntary consent of the parties, the distinction between the two ^ e j n g precisely the same as that between implied contracts and O quasi-contracts. The judicial lien of the civil law, is a lien created by an order of a Court of Justice, for the purpose of compelling obedience to its orders, and corre- sponds to the process of attachment under the procedure of our Indian Courts. I do not propose to discuss at length the various rules which governed each of these classes of securities, as this is not the place for such discussion. Much of our own law of mortgage is, however, still in an uncertain, if not in a fluid, condition, and I shall, therefore, be obliged to refer occasionally to the Roman law which, although not possessed of any inherent binding author! ty, has always proved an almost inexhaustible store-house of legal principles, and may be usefully consulted in all doubtful cases arising in our Courts. A few general ob- servations, therefore, will, I trust, assist you in following me through some of the discussions in which I shall be engaged in the course of these lectures. The pledgee possessed in later Roman law, as we have already seen, a right to sell the pledge, a right which . migl't be exercised by him, even if he had engaged with the debtor not to sell the pledge in satisfaction of his demand. But the creditor was not at liberty to sell, until his claim was fully due and payable ; and even then he was bound to give the debtor notice of his intention to sell. If, however, the creditor had expressly engaged not to exercise the right of sale, he was bound to issue three successive notices, instead of the one which was ordinarily required by the law. The pledgee was not bound to invoke the process of the Court for the sale of the pledge ; but the sale, in the absence of any express agreement to the contrary, must have been effected publicly, and the debtor summoned to be present. In later Roman la\v, the exercise of the power of sale was hemmed in by further provisions for the protection of the debtor. If the parties agreed as to the manner, time, and other conditions of the sale, the creditor was bound to act in accordance with the terms of the agreement; but, where the contract was silent on the point, the mortgagee, if in possession, was bound to give formal notice of his intention to exercise his power of EIGHTS OF PLEDGOR AND PLEDGEE. 11 sale to the debtor ; if he happened to be out of possession, he LECTURE was bound to obtain a judicial decree, and, after the lapse of '__ two years from either of these events, the mortgagee was en- titled to sell the property. (Hunter's Roman Law, p. 437.) But the creditor was not entitled to anything in excess of the amount of his debt with interest, if any, and costs. If there was any overplus, the debtor was entitled to it ; who, on the other hand, was riot released from liability if the proceeds fell short of the demand of the creditor. The creditor, however, could not be compelled to sell, unless the debtor gave security for the payment of the debt in full ; but a fraudulent sale rendered the creditor personally liable to the debtor, and if recourse against the creditor was impossible, the purchaser might be compelled to make restitution. If no bidder offered a reasonable price, the creditor might himself obtain an assignment of the pledge for a fair price ; such an assignment, however, did not absolutely extinguish the debtor's right of redemption. The debtor, before the exercise of the right of sale by the creditor, was not restrained from dealing with the property in any way he thought proper, provided that the security of the creditor was not thereby impaired. The pledgee could not be affected by any disposition which the pledger might make of the property pledged Sale by by him. The right of the pledgee was a real right, and could not be prejudiced by any alienation made by the debtor. A sale by the creditor, therefore, passed the pro- perty to the purchaser, free of all incumbrances subse- quently created by the debtor. It would appear, although the point is not quite free from doubt, that the right of sale could be exercised only by the first pledgee, and not by the second or any sub- sequent incumbrancer. It was, however, always open to the puisne pledgee to redeem the prior mortgagee, and thus acquire the rights of the latter. This right of redemption R 'g ht of was not confined to the second mortgagee, and any mort- tfon!"' gage creditor might place himself in the situation of the first mortgagee by the payment or deposit of the amount of his demand, but the privilege could not be claimed by an unsecured creditor. The principle of the English law, however, by which a preference may, in certain cases, be gained over an intermediate incumbrance, was not recog- nized by Roman lawyers, although the mortgagor himself Tacking in was not permitted to redeem without paying to the Komanlrnr - 12 LAW OF MORTGAGE. LECTUBE mortgagee all the debts, whether secured or unsecured, which might be due to him from the mortgagor, but the right could not be asserted against a subsequent incuin- brancer. Priority The priority of mortgages was, as a rule, determined by determined ^ ne or( j e r of time, and it seems that delivery of possession conferred no advantage. (But see Colquhoun's Civil Law, 1475.) It is, however, necessary to remember that, the time by which priority was regulated, was not the date on which the money for which the security was given was actually borrowed, but that on which the contract of mortgage was entered into. If, therefore, the mortgage was created subject to any condition, it would, on the fulfilment of that condition, relate back to the date when the mortgage was granted, but there was a distinction between what Potestative Roman lawyers called a casual and a potestative condi- potes'ta'tYve tion. Thus, suppose A hired a bath from B from the next conditions, kalends, and agreed that his slave C should be security for the rent, but before the kalends A borrowed money from D, and hypothecated C to him. In this case, B would have priority over D, although there was nothing actually due for rent at the time D made his advance, the reason assigned for the preference being, that the Ii3 ? pothec was attached to the contract of hire in such a manner, that without the consent of B it could not be got rid of. B would, therefore, have the first hypothec. (Hunter's Roman Law, p. 441.) But the case which I have just put, must be dis- tinguished from the class of cases in which the agreement, although prior in date, was, to borrow the language of Roman law, only potestative, that is, did not create binding obligation either to lend or to borrow. Thus, suppose A agrees with B to lend him money by a certain day, the farm of B to stand as security, but before any money has been advanced by A, suppose B borrows from C and hypothecates the same farm ; if A should, afterwards, advance money under the agreement to B, he would not, it seems, be entitled to priority over C. (Hunter's Roman Law, p. 441. See also the authorities collected in Surge's Foreign and Colonial Law, Vol. III,p. 180.) The distinction between the two cases is, as I have already suggested, that in the one an obligation is created in presenti, although it is to come into force at a future date, while, in the other case, there is no obligation imposed on the one party or on the other, either to leud or to borrow the promised money. PRIORITY OF MORTGAGES. 13 There were, however, exceptions to the rule of priority LECTURE founded either on grounds of public policy or on equitable considerations, and these exceptions were known in Roman law as privileged liens. They are thus classified by Dr. Hunter in his treatise on Roman law : of priority. (1) The Imperial Exchequer (Fiscus) which came before all creditoi's for arrears of fines. (2) A creditor advancing money to buy office (militia) expressly on the condition of obtaining priority. (3) A married woman suing for the recovery of her dos, but not in respect of the donatio ante nuptias. (4) A person advancing money on the security of any house or property for the purpose of preserving it from destruction. (Hunter's Roman Law, p. 442.) Other privileged hypothecs ranked according to their Salvage priority in time, but an exception was recognized for lien9 ' obvious reasons in favour of salvage liens in which priority was regulated in the inverse order, the later being prefer- red to the earlier. It is important to observe the change introduced into the later Roman law by which a hypothec made by a public deed, that is, sealed in the presence of witnesses and prepared by a notary (tabellio), had priority over hypo- thecs attested only by private documents. Leo gave the same privilege to a private writing signed by three good and respectable witnesses, and Justinian continued and confirmed the privilege. (Hunter's Roman Law, p. 442.) I may mention that the pledgee was entitled in the Privileged Roman law to a lien for any advances made by him for the purpose of preserving the pledge. All such advances were regardedas privileged debts, and in cases of disputed priority, took effect accordingly, and not simply from the date when the expenses were actually incurred. A privileged lien was also recognized in favour of a person whose money had been laid out in the improvement of an estate, but there was a difference between the position of such a person and that of a creditor by whom the property itself had been preserved. In the latter case the lien attached to the thing itself, while in the former case the preference was limited to the improvements, and did not extend to the estate itself. (Domat's Civil Law, 1742.) The Roman law abounds in instances of tacit or legal Tacit hypothecation, and it may be said without exaggeration ^n^nRo- that the pages of the Digest as well as the writings of man law. 14, LAW OF MORTGAGE. LECTURE civilians bristle with liens created merely by operation of law. The hypothec of pupils over property bought by their tutors with their money, the hypothec of a person making a loan for the purchase of a house, are only some of the numerous instances which might be cited in illus- tration of the readiness with which Roman lawj^ers allowed a lien to be annexed to a great variety of transactions. It is, however, unnecessary to notice them in detail in this place, as they owed their existence mainly to artificial causes, and, however well adapted to the requirements of the com- munity in which they grew up, cannot be held up as pat- terns for close imitation in the jurisprudence of communities cast in a different mould, and governed by institutions of a different type. In every body of law, care must be taken to distinguish those portions of it which rest upon natural equity, reflected in the dry light of reason, from those which have grown out of mere accidental conditions, and which always take their colour and shape from their environments. It is, surely, possible to admire a system without acknowledging that every part of it is adapted to the requirements of all ages and countries. Our admira- tion, however well-founded, should not be allowed to betray us into confounding the general with the special, the essen- tial with the accidental. This caution is, perhaps, no- where more necessary than in India, where its neglect has led to the introduction of much law of very doubtful equity but of most undoubted subtlety, the only apology for which, I am afraid, is to be found in the ' fluidity ' of our law, and I may perhaps add without disrespect, the facility with which the work of consolidation can be effected. Hypothe A hypothecation came to an end by payment or tender cation how followed by consignation or deposit of the mortgage debt, together with interest and such expenses as the mortgagor was bound to pay. It was also destroyed by a release by the creditor which might be either express, or implied from his conduct, as, for instance, by his agreeing to take a different security. But a novation, by which term the transaction was known to the Roman law, did not extinguish the original mortgage if it was renewed at the time of the substitution, but such mortgage took effect only according to the extent of the original lien and did not attach to any further sum in which the debtor might subsequently become indebted to the mortgagee. (Surge's Foreign and Colonial Law, Vol. Ill, p. 215, and p. 237. MARSHALLING IN ROMAN LAW. 15 See also Colquhoun's Roman Law, 1475.) I may also LECTURE mention that a creditor who had got a tacit mortgage, did not release or discharge it by taking a conventional secu- rity, nor did he surrender his priority in any way by accepting such a mortgage. (Burge's Foreign and Colonial Law, Vol. Ill, p. 242.) The pledge might also be extinguished by merger which Extinction occurred when the rights of the pledger and of the pledgee by mer er< became vested in the same person, but no merger took place where the operation of the rule would work any injustice. If it was indifferent to the person, in whom the union of interest arose, whether the charge was kept alive or extinguished, a merger might be presumed in the absence of anything to repel such inference, but there was no merger where any beneficial purpose could be answered by keeping the mortgage alive. I need scarcely point out, that the right of the pledgee was liable to be extinguished by the law of prescription, and that, of course, the security could not be enforced if the pledge was destroyed, although where the destruction was accidental, the right of the creditor to recover payment was not in any way affected by the loss. But nothing falling short of destruction could put an end to the pledge, and if the subject of the pledge only suffered a change, the pledgee could enforce his rights against it notwithstanding such alteration. It is instructive to observe that the doctrine known as Marshall- marshalling in the English Court of Chancery, was recog- s Ko ~ nized, to a certain extent, in the later Roman law, and a third person in possession of the mortgaged property might, under certain conditions, insist upon the creditor proceed- ing in the first instance against the debtor and his sureties, hut no such indulgence could be claimed by the person in possession, if he knew, at the time he acquired the mortgag- ed premises, that they were subject to the mortgage, or if he acquired them after a suit had been instituted against the mortgagor on the mortgage security. (Burge's Foreign and Colonial Law, Vol. Ill, p. 221.) It appears that if a person who was not the owner of a Effectof the property mortgaged it, and afterwards happened to become mortgagor the owner, the property so acquired would be subject to the theowuer. mortgage created by him, and it seems, although the point is not free from doubt, that the mortgage related back to the date of the original contract and would be preferred to a subsequent mortgage granted after the acquisition of the 16 LAW OF MORTGAGE. LECTURE dominium by the mortgagor. (See the authorities for and against this proposition, collected in Burge's Foreign and Colonial Law, Vol. Ill, pp. 173-174.) The right of substitution or subrogation formed an fu'brogi- important branch of the Roman law of mortgage, and was tion in Ro- re cognized in it to an extent to which it has not been aw ' carried in most modern systems. A subrogation in the Roman law might be either conventional, that is, consensual, or it might take place by mere operation of law. A subse- quent mortgagee, who paid off a prior mortgagee, was entitled as of right to stand in the place of the latter, and this is an instance of subrogation by opera- tion of law, while an instance of conventional subrogation is furnished by the ordinary case of an assignment of his security by the mortgagee. A creditor who lent money How ac- to tne debtor for the purpose of paying off a mortgage, on the quired. condition that he was to be substituted in the place of the mortgagee, was also entitled, under certain circumstances, to the benefit of the mortgage. (Domat's Civil Law, 1774.) The right of substitution might also, in some cases, be acquired by an order of Court, made with the consent of the debtor, or, even sometimes without such consent. A similar right was allowed in favour of a person to whom a mortgage debt was sold under a decree of a Court of Justice. The right of sub- rogation was not, however, necessarily dependent, either on the order of a Court of Justice, or, as you have just heard, on the consent of the parties. A subsequent pledgee, for instance, by paying off a prior mortgagee, could, as I told you, claim to stand in the place of the latter, and so also could a purchaser who had paid off a mortgage on the property purchased by him. (Domat's Civil Law, 1777.) Again, if the purchase-money was applied by the vendee in payment of a prior mortgage, he could always insist upon standing in the place of the mortgagee, and might use the mortgage as a shield against the claims of all intermediate incumbrancers. (Domat's Civil Law, 1785.) A surety also, who discharged the debt of his principal, was entitled to the benefit of any securities which might be held by the creditor against the principal debtor. Extinction It appears that the pledge ceased to exist, if the debtor of pledge. h a r)p ene by the name of Antichresis in which the mortgagee could retain the profits in lieu of interest. The pledgee was liable in the Roman law to take the same Liabilities care of the pledge as a prudent father of a family would of p| e j h g e his own property, but if the pledge perished accidentally in his hands, the mortgagee incurred no liability, and he might, in such case, either demand another security, or recover the debt immediately from the pledger. The debtor, again, on Liabilities his part, was bound to pay the creditor any expenses f tlie necessarily incurred by him for the preservation of the mortgaged property, as, for instance, for repairing a house, but there seems to have been some doubt as to the right of E. B. G., M. 2 18 LECTURE I. Pledge when redeem- able. Pledge in systems founded on Roman law. Exception LAW OF MORTGAGE. the pledgee to reimbursement for expenses which, although not necessary, were beneficial to the mortgaged property a doubt which, as we shall see in a subsequent lecture, lingers even at the present moment in the English law, and which certain recent decisions have by no means served to dispel. Before dismissing the subject of Roman law, I will mention one or two other points which also deserve the attention of the student. A purchase of the mortgaged property by a subsequent mortgagee, although made under a sale by the first mortgagee, did not pass to the purchaser an irredeemable title, and the same was the case with the surety. Indeed, it would seem, that in all cases where the purchaser was not an absolute stranger, the debtor might exercise his right to redeem the property a privilege which has, however, been curtailed in most modern systems of law. (Burge's Foreign and Colonial Law, Vol. Ill, pp. 226-227.) Another peculiarity, connected with the Roman law, was the right, which the mortgagee had, to interrupt the posses- sion and prevent a trespasser from acquiring an absolute title to the property, by means of an action against the person in possession which might be brought even before the mortgage-debt fell due a provision the absence of which from our law occasionally causes much embarrassment to the mortgagee. (Burge's Foreign and Colonial Law, Vol. Ill, p. 232.) I have dwelt on the Roman law perhaps longer than I should have done, but the importance of the subject is, I trust, sufficient to excuse me for having detained you with a brief outline of one of the most interesting systems of law. The short account which I have given you of the Roman law, will also serve as a rough sketch of the law followed in our day in countries whose jurisprudence is founded on the civil law, and which constitute not only the greater part of Europe, including Scotland, but also a not inconsiderable portion of the new world. There is, however, one important deviation which deserves notice, the creditor not being per- mitted by most continental systems to exercise the power of sale except through judicial process. Another departure from the civil law may also be noticed in this place, the hypothecation of moveables, although sanctioned by Roman lawyers, not being, as a rule, allowed in any of the modern systems which are professedly founded on the civil law. ENGLISH LAW OF MORTGAGE. 19 (Surge's Foreign and Colonial Law, Vol. Ill, p. 201 ; LECTURE Code Napoleon, 2119.) L There is one other system of law which has a very close English interest for the Indian student; and a few words on the lawo r f (r English law of mortgages will not, I trust, be wholly out m of place. An English mortgage resembles in its features, as I have already had occasion to remark, the Fiducia of the later Roman law. In form it is a conveyance of land by the debtor to his creditor, with a proviso that, on repayment of the debt on a certain day, the conveyance shall be void, or, as is now more usually the case, that the creditor shall reconvey the estate to the debtor. If the money is not repaid on the appointed day, the mortgagee becomes at law the absolute owner of the property, but the Court of Chancery, which has almost exclusive juris- diction over mortgages of land, regards the transaction only as a security for the repayment of the debt, and allows the mortgagor to redeem on payment of the principal, interest, and costs within a reasonable time, which has been reduced by a recent statute to twelve years from the date of the entry of the mortgagee, or of an acknowledgment by him Equity of of the title of the mortgagor. This right to redeem is known redemp- as the " equity of redemption," and, as I shall have occasion tlon ' to explain hereafter, is guarded with peculiar jealousy by the Court of Chancery. But we must remember that the equity of redemption is not, as the name perhaps would suggest, a mere right. It is an "estate" in the land, and may be devised, granted, or otherwise alienated by the mortgagor, subject, however, to the right of the mortgagee to foreclose, when, under the decree of foreclosure, the estate passes to the mortgagee free of all iucumbrances created subsequently to the mortgage. At any time after the estate has been forfeited at law, the mortgagee has the right to call upon the mortgagor either to redeem, or, in default, to be for ever foreclosed from redeeming the property. This is accom- Bi u of plished by a bill of foreclosure, by which the mortgagee foreclosure, prays that an account may be taken of what is due to him on his securitjr ; and that the mortgagor may be decreed either to pay the amount, by a short day to be appointed by the Court, or to be foreclosed his equity of redemption. An account is taken, and a day for payment is appointed; the mortgagor being generally allowed for that purpose six mouths from the date of the certificate determining 20 LAW OF MORTGAGE. LECTURE the amount due to the mortgagee on his security. If the mortgagor makes default, the mortgagee obtains an absolute order for foreclosing, and the estate passes from the mort- gagor to the mortgagee. A decree of dismissal of a bill for redemption, by reason of non-payment of the mortgage- money at the time appointed by the Court, also operates as a foreclosure. Decree The Court, however, sometimes, instead of making a for sale. however, was ultimately found out of the difficulty the pawnor. created by the necessity of detaining the pledge, and the restriction might be evaded, in the later Mahommedan law, by the fiction of the pawnee lending the pledge, which he was at liberty to do, to the pawnor. The pledge, however, might be resumed at any moment by the pawnee, while the loan did not put an end to the pawn. (Hamilton's Hedaya, Vol. IV, p. 244.) Seizin not it j s important to observe that, under the Maliki law, necessary . . . J , ^ , .., ~ , , in the Ma- seizin is not necessary. Contact with foreign peoples and Hki law. foreign institutions could not long fail to do their work of disintegration. As truly observed by Mr. Ameer AH, " the grand superstructure of Islamic jurisprudence is founded on the Koranic laws and the traditional sayings of the prophet, but much of the coping stone was supplied at Bagdad, in Syria, in Andalusia and Persia," and, the learned professor might have added, in India. (Tagore Law Lec- tures, 1884, p. 4.) But the building, although representing different styles of architecture, is, on the whole, if some- what wanting in grace and symmetry, not altogether deficient in solidity, nor absolutely inharmonious in its parts. redemption "^ seems ^ na ^ an equity of redemption cannot strictly be cannot be the subject of a gift in Mahommedan law, because posses- sion keing ess ential to the validity of a pledge, there can be no delivery of seizin to the donee, without which the gift would be incomplete. Thus, in the Fatawa-i-Alamgiri (Vol. Ill, p. 521), it is said that if the property be in the hands of a pledgee, the gift is not lawful for want of posses- sion. As pointed out by Macnaghten, the reason of the rule is, that seizin and delivery cannot be effected when the thing is not in the possession of the donor. " It is of no consequence how the possession has been parted with, even though the proprietary right be expressly retained or claimed as in the case of a pledge or of an usurpation." (Note to Macnagh ten's Precedents of Gifts Cases, No. 6, and the opinion of the Mahommedan Law Officer. See also Mohinudin v. Man- RIGHTS OF PLEDQOR AND PLEDGEE. 47 sherskah, 1. L. R., VI Bom., 650.) This rule, however, has LECTURE fallen into disuse with the reason for it, since hypothecation JF'T^ was engrafted on the older Mahommedan law. If the ' property, therefore, be not in the possession of the mort- gagee, as frequently occurs in practice at the present day, the objection does not apply and a valid gift or dedication, in which also delivery of possession is essential, may be made by the mortgagor, of his equity of redemption. (Shahzadee Hazra Begum v. Khaja Hussain All Khan, XII Suth. W. R., 498 ; IV Ben. L. Rep., A. C. J., 86.) As I have already observed, this restriction never applied to a sale of the equity of redemption in which seizin is not essential, although there is a very peculiar rule in the Mahommedan law relating to priority in the case of two successive sales by the mortgagor of his property. It may, however, be doubted whether the view that a TI e HanaQ gift of the equity of redemption is invalid is not founded aw * upon a narrow construction of the Hanafi law. It is clear that in the case of a hoivalat the debt may be trans- ferred from the original debtor to a third person, and if such debt happens to be secured by a pledge, the person who discharges the debt would seem to be entitled to the pledge. The passage in the Fatawa Alamgiri, to which I have already referred and which is generally cited as an authority for the proposition that the gift of an equity of redemption is unlawful, may perhaps be read not as abso- lutely prohibiting a donation, but only as negativing the right of the donee to actual possession in derogation of the rights of the mortgagee under his mortgage. (See the observations of Mr. Ameer Ali in the Tagore Law Lectures, 1884, pp. 69 70, where the learned author points out the analogy between a gift of a reversion and one of an equity of redemption.) I shall now proceed to consider the respective rights of Rights of the pledger and pledgee in Mahommedan law. I propose thepledgee ' to place before you only a rough outline, as the details cannot be said to possess much interest. The pledgee had the right to sell the pledge on the default of the debtor, but only when the right was given by the contract itself. He was then regarded as the agent of the debtor, but the authority, upon principles recognized in every system Power of of law, was not revocable. It was not necessary that the authority should be given to the creditor himself. It law. might, at the option of the party, be given to a third 48 LAW OF MORTGAGE. LECTURE person who could be compelled by the Court to exercise \ L ~ the power. A sale, however, by actual judicial process, Contd. seemg to i iave been unknown, and the Kazi could only compel a person who had been invested with the power of sale to exercise it for the benefit of the creditor. If the power of sale was not given by the original contract, the pledgee had only a bare lien, without the right of getting material satisfaction out of the pledge. In the Rights of Mahommedan law, the debtor was not authorized to deal pledger. j n an y way ^ifa th e property pledged by him ; and a sale without the consent of the creditor was invalid. If, notwithstanding, the debtor sold the property to two per- sons in succession, the person who was recognized as the purchaser by the pledgee, acquired a preferable right to the property, although the sale to him might be posterior in point of time. The rule of the Mahommedan law regarding the liabi- lity of the pledgee for the destruction of the pledge even when the destruction is accidental, is somewhat peculiar. It is thus stated by Macnaghten: "Where such property, being equivalent to the debt, may have been destroyed otherwise than by the act of the pawnee Conse- or mortgagee, the debt is extinguished ; where it exceeds quences of ] ie (j eD ^ the pawnee or mortgagee is not responsible for pledge. the excess ; but where it falls short of the debt, the defi- ciency must be made up by the pawnor or mortgagor : but if the property were wilfully destroyed by the act of the pawnee or mortgagee, he will be responsible for any excess of its value beyond the amount of the debt." (Macnagh ten's Mahommedan Law, Chap. XI, 19.) There are one or two other points which deserve notice. The pledgee was not permitted to enjoy the usufruct of the property pledged to him, but he was not chargeable with the expense of providing for the support of the Liability of pledge, although he was bound to provide for its custody, connected " ^ * s * ^ e observed," says the author of the Hedaya, with the " that the wants of a pledge are of two kinds : (1) such as and t0d re- are re( l u i s ^e towards the support of the pledge and the servation continuance of its existence ; (2) such as may be necessary of pledge, towards its preservation or safety, whether wholly or partly. Now, as the absolute property of the pledge apper- tains to the pawner, the expenses of the first class must, therefore, be defrayed by him ; and as he has, moreover, a property in the usufruct of the pledge, its support and the PLEDGE FOR CONTINGENT DEBT. 49 continuance of its existence, for this reason also, rest upon LECTDHK him, being an expense attendant upon his property, in Jf 1 ^ the same manner as holds in the case of a trust. Of this ' class, are the maintenance of a pledge in meat and drink, including wages to shepherds, and so forth ; and the cloth- ing of a slave, the" wages of a nurse for the child of a pledge, the watering of a garden, the grafting of fig trees, the collecting of fruits, &c. The expenses of the second class, on the contrary, are incumbent on the pawnee ; because it is his part to detain the pledge ; and, as the preservation of it, therefore, rests upon him, he is conse- quently to defray the expense of such preservation. Of the second class is the hire of the keeper of the pledge ; and so likewise the rent of the house, wherein the pledge is deposited, whether the debt exceed or fall short of the value of the pledge.'" (Hamilton's Hedaya, Vol. IV, pp. 200-201.) But any taxes or tithes, due on account of the pledged property, must be paid by the pledger as payments necessary towards the subsistence of the property. (Hamil- ton's Hedaya, Vol. IV, p. 202.) A pledge cannot be given as a security against contin- Pledge gencies. Thus, a pledge deposited with a person, as a 1111 ! 8 ' 1 " 3 security for anything which may be due in future, is invalid ; a n existing " although," adds the Hedaya, " it is otherwise in the case debt - of a promised debt, as, where a person gives a pledge to another on the strength of his promising to lend him one thousand dirhems, and the other takes the pledge and pro- mises to lend the money, and the pledge perishes in his hands ; for, in this case, he is responsible in proportion to the sum promised, in the same manner as if it had been actually paid, the promise of debt being considered as an actual existence of it, for this reason that it was made at the earnest desire of the borrower." (Hamilton's Hedaya, Vol. IV, pp. 208-209.) In a case, in which a Mahommedan vendor had deposited with the vendee the title-deeds of a certain estate, as a security for his delivering up to the vendee the title-deeds of the property which had been sold to him, and which were not at the time in the possession of the vendor, Lord Kingsdowii observed : " By the Mahommedan law, such a contract as the one under consi- deration, for a security in respect of a contingent loss, would be one, not of pawn, but of trust." (Varden Seth Sam v. Lulqmtty Royjec, Lalla, IX Moore. Ind. App., 320.) K. B. G., M. 4 50 LAW OF MORTGAGE. LECTURE It seems that in the Mahommedan law a pledgee is bound ll -~~, to produce the pledge, as well on receiving a partial pay- ' ment, as in the case of a complete discharge, because, as Pledgee the doctors say, the pledgee's producing the pawn is of no b roduce prejudice to him, while, at the same time, it serves to dissi- the pledge pate any apprehension of the loss of the pledge which on receiv- ma have arisen in the mind of the pawner. (Hamilton's ingapartial J - irt c\ payment. Hedaya, Vol. IV, p. 196.) Destruc- If a pawner destroy the thing he has pledged, the pledge tbe P awnee ma y demand a fresh pledge ; but if a stranger (that is, a person unconcerned in the contract) destroy the pledge, the pawnee (not the pawner) is litigant against him, and may take from him a compensation for the value, which he must retain in pawn in place of the original pledge ; for the pawnee, as being the most entitled to the substance of the pledge, is also most entitled to its substitute, namely, the value. (Hamilton's Hedaya, Vol. IV, p. 243.) increase It is important to observe that every species of increase froin U the accruing from a pledge after the execution of the contract pledge. (such as milk, fruits, wool, or progeny), belongs to the pawner as being an accession to his property, -but they are, nevertheless, detained with the original in pawn ; for " branches are dependant on the stock ; and the con- tract of pawn, being of a binding nature, extends over all its branches." (Hamilton's Hedaya, Vol. IV, p. 263.) We have seen that the pledgee did not possess, in the Mahommedan law, an unqualified power of sale ; and the reason why no improvement took place in this respect is Causes of not far to seek. The Mahommedan law prohibited the lopment of taking of interest as unlawful, and this rule must have Mahomme- seriously retarded the development of the law of pledge, dan law. ^y e gaw j low common f a i rne ss suggested in Hindu law the rule by which the debtor was bound to redeem before the interest became equal to the principal. But no such liability was imposed upon the Mahommedan debtor, be- cause the pledge was thought to be a sufficient security for the loan, and, as the debt could not receive any acces- sion, the creditor did not run any serious risk of losing his money. The prohibition, however, relating to interest, led to the invention of the bye-bil-wufa, a kind of security, analogous to the English mortgage, and possessing a very interesting history. The Mahommedan creditor, being prohibited by law from taking interest, devised a mode of evadin a statute which had been in force for about two hundred years, by what a learned but somewhat irre- verent writer calls a piece of solemn juggling (Monahan on The Method of Law, p. 14). The Chancery Judges were certainly not slow to follow the example, if indeed, they were not the first to set it, by frittering away the provi- sions of not a few Acts of Parliament, when they found themselves unable to accept the principle on which they were based. The same methods which were openly em- ployed in transforming the common law which Equity always professed to follow, were also employed, less openly it is true, but not less effectively in modifying the sta- tute law of the country. But a repetition of such per- formances will not be suffered in modern times, and I view with dismay, although, I confess, not with surprise, the attempts made, from time to time, to introduce the practice in India (j). Apart from the danger of confusing the boundary which separates the administration of the law from the making of it, the practice can by no means be held up as a pattern for imitation by our Courts. Emi- nent English Judges, who clearly saw the mischief it was calculated to produce, have occasionally raised their voices against it, and the protest made by Lord Bedesdale will not be regarded as at all too strong by those who are familiar with the undisguised attempts of Equity Judges to usurp the functions of the Legislature. " The Statute," said Lord Redesdale, speaking of the Statute of Frauds, " was made for the purpose of preventing perjuries and frauds, and nothing can be more manifest to any person who has been in the habit of practising in Courts of Equity, than that the relaxation of that Statute has been a ground of much perjury and much fraud. If the statute had been rigorously observed, the result would probably have been, that few instances of parol agree- ments would have occurred. Agreements would, from the Relaxation necessity of the case, have been reduced to writing, where- tute'of 818 " as> i fc i >s manifest, the decisions on the subject have Frauds. opened a new door to fraud; and, under pretence of O') See the observations of the Lords of the Judicial Committee in Thumbusanmy Moodelly v. Hossaln RowtJien, I. L. R., I Mad., 1. EQUITABLE MORTGAGE. 71 past execution, if possession is had in any way whatsoever, LECTURE means are frequently found to put a Court of Equity in such a situation that, without departing from its rules, it feels itself obliged to break through the Statute." (Lindsay v. Lynch, II Sch. and Lefr., 5. See also the observations of Lord Alvanley inForster v. Hale, III Ves., 712, 713.) And even Story, who speaks more cautiously, is obliged to admit " that the exceptions thus allowed, do greatly trench upon the policy and objects of the Statute of Frauds ; nnd, per- haps, there might have been as much wisdom originally in leaving the Statute to its full operation, without any at- tempt to create exceptions, even in cases where the Statute would enable the party to protect himself from a perfor- mance of his contract through a meditated fraud. For, even admitting that such cases might occur, they would become more and more rare as the Statute became better understood ; and, a partial evil ought not to be permitted to control a general convenience. And, indeed, it is far from being certain that these very exceptions do not assist parties in fraudulent contrivances, and increase the temptations to perjury, quite as often as they do assist them in the promotion of good faith, and the fur- therance of justice. These exceptions have also led to great embarrassments in the actual administration of equity ; and although, in some cases, one may clearly see that no great mischief can occur from enforcing them, yet in others, difficulties may be stated in their practical application, which compel us to pause, and to question their original propriety. " (Story's Equity Jurisprudence, 765.) I have said that contractual mortgages may be created TWO kinds either by writing or by parol. They may also be either ex- j^f ^ ' press or implied. There is one important class of mortgages, g*gm, x- I say class, because in English law they form a class by p r essand themselves, in which the intention to create a mortgage m is presumed from the conduct of the parties. Thus, if money is borrowed on a deposit of title-deeds, the Court would infer an intention to charge the property covered by the title-deeds, with the repayment of the money. The transac- tion, I need hardly point out, is, however, very different from a true legal mortgage which is not based upon any express or implied consent of the parties, although the difference is sometimes veiled by the ambiguity of the term " implied contract " in English law. In English law, a mortgage of 72 LAW OF MORTGAGE. LECTURE this kind is called an equitable mortgage, because, follow- m - ing a well-known maxim, equity regards the transac- Equitabie tion in the same light as a formal mortgage ; and this mortgage. S0 rt of mortgage being recognised in equity is called an "equitable mortgage" as opposed to a "legal mortgage." The expression is also applied to similar transactions between natives of this country, although, strictly speaking, it can be properly applied only in a country in which law and equity are administered as two distinct systems. Equitable Equitable mortgages, although common enough in the mortgages ,-, V, i L v A. in the mo- Presidency towns, do not seem to be very common in the fussft. mofussil. We, indeed, find an instance of it in an early case in the Sudder Dewany Adawlut, but the parties to the transaction seem to have been residents of Calcutta, and the difference of opinion between one learned Judges by whom the appeal was heard, shows that the case was one of the first impression, and that the transaction was by no means common at the time. The report of the case to which I refer, is not very full. It would, however, appear that a certain person being indebted to the plaintiff and being pressed for payment, made over to him the title- deeds of certain property. It does not, however, appear that the debtor, when he made over the title-deeds, expressly stated his intention to offer them as a security for the debt. The property was afterwards sold under an execution by the Sheriff, and the purchaser bought with notice of the plain- tiff's claim. The plaintiff sought to enforce his lien on the property, contending that the purchaser under the execution had purchased the property subject to his lien. The Zillah Judge having given judgment in favour of the plaintiff, upon the ground that the deposit by the borrower of the title- deeds was equivalent to a mortgage, the decree was affirmed on appeal to the Sudder Dewany Adawlut, although, one of the Judges was inclined to think that the mere delivery of the title-deeds was not sufficient to clothe the creditor with the rights of a mortgagee. (Laljee v. Govindram, VI Macnaghten's Sel. Rep., 199.) A few other cases from the mofussil may be found scattered in our books of reports, in which the Court has given effect to a deposit of title-deeds as a valid simple mortgage, but, as I have already told you, this is not an usual mode of giving security outside the Presidency towns. But, although in the mofussil, an equi- table mortgagee only obtains a decree for sale, it would seem that a decree for foreclosure may be obtained in the High DELIVERY OF TITLE-DEEDS. 73 Courts in the exercise of their original jurisdiction (Ram- LECTUBE narain Bose v. Ramcunny Paul, and Pertab Chunder Paulit v. Aslam Holdar, 24th December 1851, cited in Macpherson's Mortgage, p. 591. Note (c). But see Oo Noung v. Moung Htoondo, I. L. R., XIII Calc., 322.) In English law, notwithstanding some difference of opinion at one time, an equitable mortgagee is entitled to foreclosure, whether the deposit of title-deeds is, or is not, accompanied by an agreement to execute a legal mortgage. But, if the terms of the agreement exclude the right to a legal mortgage, the Court can only make a decree for sale. (Fisher on Mortgage, pp. 480 482.) In the case which I have cited from the Select Reports, Mortgage the Court inferred an intention to create a mortgage from '^Je^ r by the mere fact of the delivery of the title-deeds to the credit- <>f the or. The deposit of title-deeds, however, is not unfre- tltle - d eeds. quently accompanied by an agreement, either verbal or written, in which the intention to create a charge is ex- pressly stated. When that is the case, the transaction does not substantial!} 7 differ from an express conventional mort- gage ; and there is no reason why, as between parties who can pass land without writing and without delivery of possession, such a transaction should not be given effect to. In a case in the Madras Presidency, in which the local Sudder Dewany Adawlut had refused to recognise the validity of such a transaction, Lord Kingsdown, in deliver- ing the judgment of the Lords of the Judicial Committee of the Privy Council in appeal, is reported to have said : " The decision of the Sudder Dewany Adawlut, so far as it respects the enforcement of the lien against the third if further and last defendants, appears to have proceeded upon the ^"^'u ground that the principles of the English law applicable an agree- to a similar state of circumstances ought not to govern ment to the decision of that suit in those Courts. This was cor- charge, the rect, if the authoritative obligation of that law on the t ransaction Company's Courts were insisted on. There is, properly, p S r ess con- no prescribed general law to which their decisions must ventionai conform. They are directed in the Madras Presidency to m proceed generally according to justice, equity, and good conscience. The question then is, whether the decision appealed against, violates that direction or not. The Court of Appeal, reversing the prior decisions, has decided that the contract was not operative as a hypothecation, or pledge, even between the parties to it. Yet, the evidence 74 LAW OF MORTGAGE. LECTURK shows that the plaintiff looked not simply to the personal J* 1 - credit of the person with whom he contracted, but bar- gained for a security on land. If any positive law had forbidden effect to be given to the actual agreement of the parties to create that lien, the Court, of course, must have obeyed that law. If the contract of lien were imperfect for want of some necessary condition, effect must have been, in like manner, denied to it as a perfected lien. But nothing of this sort is suggested in the pleadings, or prov- Varden ^ ed. It is not shown that, in fact, the parties contracted Qggg Sams \vith reference to any particular law. They were not of the same race and creed. By the Mahommedan law, such a contract as the one under consideration, for a security in respect of a contingent loss, would be one, not of pawn, but of trust. (Hamilton's Hedaya, Vol. IV, p. 208, tit. ' Pawns.') It is not declared that any writing or actual delivery is essential to the creation of such trust by that law ; but as the contracting parties are not both Mahommedans, that law would not have governed the question of the validity and foi'ce of their contract, even in the Supreme Court. The plaintiff is a Christian ; the contract took place with par- ties living within the local limits of the Supreme Court of Madras, though it related to land beyond them. It is not shown that any local law, any lex loci rei sitce ex- ists, forbidding the creation of a lien by the contract and deposit of deeds which existed in this case ; and by the general law of the place, where the contract was made, that is, the English law, the deposit of title- deeds as a security, would create a lien on lands, though, as between parties who can convey by deed only, or con- veyance in writing, such lien would necessarily be equit- able. In this case there is an express contract for a security on the lands, to which, no law invalidating it, effect must be given between the parties themselves. " (Varden Seth Sam v. Luckpathy Royjee Lallah, IX Moore Ind. App., 307.) Equitable 1 have said that equitable mortgages form a distinct inEn g g a iand & rou P m tne English law of securities. It was, however, only very gradually that they found a place in that system, and their ultimate recognition is solely due to the action of the Court of Chancery. The Statute of Frauds provides that all agreements relating to any interest in land must be reduced to writing, and equitable mortgages were sup- posed to trench upon the Statute. They were, however, MEMORANDUM. 75 admitted by the Court of Chancery by a somewhat refined LECTUBB distinction between executed and executory contracts. m - Equitable mortgages appear to have been first recognised by Lord Thurlow, but Lord Eldon and Sir William Grant were both averse to any extension of the doctrine. It was at first attempted to confine the rule only to those cases in which the delivery was made with the object of executing an immediate pledge ; but, the doctrine has since been over- ruled, and equitable mortgages have maintained their ground in English law, notwithstanding the jealousy with which their introduction was at first regarded. We have here an instance, by no means exceptional, in which the law has been compelled to yield to the exigencies of com- merce. As observed by Lord Abinger : " 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 mort- gage. Expediency, therefore, as well as necessity, has contributed to establish the general doctrine, although it may not altogether be in consistency with the Statute." (Keys v. Williams, 3 Y. & C, 61.) In order to create a valid equitable mortgage, there must Memoran- be either express evidence of the intention to do so, which dum> may either be by parol, or, by a memorandum in writing, or, partly by parol and partly by writing, or a presump- tion may arise from the mere delivery of the deeds. (See the cases collected in White and Tudor's Leading Cases, Vol. I, pp. 774 788.) But if there is a statement in writing of the circumstances under which the deposit was made, it seems that no parol evidence, inconsistent with such writing, would be admissible (Baynard v. Woolley, XX Beav., 583 ; Ex-parte Coomb, XVII Ves, 369). A formal mortgage of the equity of redemption is also Mortgage known in the English law as an equitable mortgage, of t. 116 while the very same name is given to an informal security, redemp- an agreement, for instance, to create a formal mortgage, tion .> an but this is apt to be somewhat misleading. In a recent mortgage, case in the Calcutta High Court (The Bengal Banking Corporation v. Mackertich, I. L. R., X Calc., 315), it was held, that a document which only amounted to an agree- ment to mortgage, although admissible in evidence as a mere agreement, could not, under the provisions of the Registration Act, be treated as creating an equitable mort- gage so as to bind the propert}^. It does not appear that 76 LAW OF MORTGAGE. Cases on the point. LECTURE there was any deposit of title-deeds, but it was contended Irl - that the agreement ought to be regarded in equity as the same thing as a perfected transaction ; but the con- tention was overruled on the ground that it was directly in opposition to the provisions of the Registration Act. The Chief Justice, in delivering the judgment of the Court, observed : " We all know that there are a great many documents coming within the description of clause (K) which may amount, nevertheless, to what are called equitable mortgages, and so create an interest in land. As such, they would require to be registered, though as mere agreements to mortgage, they, under clause (h), would not. The only way, therefore, of meeting the difficulty, seems to be, to hold that they are available for the one purpose without registration, but not for the other. This is only extending to that class of cases the principle which we have laid down in the Full Bench case of Ulfutunnissa v. Hossein Khan (I. L. R., IX Calc., 520). " It is clear, that if we are to hold that equitable mort- gages, when they are in the form of agreements to mort- gage, do not require registration, such instruments would be generally used instead of legal mortgages, for the pm*- pose of avoiding registration; whilst, on the other hand, if we hold that any document which amounts to an equit- able mortgage, cannot be used as an agreement to execute a mortgage, we should be defeating the clear intention of clause (ti) of the Registration Act." In England it is settled law, that an equitable mortgage cannot be created by a mere parol agreement, or even by a written memorandum to create a security if it is not followed by an actual deposit of title-deeds. (Ex-parte Halifax, 2 M. D. & DeG., 544. Re Bankhead's Trust, 2 K. & J., 560.) But a written agreement for a mortgage presently enforce- able, may constitute an equitable mortgage. (Tebb. v. Hodge, 5 C. P. (Ex. Ch., 73.) A mortgage of future crops is also sometimes spoken of as an equitable mortgage. Such a mortgage is valid, but the transaction is treated as in the nature of an agreement to mortgage. (Misri Lai v. Mozhafer Hossain, I. L. R., XIII Calc., 262 ; Lalla Tilock- dhari Loll v. Furlong, II Ben. L. Rep., A. C., 230.) But the mortgagor must have a potential interest in that out of which the property may arise. A mortgage by a person of the crops which may grow on land in his pos- session is valid ; but a mortgage by a person of such crops Mortgage of future crops. EQUITABLE MORTGAGE IN INDIA. 77 on land which he may subsequently acquire would not, LECTURE it seems, pass even an equitable interest. (Orantham v. Hawley, Hob., 132.) The rules of equity are, no doubt, more Whafc can _ liberal than those of the common law, but even in equity a not be ti>e naked possibility or a mere expectancy as that of an heir subject of to succeed to his ancestor, cannot be the subject of mortgage, m although, in some cases, such transactions may operate as agreements to create a mortgage. I have already said that the expression " equitable " Equitable mortgage " is not properly applicable to a transaction t r ! g pfo- between natives of this country, and if I use it, it is only perexpres- out of deference to long-continued usage. The objection country! 11 ' 8 is not a mere verbal one. The case of Varden Seth Sam v. Luchmiputty Royjee Lallafi, shows the danger of extending technical English expressions to transac- tions which have only a partial resemblance to one another. In the Madras case, the defendants insisted, in their defence, upon a wellkuown doctrine of the English Court of Chancery, and contended that, as purchasers for value without notice, they were protected from the claim of the plaiutiif. Now, if you examine the real nature of an equit- able mortgage in the English law, and that of a mortgage by delivery of title-deeds in India, you will find a very remark- able distinction. In the English law, an equitable mortgage is only an agreement to mortgage, owing to the incapacity of persons subject to the English law to convey otherwise than by deed. In this country, however, there being no such restriction, a delivery of title-deeds of itself may operate as a conveyance. Now, as I have already ex- plained to you, a contract does not create a real but only a personal right, although English Courts of Equity, proceeding upon a very -rational principle, treat the con- tract as a conveyance as against purchasers with notice of the agreement. In an English Court of Equity, therefore, Defence of a purchase for value without notice may be a perfectly {? u r rc v h a ^ good defence to a suit by an equitable mortgagee, but in without this country it would not furnish any answer, for, the so- notlce - called equitable mortgage not being in any sense a contract for a mortgage but a perfected pledge, the Indian equit- able mortgagee has a right superior to that of any per- son claiming under a title subsequently derived from the mortgagor. It seems to me that the defence in the Madras case, to which I have referred, was suggested by the use of the unhappy expression " equitable mortgage " to denote 78 LA.W OF MORTGAGE. LECTURE m - Equitable defence. Case of lect'or 11 fraud. the nature of the transaction. I think I have said enough to put you on your guard against the misconceptions, which an inaccurate use of technical terras, borrowed from an extremely artificial foreign system, seldom fails to occasion. (See, however, Bunseedhur v. Heera Loll, I All. H. C. Rep, 166.) Another peculiarity of the English law as regards the p| ea Q f purchase for value without notice, is that this defence, known to English lawyers as an equitable de- fence, was not, until the recent changes tending to the fusion of law and equity, available in a Court of Law ; and even in a Court of Equity it seems to be doubtful whether it could be set up against a purely legal title. This is a very fair illustration of the method by which, like the Roman praetors of old, Equity Judges in England remodelled the law under the appearance of only laying down rules of procedure, and indicates the way in which the whole system has been gradually built up. The analogy between the " exceptiones " of the Roman law and equitable defences is too close to be overlooked. The Chancery Judge, in effect says to the plaintiff : " We will not give you any assistance against the defendant, a purchaser for value. Go to a Court of Law and there seek such relief as it can give you." (See Snell's Equity, pp. 23 29. Golla Chinna v. Kali Appiah, IV Mad. H. 0. Rep., 434.) The defence of purchase for value without notice, how- ever mus t not be confounded with another defence, which has only a seeming analogy with it, but which is founded upon an altogether different principle. Where one person has by his neglect suffered another to deal with any pro- perty in such a manner as to lead an innocent party to believe that the other pergon is dealing with his own pro- perty, an equity arises in favour of the person who has been misled against the person whose negligence has con- tributed to the result. It is a general principle of equity, that whenever one of two innocent parties must suffer by the act of the third, he who has enabled the third party to occasion the loss must sustain it (per Turner, L. J., in Tayler v. Great Indian Peninsular Railway Company, IV D. & J., 574). But the principle does not apply where one person has the means of discovering the fraud, or where the negligence is only remotely connected with the transac- tion, nor does it apply where there is no duty imposed on the person who is guilty of such negligence. (Sivan v. North EQUITABLE DEFENCE. 79 British Australasian Company, II H. & C., 182 ; Trus- LECTURE tees of Evan's Charity v. Bank of Ireland, 5 H. L., 389 ; Vandeleur v. Blagrave, XVII L. J., Ch., 45.) This doctrine is not founded upon any technical ground, and there can, therefore, be no objection to the recognition of the principle by our Courts. The distinction between the two pleas is well Equitable illustrated by the recent case of Durga Frosad v. Shumbu defence re- Nath, (I. L. R., VIII AIL, 86), where it was held that, SVaL- although it would be material to show that the defendant bad High had in any way by fraud been kept out of knowledge of the Court> mortgage, his not having notice of it, would not otherwise affect his liability, inasmuch as the principle on which Courts of Equity in England refuse to interfere against bond jide purchasers for valuable consideration, when clothed with the legal title, has no applicability in the Courts of British India. I have already stated that the deposit of title-deeds Memoran- is sometimes accompanied by a memorandum in writing, ^ l c " fc setting forth the nature of the transaction. Even in this tract, case, however, the memorandum is not the contract be- tween the parties ; but, the contract is implied by the Court from the deposit of the title-deeds and the advance of the money on such deposit. In the case of a mortgage in writing, if the instrument is unregistered, the mortgagee cannot, generally speaking, enforce his security against the land, because the contract is evidenced by the instru- ment itself, and if the writing is inadmissible, no other evidence is allowed to be given. In the case, however, of a mortgage by deposit of title-deeds, although there may be a memorandum in writing, it is not looked upon as the instrument creating the mortgage, but, as observed by the Court in Kedarnath Dutt v. Sham Loll Khettry, " The mortgage is created by the agreement which is evi- denced by the loan and the deposit of the title-deeds. The mortgagee may, therefore, rely upon the parol agreement, which is implied by the deposit of the title-deeds." The distinction is an important one, and requires to be illus- trated by one or two cases in which the question has been discussed. In the case of Kedernath Dutt v. Sham Kedematk Loll Khettry, to which I have already alluded, the facts ^^J' La n were shortly these. The plaintiff, who asked the Court to Khettry. declare his rights as an equitable mortgagee on certain premises, had advanced to Woomachurn Banerjee a certain sum of money on the deposit of the title-deeds 80 LAW OF MORTGAGE. LECTURE of some property belonging to the borrower. Wooma- m - churn also executed a promissory note, whereby he pro- mised to pay to "Sham Lall Khettry or order, the sum of Rs. 1,200, with interest at the rate of 24 per cent, per annum, for value received in cash." There was an en- dorsement on the promissory note in these words: "For the repayment of the loan of Rs. 1,200, and the interest due thereon of the within note-of-hand, I hereby deposit with Babu Sham Lall Khettry, as a collateral security, by way of equitable mortgage, title-deeds of my property situate at No. 11 in Fuckeer Chand Hitter's Street at Mirzapore in Calcutta." (Sd.) " Woomachurn Banerjee." There was some question as to whether the transaction was completed when the promissory note was given, but the Appellate Courtthoughtthatthe question whether there was a complete equitable mortgage before the promissory note was given, or, whether that was the completion of the transaction, was not material. It seems, that after the deposit of the title-deeds, the property was sold under an execution against Woomachurn, and purchased by the defendants Kedernath Dutt and Madhub (Jhunder Bose. These defendants resisted the plaintiffs suit on the ground, that the mortgage was created by an express agreement which was reduced to writing, and, as the endorsement was not registered, the plaintiff could not enforce any claim against the land which, as I have already said, had intermediately passed to them under an execution against Woomachurn Banerjee. The objection, however, was overruled. Sir Richard Couch, in giving the judgment of the Court, observed : " The rule with regard to writings is, that oral proof cannot be substituted for the written evidence of any contract which the parties have put into writing. And the reason is, that the writing is tacitly considered by the parties themselves as the only repository and the appropriate evidence of their agreement. If this memorandum was of such a nature that it could be treated as tlie contract for the mortgage, and what the parties considered to be the only repository and appropriate evi- dence of their agreement, it would be the instrument by which the equitable mortgage was created and would come within section 17 of the Registration Act. But it was not a writing of that character. As I have said, the equitable mortgage was created by the agreement which was evi- denced by the loan and the deposit of the title-deeds. The NATURE OF MEMORANDUM. 81 promissory note, whether given either at the same time LECTURE or some hours afterwards in pursuance of the understand- IIJ - ing between the parties, was evidence of the terms upon which the loan was made, viz., that the interest should be at the rate of 24 per cent. " But, as regards the contract between the parties, if Memoran- there had been no memorandum at all on the promissory d j!^ n e y l i 1 "" note, there would have been a complete equitable mort- deuce of gage. When we consider what the memorandum is, we de P 3It - find it is not the contract for the mortgage nor the agree- ment to give a mortgage, for the Rs. 1,200 : it is nothing more than a statement by Woomachurn Bauerjee of the fact from which the agreement is inferred. It is an admis- sion by him that he had deposited the deeds upon the advance of the money for which the promissory note was given. It is not by the memorandum that the Court takes the agreement for the mortgage to be proved, but l>y the deposit of the deeds. It is no more than a piece of evidence showing the fact of the deposit which might be proved by any other evidence. The memorandum need not have been produced. " On the ground, therefore, that this was not a writing which the parties had made as the evidence of their con- tract, but only a writing which was evidence of the fact from which the contract was to be inferred, I think it does not come within the description of documents in the 17th section of the Registration Act." (Kedarnath Dutt v. Sham Loll Khettry, XX Suth., W. R., 150; XI Ben. L. Rep., 404. See also Ruploll Mitter v. Ramlochan Sircar, Suit No. 516 of 1877, unreported ; also Oo-Noung v. Moung Htoon-oo, I. L R., XIII Calc, 322.) There is another case to be found in the books (Jivandas Bombay Keshavji v. Framji Nanabhai, VII Bom. H. C. Rep., 45, cai ? e on the O. C.) which is somewhat stronger. In that case the pc plaintiff had. agreed to lend a certain sum of money to Devji Keshavji, on a deposit of the title-deeds of cer- tain property belonging to the debtor. The title-deeds having been deposited, the plaintiff continued to advance certain sums of money, from time to time, till the whole sum advanced amounted to that which the plaintiff had originally agreed to advance. On the 13th of June 1865, after the Registration Act of 1864 had come into force, and when the last advance was made, a Guzerati document was executed by the debtor in 'which, after stating the R. B. G., M. 6 82 LAW OF MORTGAGE. LECTUBE amounts which had been advanced from time to time by In - the plaintiff, the debtor proceeded to say : " According to these particulars I have received or borrowed from you, at interest, Rs. 25,000 in cash and currency notes. On account of the same, there are mortgaged at your place my piece of land at Naigani, namely, a garden with a building (or) a bungalow, which (land) is registered under No. 36 in the Collector's books, and the building or dwell- ing-house built on the said piece of land, which is registered under No. 9 in the books of the House-assessment Col- lector. All the deeds and other ' vouchers ' relating to the said land having been left in mortgage at your place, Rs. 25,000, namely (Rs. twenty-five thousand) have been received (or borrowed) at interest thereon for an unlimited time. " Security This document was not registered ; and the question arose delivery of whether the writing being inadmissible in evidence, the the deeds, plaintiff could enforce his rights as mortgagee. The ques- tion was answered in the affirmative ; and Mr. Justice Ba} 7 ley, in giving judgment, is reported to have said: "I consider that the contract for a security on the land was created when the loan was applied for, and, agreed to, and the deeds were handed over to Karsandas ; and that the receipt then, and those subsequently, given, did not nor did the Guzerati document of the 13th of June 1865, on which day Rs. 25, the last instalment of the Rs. 25,000, was advanced create or declare any right or interest within the meaning of the Registration Acts. The rights of the parties, be they legal or be they equitable, had already been created and perfected on the 31st of October 1864, and it required no memorandum or writing to render such rights valid ; nor, in fact, was there evidence that any such document, or any deed or writing, was, on the 31st of October 1864, contemplated by the parties. Suppose the receipts and the instrument of the 13th June 1865 had never existed, the lien or charge on the property would still, in my opinion, have been perfect and valid. The fact of such an informal native document having been sub- sequently given, and executed after the transaction had been completed, cannot, I think, in any way be held to affect the validity of that which Sir Lawrence Peel, in the Calcutta case, calls ' a perfected contract of pledge,' or, to borrow the words of Lord Kingsdown, a ' contract which created between the parties a lien on the land. ' PAROL "EVIDENCE. 83 "In general, no doubt, where a contract lias been reduc- LECTURE ed into writing by the parties, the writing is the best evidence of it, and must be produced. But it is not in Paro] ev ._ every case necessary, where the matter to be proved has dencewhen been committed to writing, that the writing should be pro- admissible, duced. If, for instance, the narrative of an extrinsic fact has been committed to writing, it may } r et be proved by parol evidence. Upon this principle, a receipt for money given on unstamped paper, will not exclude parol evidence of the payment, and the paper on which it is written may be produced, not as evidence of itself, but as a material memorandum, which a witness who saw it given, may refer to, and give parol evidence of the fact of payment Ram- bert v. Cohen (IV Esp., 213) ; I Taylor on Evidence, p. 412, 5th ed. So, a verbal demand of goods, is admissible in trover, though a demand in writing was made at the same time. Smith v. Young (I Cainph., 439). The fact, too, of birth, baptism, marriage, death, or burial may be proved by parol testimony, though a narrative or memorandum of these events may have been entered in registers which the law requires to be kept; for the existence or contents of these registers form no part of the fact to be proved, and the entry is no more than a collateral or subsequent memorial of that fact, which may furnish a satisfactory and convenient mode of proof, but cannot exclude other evi- dence, though its non-prod uetion may afford grounds for scrutinising such evidence with more than ordinary care. (I, Taylor on Evidence, p. 413./' The above cases, however, must be distinguished from Title-deeds another class, of which you will find an instance in the case ^j^ 8 ^ 611 of Dwarkanath Mitter v. Saratkumari,(VH Ben. L. Rep., 55, letter. O. C. J.). In that case, the title-deeds were deposited with a letter which stated that they were delivered to the creditors as collateral security for the twenty thousand rupees which fell due on that date, and, the Court pointed out, that the letter explained why the deeds were deposited, and that the case was, therefore, not one in which the charge would be implied from the deposit itself, nor was the equitable mortgage made expressly by parol You will observe that, in this case, there was no evidence of an agreement to give a mortgage, such as the loan of the money accompanied by the deposit of title-deeds. With- out some letter or verbal communication, there would have been nothing to connect the debt which had been incurred 84 LAW OF MORTGAGE. LECTTTBE with the deposit of the deed. The mere possession of the m ' title-deeds by the creditor without evidence of the contract upon which the possession originated, or at least, of the manner in which that possession originated, so that a con- tract may be inferred, will not be enough to create an equitable security. (Dixon v. Muckleston, L. 11., VIII Ch. App., 155 ; Gunput v. Adarjee, I. L. R., Ill Bom., 312. See also Neve v. Pennell, II Hemming and Miller, 170. Dis- tinguish Russel v. Russel, I White and Tudor, L. C., 773). jaitha The recent case of Jaitha Bhima v. Haji Abdool Syad ^nT^fi- Oosman, (I. L. R., X Bom., 635) is also a very instructive dool Syad authority on equitable mortgages. It appears from the Oosman. re port that the plaintiff having consented to lend Rs. 10,000 to the defendant, the latter deposited with him, on the 2nd April 1883, the title-deeds of a certain pro- perty. On receiving them, the plaintiff told the defendant that he would take them to his attorney, have a deed drawn up, and then advance the money. The defendant applied to the plaintiff for the money before the deed was prepared, but the plaintiff refused, saying he would not advance the money until he was satisfied by his attorney, and the deed had been prepared. At the time the deeds were handed over to the plaintiff (i. e., the 2nd April 1885) there was no existing debt due by the defendant to the plaintiff. On the 6th April 1885, the mortgage-deed was executed, and, on the same day, the money was advanced by the plaintiff to the defendant. The plaintiff stated that he had advanced the money on the security of the title-deeds on the same day. He did not say how long before the execution of the deed the money had been paid ; but the deed itself recited that the Rs. 10,000 was paid immediately before the execution of the mortgage. The mortgage-deed was not registered. The plaintiff stated that he knew that it required regis- tration, but that it was left unregistered at the request of the defendant, who did not wish to be exposed in the eyes of the public. The plaintiff sued for a declaration that he was entitled to an equitable mortgage upon the said property, and for the sale thereof, in default of the payment of the mortgage- debt. He contended that the loan had been made on the security of the title-deeds which had been deposited on the 2nd April ; that he had, no doubt, intended to obtain a legal mortgage, but that he had abandoned that intention PAROL EVIDENCE. 85 by consenting to leave the mortgage-deed unregistered, LECTUEB and had, on the 6th April elected to rely upon his equit- able mortgage. It was, however, held, that the plain- tiff had no equitable mortgage. At the time when the deeds were deposited, there was no antecedent or existing debt, nor was there any oral agreement that the title- deeds should stand as a security for future advances, nor was any advance, in fact, made until the mortgage-deed was about to be executed. It was clear that if the defen- dant had not been ready to execute the deed, no advance would have been made. The money was, therefore, really advanced on the security of the mortgage-deed, though, at the time the money was advanced, the plaintiff hud the title-deeds in his possession. In delivering judgment, the Court observed: "When there is a debt in existence, and title-deeds are deposited by the debtor with the creditor to secure the debt, an equitable mortgage is at once created ; and that is so, even though the deeds are deposited for the express purpose of having a legal mortgage prepared (see Dayal Jairoj v. J ivrqfratami, I. L. R., 1 Bom., 237, and the cases therein cited) ; and I apprehend the law to be the same, when title-deeds are deposited under an oral agreement to cover present and future advances. As each advance is made, it becomes a charge upon the land comprised in the title- deed, from the force of the prior oral agreement that it shall be so. (Jivendas v. Frdmji, VII Bom. H. C. Rep., 45, O .0. J. ; Ex-parte Langston, XVII Ves., 227 ; Ex-parte Whitbread, XIX Ves, 209; Ex-parte Kensington, II V. and B., 79). "In Seton on Decrees, p. 1131, the law is thus stated: ' If deeds are delivered to enable a legal mortgage for se- curing an existing debt to be prepared, then an equitable mortgage is completed ; secus if to secure a fresh loan yet to be made. For this proposition, see Hocldy v. Bantock I. Russ., 141; Keys v. William, III Y. and C., 55; and Ex-parte, Bruce, I Russ, 374, are cited. The secus is borne out by the following passage from the judgment in Keys v. William, III Y. and C., p. 61. '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, 86 I- AW OF MORTGAGE. LECTURE although they may be deposited only for the purpose of pre- m - paring a future mortgage. In such case, the deeds are given in as part of the security, and become pledged from the very nature of the transaction. Effect of j n khe present case, when the deeds were deposited with deeds? ry the plaintiff, there was no antecedent or existing debt, nor was any oral agreement made that the title-deeds should stand as a security for future advances, nor was any ad- vance, in fact, made until the mortgage-deed was about to be executed ; and there is no doubt that, had the insolvent not been ready to execute the deed, no advance would have been made. The money was really advanced on the security of the mortgage-deed, though, at the time the money was advanced, the plaintiffs had the title-deeds in their possession. That is so, however, in the case of almost every legal mortgage. The question resolves itself into this. Does a mortgagee in possession, (as he usually is) of the title-deeds of his mortgagor, obtain an equitable mort- gage when he actually advances money upon the security of a legal mortgage about to be executed, and when such legal mortgage, by reason of not being registered, never operates as a mortgage ? To hold that he does, would, to a considerable extent, defeat the policy of the registration law. It would be also implying an agreement which is really contrary to fact, but yet is an agreement which parties would probably enter into on all occasions, were the desirability of it to occur to them. If, however, they ex- pressed it in words, the provisions of section 92 of the Evidence Act (I of 1872) would exclude it from the consider- tion of the court. The application of the maxim, 'expres- sio facit cessare taciturn,' would, as upon similar principles, I think, exclude the implied agreement. (See per Lord Cairns in Shaw v. Foster, at page 340, of the L. R , V Eng. and Ir. App., p. 321.) The plaintiffs' possession of the title-deeds is properly referable to the fact of the premises having been conveyed to them, and to their, therefore, being entitled to the deeds ; but they have not taken the proper steps to make that conveyance to them effectual in law. " The case for the plaintiffs is put thus : If the money had been advanced, and the legal mortgage had not been executed, there would have been a good equitable charge upon the premises. Is not the result the same when the parties do not choose to complete the mortgage they have EFFECT OF DELIVERY OF DEEDS. 87 executed by registration ? Assuming, for the sake of argu- LECTURE ment, that the proposition enunciated is, in the absence of an agreement to that effect, sustainable, the answer is, that the Evidence Act, section 92, and the maxims I have referred to in the former case, have no application, while in the latter they apply. It is said the parties have, in fact, waived the completion of the legal mortgage, but I think this is not the correct view. There is no direct evidence to that effect ; and, in fact, they have not waived it. The interest was paid in respect of the mortgage ; and its receipt was endorsed upon the mortgage-deed. They have only omitted to take the steps requisite to enable a court to give effect to its terms. " Sumpter v. Cooper (II B. and Ad., 223), is relied upon as an authority in favour of the plaintiffs' view. In that case, however, the deeds were deposited, in 1827, to secure a present advance of 500, and a good equitable mortgage was then created by deposit of title-deeds. It was held that a subsequent invalid assignment, in March 1828, of the premises to the equitable mortgage, did not affect his prior valid equitable mortgage. Hiern v. Mill, (XIII Ves., 114) has also been referred to. In that case, also, the deeds were deposited to secure a present advance, and were to be retained as security for such advance, till a legal mortgage should be prepared and subsequent advances were also ex- pressly made upon the same security. The legal mortgage was not executed, and the equitable mortgage was held to be valid. "In James v. Rice (V DeG. M. and G., 461), the deeds were in the hands of the plaintiff, and there was a parol agreement to give him a legal mortgage to secure an existing debt. This was held to create a valid equitable mortgage. "I have not been able to find any English case on all fours with the present. "In tlie case of Dwarka Nath Mitter v. Sarat Coomari Dassi (VII Ben. L. Rep., 55), the title-deeds were sent with a letter stating that they were to be held as security for an antecedent debt. The letter was not registered, though it needed registration, and, therefore, could not be given in evidence. The holder of the title-deeds sued, in effect, to establish an equitable mortgage ; but though he had the title-deeds in his possession, as he had no proof of the equitable mortgage other than the possession of the deeds his suit was dismissed. 88 LAW OF MORTGAGE. LECTURE " That case was recognised and distinguished in Kedar "I- NathDutt v. Sham Lai Khettry (VII Ben. L. Rep., 55). In the latter case, the equitable mortgage was upheld, as the un- registered letter was but a record of the deposit of the title- deeds and of the purpose of such deposit, and, therefore, was admissible in evidence. The reasoning of the court seems to assume that, had it contained the terms of the contract between the parties and purposed to create a charge upon the land, the decision would have been against the plaintiff." (Jaitha, Bhima v. Haji Abdool Syad Oostnan, I. L. R., X Bom., pp. 644647)." Summary The authorities, therefore, show that where the conduct 8ions! CI f the parties is such as to raise the inference of a mort- gage, such conduct may be relied upon, although there may be a statement of fact in writing from which the same inference may be drawn. If, for instance, I borrow money on the deposit of title-deeds, 1 may state the fact of deposit in writing, but the writing will not be the only evidence of such deposit, which may be proved by other means. If, however, a formal document is executed, I apprehend, such document must be taken to be the only evidence of the transaction, although there are certain expressions in the judgments of the Bombay Court which may lead to the inference, that even in such cases the parties may, so to speak, go behind the writing, and rely upon the deposit coupled with the advance. When title-deeds are deposited with the express inten- tion to secure an antecedent debt or a present advance, or under circumstances from which it may be inferred that they are deposited with such intention, and, subsequently the depositor executes a formal mortgage which for want of registration, or for some other reason, cannot be given in evidence, it has been said that the formal mortgage or document does not destroy or impair the prior valid equit- able clmr S e - (Jeebon Dass v. Framjee, VII Bom. H. C. R e P-> O- c - J-> 45; Jeyetha fiheema v. Haji Abdool, I. L. R., ed. X Bom., 634.) It appears to me, however, that if an equitable mortgage is to be regarded as founded on the express or implied consent of the parties, and not upon an obligation attached by the law itself, quite apart from any question as to the intention of the parties themselves, in other words, if it is founded upon an implied, and not upon a quasi-con tract, the proposition is open to consi- derable doubt. (See the observations of Macpherson J. in EQUITABLE MORTGAGE. 89 Rahumutoolah v. Shuriatoolah, X Suth. W. R., F. B., 60.) LECTURE It seems to me, with very great deference, that the fallacy which underlies the proposition, like others which cluster round an ambiguous term, is veiled by the obscurity of the expression ' implied contract ' in the English law. From what I have already said, it is clear that a mere Registra- memorandum, accompanying a deposit, is not a document memoran- the registration of which is compulsory. I have gone at dum not some length into the matter, because I think the nature of gJ. npul " what is called an equitable mortgage, cannot be properly understood without a careful study of the distinction be- tween mortgages of this class, and those I have called ex- press conventional mortgages ; and this distinction is very clearly brought out in the cases in which questions of the admissibility of the memorandum, which sometimes ac- companies the deposit, have been raised. It would seem that an equitable mortgage, although it Equitable may be accompanied by a writing, is still only a parol j" t "f, a orai mortgage, and, therefore, liable, generally speaking, to all agreement, the disadvantages imposed by the law on parol transactions. But it has been recently held, that it is not an oral agree- ment within the meaning of the Registration Act (Cog- gan v. Pogose I. L. R., XI Calc., 158). In giving the judgment of the Court, Pigot, J., observed : " An oral agree- Cogan v. ment under this section must be understood to mean, p 9 ose ' so far as the present question is concerned, an agreement merely oral. Now, a mortgage by deposit of title-deeds may well be created without any expression of agree- ment in words at all ; the essence of the transaction is the deposit of the deeds, on which the mortgage becomes com- plete. No doubt, as one consequence of it, the mortgagee may be entitled to a registered conveyance, but that right is an incident of the transaction, and is not of the essence of it ; and, hence, I do not think counsel's argument can govern the decision of this question, viz., that argument in which he contended that an equitable mortgage was an agree- ment to execute a conveyance. It is, in itself, a mortgage, and carries with it a right to a conveyance ; but, this is not the essential character of the transaction. It is a com- plete act ; and not an executory agreement. For these rea- sons I do not think the case comes under section 48. " The learned Judge added : " The matter is of less importance, having regard to the provisions of sections 58 and 59, Trans- fer of Property Act. From the last paragraph of the latter 90 LAW OF MORTGAGE. LECTURE section, it would appear that, where the Act is applicable, III. equitable mortgages outside the towns of Calcutta, Bora- bay, Madras, Karachi, and Rangoon, are no longer valid." It cannot, however, be denied that an equitable mortgage is as much within the mischief of the Act as an ordinary verbal agreement, audit may well be doubted, whether the judgment sufficiently distinguishes quasi-contr&cts from implied agreements properly so called. Registra- In England, where there is no writing but the equitable England, mortgage is created merely by the deposit of title-deeds the necessity for registration does not arise. There is, in fact, no instrument Avhich can be registered under the Act (Sumpter v. Cooper, II B and Ad., 223); and a creditor, having a lien which may be created without any writing, is not bound to obtain written evidence in order to protect him- self by registration. (Kettlewell v. Watson, XXI Ch. D., 685.) If the equitable mortgage, however, is accompanied by a writing, it will not be available against a subse- quent mortgagee, whose mortgage has been duly registered without notice of the deposit of the title-deeds. (Hewitt v. Loosemore, IX Hare, 449 ; Allen v. Knight, V Hare, 272 ; Farron v. Rees, IV Beav., 18 ; Worthington v. Morgan, XVI Sim., 547.) General To go back : Every species of property, whether move- tiorTtnva- a ^^ e or imnioveable, which can be alienated, may be also lid. the subject of mortgage ; but it seems that a general hy- pothecation will not be recognised as valid by our Courts. (Mullick Bashoo v. Goor Bukoh Gir, N.-W. P., Vol. VII, p. 265; Chunder Kisliore v. Gooroo Churn, S. D. A., 1855, p. 353. Cf. Maniclc Chand v. Reharee Lall, II All. H. C. Hep., 263.) A covenant to convey and settle lands will not confer a specific lien on the lands of the covenantee, but the covenantee will be a creditor by specialty (Sugden's Vendors and Purchasers, p. 711); and this rule has been adopted by our Courts. (Najibulla Mulla v. Nasir Mistri, I. L. R., VII Calc., 196 ; Gunoo Singh v. Latafut Hossain, I. L. R., III. Calc., 336 ; Deojit v. Pitamber, I. L. R , I All., 275 ; Bhapul v. Jagram, I. L. R., II All., 449 ; Ram Rulcsh v. Sookh Deo, I All., H. C. Rep, 159; Chonnee Lall v. Puhuhvan Singh, H. C. R., N.-W. P. 1868, p. 270; JJheri Dorayyav. Maddiputu ftamayya, I. L. R., Ill Mad., 35.) But it is not essential that the property should be described by name ; and in this, as in other cases, oral evidence is admissible to prove identity. (For an CAPACITY TO MORTGAGE. 91 instance, see Kanhia Lall v Muhamad Hossain Khan, I. L. LECTURE R., V All., 11.) The question, however, appropriately be- IIr longs to the law of evidence, and can scarcely be said to fall within the province of this lecture. I may mention that the question of the validity of general mortgages, is not now of much practical importance, as no document which does not sufficiently specify the property comprised in it, can be registered, and a general hypothecation, therefore, cannot under the law be created by a registered instrument. (As to the English law on the subject, see Fisher on Mortgage, pp. 1819. See also In re Clarke, 35, C. L. D.. 109. Com- pare Ramsidh Pande v. Balgobind, I. L. R., IX All., 158.) As regards the power to mortgage, it may be said that, Capacity generally speaking, a mortgage being a qualified alienation, the same rules which regulate the power to sell, also re- gulate the capacity to mortgage. A detailed examination of these rules which you will find in Mr. Justice Macpher- son's treatise on Mortgages would be beyond the scope of the present lectures. A doubt may, however, some- Rights of a times arise when trustees are empowered to sell, and no ^"ti^fimit- express power to mortgage is given. The law on the sub- ed powers, ject in England is, that a trustee empowered to sell is not, in the absence of any indication to the contrary in the language of the instrument, competent to create a mortgage; but the rule is obscured by a cloud of verbal distinctions and can be disentangled only by a careful study of the authorities on the subject. (See the cases collected in Lewin on Trusts, p. 425.) The question whether a direction to sell would authorize a mortgage was discussed in the case of Sreemutty Dino Moye Dossee v. Tara Chand Kundoo. (Bourke's Reps., A. O. 0,48; III Suth. VV. R., Mis App., 7, note.) The will in that case contained a direction by the testator that the executor should sell his property at a reasonable price and liquidate his debts. In giving judgment Sir Barnes Peacock said " A direction to sell a house does not neces- sarily include a power to mortgage the same. A direction to sell a house, and to invest the surplus in Government securities, is a very different thing from a direction to borrow a large sum of money at 15 per cent, or some other higher rate of interest. The case of Holdenby v. Spofforth (I Beavau, 390) shows that a trust ' to make sale or dispose of ' the testator's real estates, does not authorise a mortgage, there appearing an intention on the part of the testator that 92 LAW OF MORTGAGE. LECTURE the whole estate should be converted. And, in the present IIL case, we think that the clear intention of the testator was that, if it should become necessary to raise money for the pur- poses of his estate, the house in Calcutta should be sold, and the surplus proceeds, if any, invested in Government securities. When a testator says that the proceeds of a sale are to be applied in a particular manner, he practically points out very distinctly that the house is not to be mortgaged, more especially, that it is not to be mortgaged at a high interest, which must, almost necessarily, be in- jurious to the estate." Power how I may mention that powers are generally construed construed. W jj ; j 1 some degree of strictness. A power of attorney, for instance, containing a clause empowering a person to sell or mortgage the donor's property for the payment of his debts, would not authorise the execution of a simple money-bond to one of the donor's creditors for payment of the money due to him; a simple money-bond being an instrument of a different nature from a mortgage-bond. (Poorna Chunder Sen v. Proswnno Cooniar Das, I. L. R., VII Gale., 253.) Bight of 1 must tell you that, under the English law, an executor executor. QY ac j m i n i s trator has full power to dispose of the assets in his hands, and, incase of an alienation, the assets cannot be followed by the creditors of the deceased. Similar powers may be exercised by an executor or administrator under the Indian Succession Act, section 269; and the transferee is not bound to see to the application of the purchase-money. " His title is complete by sale and de- livery : what becomes of the price is no concern of his. " (Per Lord Thurlow, in Scott v. Tyler, II Dick, 725.) The same observation applies to mortgages ; and a mere direction for the payment of his debts by the testator, makes no difference in the right of the executor to deal with the assets in any manner that ha thinks fit. If, there- fore, an executor pledges a portion of the assets, a creditor who should purchase under an execution against the general assets, either real or personal, would take only subject to the charge created by the executor. (Nilcauta, Chatterjee v. Peary Mohan Dass, III Ben. L. Rep., O. C., 13.) But if the mortgagee knows that there are unsatisfied debts of the testator, and that the executor intends to apply the money otherwise than in the payment of such debts, he will not acquire a good title. EXECUTOR UNDER HINDU LAW. 93 The executor of a Hindu will has, under the Hindu LECTURE Law, only a limited power of dealing with the property of the testator ; and his authority, in the absence of any Executor directions contained in the will, is subject to the same under Hin- restrictions as that of the manager of an infant under the du law ' Hindu Law as explained in the well-known case of Hanu- man Prosad Pandey (VI Moore Ind. A pp., 293). A mort- gage by an executor under a Hindu will can, therefore, be only justified, either by the directions given by the testa- tor in his will, or by the exigencies of the estate. (Joy- kalee Dabee v. Shib Nath Chatterjee, III Ben. L. Rep., O. C., 4 ; I Suth. W. R., 33. Of. XIV Ben. L. Rep., 49 ; Laganada v. Ramovame, I Mad. H. C. Rep., 384 ; Rooplal Khettry v. Mohima Chunder Hoy, X Ben. L. Rep., 274 note. But see Ashutosh Day v. Mohesh Chunder Dutt, Fulton's Rep., 380. Cf. Sreematty Dassi v. Tarachand Kundoo, Bourke's Rep., A. O. C., 48 ; Rooplall Khettry v. Mohima Churn Roy, X Ben. L. Rep., 271 274 note.) The Hindu executor takes no estate to use the phraseo- Hindu ex- logy of the English law but only possesses a power of ^u'eiTno management. If, therefore, the will gives him a power to estate, make a mortgage for a specific purpose, it is the duty of the mortgagee to see that the power is strictly followed. If the will, however, gives the executor generally an authority to pay the testator's debts out of the estate, the transferee need not look further than the will itself. The Hindu Wills Act gave the executor the same powers Hindu as those conferred by the Indian Succession Act, but they Wllls Act * have since been modified by the Probate and Administra- tion Act (V of 1881), which now regulates the powers of executors as well as administrators in cases not falling within the provisions of the Indian Succession Act. It is true, that an executor or administrator may still, in the exercise of his discretion, dispose of the property of the deceased, either wholly or in part, in such manner as he thinks fit, but such power cannot be exercised except with the sanction of the Court (see Chapter VI of the Probate and Administration Act). Persons under disability, such as minors and lunatics, are Persons also incapable of creating a valid mortgage. The rights ablihvln- of persons appointed to take charge of their estates, are capable of now regulated by Statute in most parts of the country, and it seems that acts, not done in strict conformity with the directions of the Statute, will be absolutely void. 94> LAW OF MORTGAGE. LECTURE (Chinuman Sing v. Subram Kuar, I. L. R., II All., 902 ; in. Manji Ram v. Tara Sing, I. L. R., Ill All., 852.) It has been held in Bengal, that a guardian of a minor, minor. & not appointed by the Court, is not fettered by the restric- tions imposed by the Minors' Act, but may rely upon what is called the common law which gives him authority to mortgage his ward's estate under certain conditions. I will conclude by observing that the question as to how far a minor may ratify a mortgage made by him during his minority, and as to whether such a ratification can take effect to the prejudice of an intermediate incumbrancer in cases unaffected by statute law, is by no means clearly settled, and the writings of civilian as well as English lawyers, show, that the question is beset with consider- able difficulty. (Surge's Foreign and Colonial Law, Vol. Ill, pp. 166170 ; Pollock's Contract, pp. 5263.) Accessions I shall now proceed to discuss the rights of the mort- to pledge, gagee, when the property pledged to him has received any accession, or undergone any alteration. The general law on the subject is that the creditor has not only a right against the property mortgaged to him, but also to any augmentation ov increase. (Story on Bailment, 292.) Thus, to take a familiar illustration, if a flock of sheep is mortgaged, the creditor acquires the same rights to any natural increase, as he has against the animals which composed the flock at the time of the mortgage. On the same principle, accessions to the mortgaged property by alluvion, become subject to the mortgage. Similarly, the goodwill of a business carried on upon the mort- gaged premises; and, therefore, any compensation which may be paid for it under the Lands' Clauses Act will follow the security. (Pile v. Pile, III Ch. D., 36.) I may add that in some systems of law, the right of the mortgagee to whom land has been pledged, extends to any buildings which may be subsequently erected by the debtor on the land. Mortga- But the mortgagee has only a qualified right in the acces- fothe" gbt s ' on an< ^ * s ^ a ^ e * be redeemed by the mortgagor. Thus, accessions, f r example, in Bakshiram Oangaram v. Darku, Tukaram OIll Vfi , (X Bom. H. C. Rep., 369), where the mortgagee, by virtue qualified r i- . r ' . n rt , J . right. or l ns possession as mortgagee, purchased certain trees from the Crown on favourable terms, it was held that the trees became, by the sale, an increment to the mort- gaged estate, and that the mortgage was liable to be re- deemed on payment of the mortgage-money with interest, RIGHTS OF PLEDGEE. 95 together with the money laid out in purchasing the trees LECTURE and other reasonable expenses. The mortgagee could not equitably claim more than the benefit, as a securit} 7 , of the addition to the property. So, also, if a village without specified boundaries is mortgaged, the mortgagee is, on the one hand, entitled to it as a security with any casual increase which may occur to it, and is, on the other hand, subject to redemption by the mortgagor to the same extent. (Sadashiv Anant v. Vithal Anant, XI Born. H. C. Rep., 32.) In the last case, the Court expressed an opinion that if the boundaries had been precisely laid down by topographical references, the case might have been different. But I think that in a case of alluvion in this country, the mortgagee would, in the absence of any express con- tract to the contrary, be entitled to treat it as an accession to his security. But the leading case on the point is Kishendatt Ram v. Leading Mumtaz All (I. L. R., V Gale., 198), in which it was laid cases on the down by the Privy Council that the English law which treats pc most acquisitions by a mortgagor as enuring for the benefit of the mortgagee, and, conversely, most acquisitions by the mortgagee, as accretions to the mortgaged property or sub- stitutions for it, is founded on equity and good conscience, and may be applied in the case of Indian mortgages. In that case the Privy Council allowed the mortgagor to redeem certain Birt tenures, originally carved out of the mortgagor's estate, and afterwards bought in by the mort- gagee and treated by him as merged in the superior taluk- dary title. It also appeared in evidence that the mort- gagee had taken advantage of his position of talukdar de facto in acquiring the Birts. Their Lordships say in the course of their judgment : " There was some discussion at the bar on the English decisions, upon similar questions between mortgagor and mortgagee. If the principle invoked depended upon any technical rule of English law, it would, of course be inapplicable to a case determinable, like this, on the broad principles of equity and good conscience. It is Kishendat only applicable, because it is agreeable to general equity Ram's and good conscience. And, a.gain, if it possesses that ase ' character, the limits of its applicability are not to be taken as rigidly defined by the course of English decisions, although those decisions are undoubtedly valuable, in so far as they recognise the general equity of the principle, and show how it has been applied by the Courts of this 96 LAW OF MORTGAGE. LKCTUBE country. It is, therefore, desirable shortly to notice the II arguments on this point. It seems to their Lordships that, although some of the earlier cases may have been qualified by more recent decisions, the general principle is still recognized by English law to the extent, viz., that most acquisitions by a mortgagor enure for the benefit of the mortgagee, increasing thereby the value of his security ; and that, on the other hand, many acquisi- tions by the mortgagee are, in like manner, treated as accretions to the mortgaged property or substitutions for it, and, then, subject to redemption. The law laid down in Rafcestraw v. Brewer (II P. W., 511) as to the renewal of a term obtained by the mortgagee of the expired term, being 'as coming from the same root,' subject to the same equity, has never been impeached. The English.case, which in its circumstances comes nearest to the present, is that of Doe v. Patt (II Doug., 710), in which the principle was enforced against a mortgagor. It was there held, that if the lord of a manor mortgage it in fee, and afterwards, pending the security, purchase and take surrenders to himself in fee of copyholds held of the manor, they shall enure for the mortgagee's benefit, and the lord cannot lessen the security by alienating them. It is difficult to see why, as in the case of a renewable lease, the same equity should not attach to the mortgagee, particularly if, by reason of his position as mortgagee in possession, he had had peculiar facilities for obtaining the surrenders." To borrow the words of Lord Chancellor Nottingham : "The mortgagee here doth but graft upon his stock, and it shall be for the mortgagor's benefit." But the mortgagee is not under an absolute disability, and a lease bond fide, renewed after notice to all persons interested, has been held to be not in trust for the mortgagor. (Nesbitt v. Tredinnick, I Ba. and Be., 29.) Leigh v. The principle of treating any acquisitions, which may be '' ett ' made by the mortgagor in respect of the property mortgaged by him as part of the security, was carried to a very great extent in a recent English case (Leigh v. Burnett, XIX On. D., 231). It appears that an ecclesiastical lease of a house for a term of years, which was renewable by custom, though it contained no covenant by the lessors for renewal, was mort- gaged to the defendant, and the equity of redemption in the leasehold estate was afterwards assigned to a third party for value. The Ecclesiastical Commissioners, in whom . RIGHTS OF PLEDGEE. 97 the reversion had become vested, refused to renew the lease; LECTUUE but, before the lease expired, they agreed to sell the rever- sion to the assignee, but the conveyance was not executed till after the expiration of the lease. While the negotia- tion for the purchase of the reversion was in progress, the assignee borrowed from the plaintiff a certain sum of money ; the memorandum given to the plaintiff at the time of the loan, stated that the money was to be secured by a mortgage of the house "as soon as he had completed the enfranchisement of the property from the Commissioners." It was contended on behalf of the plaintiff, who had no notice of the previous mortgage, that the assignee of the equity of redemption was not under an obligation to pur- chase the reversion, and that it could not be supposed that he intended to make a present of it to the mortgagee of the lease. It was clear that his security would have been of no value if the lease had simply expired ; why then, it was asked, should he obtain the benefit of the purchase of the reversion without paying the purchase-mone} 7 ? But the Court held that the plaintiff was not entitled to priority over the mortgagee of the lease. In giving judgment, Mr. Justice Pearson said, " To my mind there is a grievous fal- lacy in this argument. I can only treat Newman as the mortgagor of the lease ; and, in that character, he could hold the reversion only on the same terms as he would have held a renewed lease of the property. The doctrine of this court lias always been, that the mortgagor of a renewable lease can hold a renewed lease only subject to the mortgage. The case of Rakestraw v. Brewer (2 P. W., 511) is an illustration of this doctrine. There, the mortgagee of a renewable term procured from the original landlord a new term to com- mence from the expiration of the old one, and it was held that the new term was subject to the old equity of redemp- tion. If Newman himself were here, he would be entitled to redeem the reversion on paying off the mortgage, but he would not be entitled to say to the mortgagee of the lease. ' I bought the property for your benefit, and you can only have it on paying me the purchase-money which I gave for it.' I cannot understand how any one who claims through Newman can be in any better position than he would have been. It is impossible for the plaintiff to say that, in respect of the purchase-money paid by Newman, she is entitled to priority over the mortgagees of the lease. I can conceive that she might be able to establish such a R. B. G., M. 7 98 LAW OF MORTGAGE. LECTURE claim if she had advanced the money to buy the reversion; III- but, that would be because she had no interest in the pro- perty through Newman, but was giving up a purchase on the terms of being repaid what she had given for it. As it is, she lias only a derivative title through Newman, and lie could not have maintained such a claim against the mortgagees of the lease." (29, Ch. D., pp. 234235.) Indian Jt i s> however, extremely doubtful whether our Courts donot" 8 will be inclined to carry the doctrine to such an extent. We carry the must remember that their Lordships of the Privy Council in the 'same t0 the case of Raj a Krishna Dutt Ram v. Raja Momtaz A li, extent as (I. L. R., V Calc., 198), express themselves very cautiously, casei" 81181 ' an( J> while acknowledging that the principle is, generally speaking, agreeable to general equity and good conscience, deny that the limits of its applicability are to be taken as rigidly defined by the course of English decisions. Those decisions are undoubtedly of great value in so far as they recognise the general equity of the principle and show the manner in which it has been applied by the English Court of Chancery, but they do not possess any inherent binding authority. To enforce the principle, however, against a purchaser from the mortgagor, and that, under the circums- tances disclosed in the case of Leigh v. Barnett (19 Ch. D., 231), to which I have just referred, can scarcely be regarded as agreeable to general equity and good conscience. Difference There is a very great difference between the position mortgagor of a purchaser of the mortgaged property and that of the and mort- mortgagor himself which should not be overlooked. Where a mortgagor makes an acquisition by purchase, it is no very great hardship to him to hold that it should enure for the benefit of the mortgagee ; the mortgage being only a security for the debt due by the mortgagor. The question, however, generally arises in cases in which a third person has acquired an interest in the property under mortgage, and, if he happens to be a purchaser for value without notice, there would seem to be an equity in his favour, at least as strong as that in favour of the mortgagee. The mortgagee is preferred, and very properly, in respect of the property actually pledged to him, because his title is prior in point of time. This is an intelligible principle, but the same thing cannot be said of a doctrine which would force a purchaser of the equity of redemption to make a present to the mort- gagee of any acquisition subsequently made by him with his own money. RIGHTS OF PLEDGEE. 99 There is,again,some difference between an acquisition made LECTURE by the mortgagee and one made by the mortgagor the posi- tion of the former being much stronger than that of the ... , rc , , , & . ... , Position of latter. It the mortgagee makes an acquisition by reason a mortga- of any advantages possessed by him which would not be S ee< possessed by a stranger, or, if there are circumstances to show that the powers of the mortgagee were exerted to effect the purchase on favourable terms, the mortgagor will, no doubt, be entitled to treat such acquisitions as accretions to the mortgaged property, and, therefore, subject to redemp- tion. But every purchase by a mortgagee cannot be taken to have been made for the benefit of the mortgagor. In the case of Raja Krishen Dutt Ram v. Raja Mumtaz AH the judgment of the Judicial Committee was based on the peculiar circumstances of the case, and cannot, therefore, be accepted as laying down a rigid and inflexible rule. In- deed, their Lordships themselves say, in their judgment, that they are not prepared to affirm the broad proposition that every purchase by a mortgagee of a sub-tenure existing at the date of the mortgage, must be taken to have been made for the benefit of the mortgagor, so as to enhance the value of the mortgaged property, and make the whole, in- cluding the sub-tenure, subject to the right of redemption upon equitable terms. " It may well be," their Lordships add, " that when the estate mortgaged is a zemindari in Lower Bengal, out of which apatni tenure has been granted, or one within the ambit of which there is an ancient mokurari istimrari tenure, a mortgagee of the zemindari, though in possession, might purchase with his own funds, and keep alive, for his own benefit, that patni or mokurari. In such cases, the mortgagee can hardly be said to have derived from his mortgagor any peculiar means or facilities for making the purchase, which would not be possessed by a stranger, and may, therefore, be held entitled, equally with a stranger, to make it for his own benefit. In such cases, also, the patni, if the patnidar failed to fulfill his obligations, would not be resumable by the zemindar, and the zemindari would always have been held subject to the mokurari." (Raja Kishen Dutt Ram v. Raja Mumtaz Ali Khan, I. L. R, V Gale., 204-205.) It may perhaps occur to some of you that, the absence of a well-defined rule is likely to give rise to much unnecessary litigation, but it is not always easy, if indeed it is possible, to draw a sharp line of distinction. At all 100 LAW OF MORTGAGE. LECTURE III. Mortgagor having a defective title. Plea of purchase for value without notice. events it must be done, if it is to be done at all, by the Legislature, and cannot be effected by judges, who from the very nature of things are obliged to deal with isolated groups of facts. I may here mention that a mortgagor having a defective title, is bound to make good his mortgage out of property subsequently acquired by him, and this upon a well-known principle applicable to mortgages as well as to other transactions ; thus, for instance, if a mortgagor having only a half-share in a certain property pretend to mortgage the whole of it, the mortgagee will have a right to insist upon a charge on the whole property, supposing the mortgagor afterwards by purchase or otherwise becomes the owner of the other half. The equity upon which the mortgagee relies, is that, whenever a mortgagor gets into his possession property which he has mortgaged to a third person, he is bound to hold that property subject to the mortgage originally created by him. In the language of the English law, the subsequently-acquired estate feeds the estoppel. Thus, in Lootnarain Singh v. Showkhee Loll (II Cal. L. Rep., 382.) A, holding a certain mehal as ghatwal, mortgaged it to B by way of a zarpeshgi lease for 21 years ; shortly after the granting of the lease, the zemindar got a decree against A, by which A's ghatwali right was extinguished. In execution of this decree the zemindar ousted and took khas possession of the mehal. Some years afterwards, the zemindar granted to A a perpetual mokurari lease- of the same mehal : it was held in a suit against A, instituted by the assignee of B's rights in the zarpeshgi, that under sec. 18, Act I of 1877, A must, out of his present estate in the mehal, make good the zarpeshgi. (Pranjivan Qovardhan Das v. Baju, I. L. R., IV Bom., 34 ; Deolie Chand v. Nirban Singh, I. L. R., V Calc., 253; S. C., IV Calc., L. Rep., 150; Lootnarain Singh v. Showkee Lall, II Calc., L. Rep., 382 ; Vishnu Trimbak v. Tatia, I Bom. H. C. Rep., A. C. J., 22.) This right, however, may be waived by the mortgagee, and cannot, it would seem, be enforced against a bond- fide purchaser for value, and without notice of the previous mortgage. For, strictly speaking, tlie right of the mortga- gee is in the nature of a right to claim specific performance ; and to such a claim a plea of a purchase for value without notice would be a good defence. In Ram Awtar Sing v. Tulsi Ram (V Calc. L. Rep., 227), Government having, ESTOPPEL. 101 under the Land Acquisition Act, taken possession of a portion LECTURE of certain land which had been mortgaged by the owner, m - afterwards, while the mortgage was still in force, re-sold the portion taken to the mortgagor, who sold it to a third person bond fide for value. It was held, that the mortgage-claim could not be enforced against the purchaser, because he was a purchaser for value, without notice of the previous mort- gage. (Cf. Swa Ram v. All Bakhsh, I. L. R., Ill All., 805, where the purchaser bought with notice.) I may mention in passing, that the Court expressed a doubt in the above case whether th^lien would have attached, even if the pro- perty continued in the hands of the mortgagor, as the land was taken by Government free from the claim of the mort- gagee, who could only claim a lien on the purchase-money. A purchaser for value is always regarded with peculiar Doctrine of favour by the law. The recent j udgment of the Master of the ^inst 1 Rolls in General Finance Mortgage and Discount Company purchase v. Liberator Permanent Benefit Building Society (10 Ch. D, for value - 15) shows that the Court is always most reluctant to extend the doctrine of estoppel against a purchaser for value. It appears from the report that the mortgagor purported to grant a freehold estate to the plaintiffs in that case, by way of mortgage. The deed contained no recitals, but there were the usual mortgagor's covenants for title, including a covenant that the mortgagor " had power to grant the premises in manner aforesaid." The mortgage was accepted by the plaintiffs on the faith of certain forged title-deeds, which were produced and handed to him by the mortga.gor. At the date of the mortgage, the mortgagor had not the legal estate nor indeed any interest whatever in the property which he purported to mortgage. Subsequently, however, the mortgagor acquired the legal estate and mortgaged it to the defendant. In an action brought by the plaintiffs to recover possession of the mortgaged property and also of the title-deeds, it was contended that the plaintiffs, by virtue of their mortgage and the subsequent acquisition of the legal estate by the mortgagor, were entitled to priority over the defendants, but the contention was overruled on the ground that the covenants in the mortgage-deed did not amount to a clear and distinct assertion that the grant- or had the legal estate to grant. It is true that the case was decided on a highly technical point relating to the doctrine of estoppel, " an excellent and curious kind of learning, " as Lord Coke says, but I refer to it as a 102 LAW OF MORTGAGE. LECTURE strong instance of the reluctance which the Court feels in - in enforcing the principle of estoppel as against a stranger who is innocent of fraud. In delivering the judgment of the Court, Sir George Jessel after pointing out that it is a very unpleasant thing to have to decide a question with- out knowledge of the reasons for some of the distinctions established by the earlier authorities goes on to say: " I see no reason for extending the doctrine. It can have no opera- tion except in the case of third parties who are innocent of fraud and who have become owners for value, and there can be no reason as I intimated at the beginning of my judgment that I am aware of, for preferring one innocent purchaser for value to another. As against the man him- self or persons claiming without value, the purchaser or the mortgagee can recover without any recourse to estoppel at all ; therefore, considering especially that the jurisdic- tion in equity and common law is now vested in every court of justice, so that no action for ejectment, or, as it is now called, an action for the recovery of land, can be defeated for want of the legal estate where the plaintiff has the title to the possession, I think I ought not to attempt, in any way to extend the doctrine by which false- hood is made to have the effect of truth. The doctrine appears no longer necessary in law it appears no longer useful and, in my opinion, should not be carried further than a judge is obliged to carry it" (10 Ch. D., 24-25) (k). Frauds of I need scarcely point out that a mortgagee has a much gagorand stronger equity in cases of actual fraud by the mortgagor. mortgagee. Where, for instance, the assignee of a lease, subject to a mort- gage, induced the landlord to take advantage of a forfeiture which the tenant committed expressly with that object, and afterwards took a new lease of the same property ; the Court declared that the new lease was subject to the mortgage. (Hughes v. Hoivard, XXV Beav., 575.) On the other hand, the mortgagee will not be permitted to take advantage of his own fraud. Thus, for instance, in (/<:) For a very learned discussion on the point, see Bigelow on Estoppels, pp. 348 381. The topic, however, is overlaid in the English law with much useless learning, owing to the ' high and transcendental effect ' of an estoppel in the common law, on which a great deal of ingenuity seems to have been wasted. The conclusion arrived at by the learned author is that the after-acquired estate does not pass as against a purchaser without notice. But, the rule is subject to an exception in favour of a conveyance by a grantor having seisin (that is by disseisin) but no title. The exception, however, is based, not on general principles, but on certain peculiarities of English conveyancing. ESTOPPEL. 103 this country, although the revenue laws make a clean sweep LECTURE of all incumbrances when the property is sold for arrears In - of revenue, a mortgagee in possession who suffers the estate to fall into arrears cannot purchase it so as to acquire an irredeemable interest ; and it will seem that the law is the same, whether the estate is allowed to fall into arrears properly or improperly. [Raja Oojooderam Khan v. Auskootosh Ley, Supreme Court, July 1852, reported in the Englishman, 8th July 1852 ; Kelsall v. Freeman, Englishman, 4th February 1854 ; Naivab Sidhee Nuzar Ally Khan v. Rajah Oojoodhyaram Khan, X Moore Ind. App., 540 ; S. C., V. Suth. W. R., P. C., 85 ; Jagat Mohini Dassi v. Mussamat Sokeemoney Dassi, XIV Moore Ind. App., 286 (Of. p. 305) ; S. C., X Ben. L. Rep., 19 (Of. p. 33). Cf. Jayanti v. Yerubandi, I. L. R., VII Mad., 111.1 The same equity may be enforced against a third party if the sale is only a fictitious sale for arrears of revenue carried out in pursuance of an agreement between the mortgagee and such third party. (Sreenath Ghosh v. Hurnath Dutt, XVIII Suth. W. R,, 240 ; Nuzar Ally Khan v. Ojoodhyaram Khan, X Moore Ind. App., 540 ; V Suth. W. R., P. C., 83.) If, however, the property is sold otherwise than through the default of the mort- gagee, the charge will attach to the proceeds. (Heeralall Chowdhry v. Janokeenath Hooker jee, XVI Suth. W. R., 222.) Upon a principle closely analogous to the doctrine of Doctrine of estoppel, it has been held in England that, where, upon a sale estoppel, by a first mortgagee, the property is bought in by the mort- gagor himself, the mortgagor acquires the estate subject to the second mortgage ; although if the property is bought by a third party, he will take it free of all incumbrances. It is the duty of the mortgagor to pay off the first mort- gagee and so discharge the estate for the benefit of the second mortgagee, and he cannot get rid of his obligation by purchasing from the first mortgagee instead of paying him off. (Otter v. Vaux, 2 K. and J, 650 ; 6 DeG. M. and G., 638; Shamacharan Bhattacharjya v. Anund Chunder Deo, S. A., No. 1613 of 1879, unreported). A somewhat difficult question may arise if the mortgagor does not him- self buy the property at the sale by the first mortgagee, but the property comes to him after passing through six or seven different hands. The point was mooted in the case of Otter v. Vaux, but was not decided by the Master of the Rolls. The question was also raised in this country in 104- LAW OF MORTGAGE. LECTURE the case of Ram Atter Sing v. Toolsiram, (V Cal. L. Rep., HI- 227), but was left undetermined by the Court. 0f /ej . v The principle of Otter v. Vaux will not however Vaux, apply in all cases. It is true that a subsequent mortgagee takes his security with the chance of the prior mortgagee being paid off without having recourse to the estate, and if therefore, the latter is paid by the mortgagor himself, there can be no question but that the puisne mortgagee gets the benefit of the payment and, ordinarily, it makes no differ- ence if the payment is made by some stranger to the estate. But if the person who makes the payment does so under compulsion or for the protection of some interest of his own, such payment cannot, on principle, enure for the benefit of the puisne incumbrancer. A payment by the surety, for instance, would not accelerate the rights of a puisne mortgagee. The surety, on the discharge of the debt, would be entitled to the benefit of the security. Again it is sometimes said, that a prior mortgagee must account to subsequent mortgagees for all monies received in respect of his mortgage-debt. But the proposition is true only in a qualified sense, a prior mortgagee being bound only to account for such sums as are received either from the mortgagor or from the mortgaged property, but not for moneys received from other sources. (Sawyer v. Goodwin, 1 Ch. D., 351, where a dividend had been received out of the estate of the solicitor by the first mortgagee on the ground of the solicitor having invested the money on an improper mortgage-security. ) The English Courts have also refused to extend the principle of Otter v. Vaux to a case in which the prior mortgage was bought by a trustee in bankruptcy, for the benefit of the general creditors of the mortgagor. But in such case the trustee will not be in the same favourable position as a stranger buying in the prior security. His purchase will not indeed neutralise the first mortgage, but he may not, any more than the mortgagor himself, defeat the rights of a puisne incumbrancer (Bell v. Sunderldnd Building Society, 24 Ch. D., 618 ; cf. CracknaU v. Janson, 6 Ch. D., 735.) To return : the right of the mortgagee will, however, not extend to what was never pledged to him, although it may be substituted in the place of the property origi- nally pledged. Thus, to take a familiar instance from the Roman law, if a farm together with the slaves upon RIGHTS OF PLEDGEE. 105 it is pledged, and the slaves die and are replaced by LECTURE others, the right of the creditor shall not extend to the latter, except, as 1 have already said, where they happen to be the offspring of the slaves who have died. (Of. Webster v. Power, L. R., 2 P. C., 69.) This limitation of the right of the creditor, however, must not be confounded with cases in which the pledge is not actually destroyed, but only, to use the language of Sir James Col vile, " assumes a new form." A question of considerable nicety on this point arose Rights of in the case of Byjnath Lall v. Rar.idin Chowdhry, (XXI [^_ r Suth. W. R., 233 ) whicli was heard in the last resort by the ga ) A question of some nicety may arise where a person having an undivided share in two estates, mortgages his share in one of them, and, afterwards on a partition, lands in the other estate only are allotted to the mortgagor. Cf. Jarman on Wills, Vol. I., p. 151. RIGHTS OF PLEDGEE. 109 of the mortgagee for that which was originally mortgaged LECTURE to him. The judgment of the Allahabad High Court in In - Nidhi Lall v. Muzahar Hossein may, at first sight, seem to lay down a contrary proposition, but the facts were very peculiar, and I do not think that the learned Judges intended to deny the right of the mortgagor to follow the property which had, by the action of the mortgagee himself, been sub- stituted for that which had been originally given in mort- gage. (Nidhi Lall v. Muzahar Hossein, I. L. R.,VII All., 436.) The question whether a mortgagee would be estopped by Mortgagee a previous judgment obtained against the mortgagor, subse- ot. estop- quently to fehe execution of the mortgage, was raised in a previous* recent case in the Calcutta High Court (Bonomally Nag judgment. v. Koylash Chunder Dey, I. L. R., IV Gale., 692). The learned Judges, while acknowledging that the question was not free from difficulty, refused to hold the mortgagee bound by the previous judgment. If the matter were res Integra, the Court might not im- probably have arrived at a different conclusion, but the question had already been decided in favour of the mort- gagee in an earlier case (Dooma Sahoo v. Joonarain Lall XII Suth. W. R., 362), and the Court, without expressing any opinion of their own, simply followed that decision. I may, however, be permitted to observe that the point does not seem to have been seriously discussed in that case, and was pretty well taken for granted by the Court. (See also Madhoo Proshaud v. Purshan Ram, I. L. R., IV Calc., 520 ; Tirbhobun Sing v. Jhono Lall, XVIII Suth. W. R, 206.) It appears from the report that in the case of Bonomally Bonomally Nag, the mortgagee was not in possession, and had no know- Na s' 8 Case - ledge of the previous suit, and these facts are, to a certain extent, relied upon by one of the learned Judges. It is, therefore, doubtful whether the Court intended to la}^ down any general proposition on the point, and there seems to be authority for the limitation suggested or rather implied in tlie judgment of one of the learned Judges. The rule on the subject is thus stated in Burge's Foreign and Colonial Law, Vol. Ill, pp. 220-221 : " The mortgagee is not prejudiced by any recovery which a third person may have obtained against the mortgagor in a suit instituted subsequent to the mortgage. But it would be otherwise, if the mortgagee were, under his contract with the mortgagor, in possession of the property, and knowingly allowed the mortgagor to litigate with another 110 LAW OF MORTGAGE. LECTURE his title to it, because, in that case, he had it in his IIJ - power, by interposing his own prior claim and defending his own title, to have prevented such a recovery. " (Of. Copis v. Middleton, II Mad., 423.) The only observation I wish to make on this passage is, that the author is here dealing only with actions of eject- ment, and that it does not necessarily follow that a more stringent rule of estoppel may not regulate other classes of suits in which the person in possession, being also the apparent owner, may fairly be regarded as representing the rights of all parties interested in the estate. Question of The question has been discussed very elaborately in the estoppel, recent case of Sitaram v. Amir Begum (I. L. R., VIII All., 324), and it is pointed out in the judgment that, after a mortgage has been duly created, the mortgagor in whom the equity of redemption is vested, no longer possesses any such estate as would entitle him to represent the rights and interests of the mortgagee in a subsequent litigation, so as to render the result of such litigation binding upon, and conclusive against, such mortgagee. It is also pointed out that section 13 of the Civil Procedure Code must be interpreted in the same way as if the words " on a title arising subsequently to the commencement of tlie first suit " had been inserted after the words " under whom they or any of them claim " a point which, I may be permitted to observe, nobody ever thought of disputing. Sitaram In delivering his judgment, Mr. Justice Mahmood said * n reference to the difficulty felt by the Calcutta High Court in the case of Bonomally Nag v. Koylash Chunder Dey (I. L. R., IV Calc., 692) that he saw no ground for entertaining any doubt on the point, but, with great defer- ence, it may be observed that the rule as to res judicata does operate, in many cases, where the party, who is sought to be estopped, does not, strictly speaking, claim under the person who was a party to the previous judgment, although in such cases the rule is for obvious reason subject to the qualification that the previous judgment was not re- covered by fraud and collusion. If the question is consi- dered with reference to general principles of law, it is, I venture to think, a mistake to suppose that none but the representative of the previous owner can be bound by the results of litigation and adverse decree against such owner. Lord Coke in speaking of estoppels says : " Privies in law as the lord by escheat, tenant by courtesy, tenant in dower, ESTOPPEL. Ill the incumbent of a benefice, and others who come in by LECTURE act of law in the post (i. e., as successors to the property, including persons not claiming title under the preceding owner) shall be bound by, and take advantage of, estop- pels." (Coke upon Littleton, 35 2a.) The case of the rever- sioner under the Hindu law is another illustration of this principle, which is one founded on considerations of conveni- ence, which after all must be the real test of the soundness of all general rules. It cannot, moreover, work any practical hardship by reason of the qualification with which it is guarded, viz., that the previous judgment must have been obtained without fraud or collusion. It is to the interest of the State that there should be an end to litigation, but this object will hardly be accomplished, if any person, having any sort of interest in the property, however minute, were at liberty to re-agitate questions which have been already solemnly decided in the presence of the person who substantially represents the estate. (See the observations of Norman, J., in Roykunthnath Chatterjee v. Ameeroonissa Khatoon, II Suth. W. R., 119 ; see also, Tarapershad Mitter v. Ram Nursingh Mitter, XIV Suth. W. R., 283.) It seems to me that the provisions of the Civil Procedure Code are somewhat defective, not in the direction suggested by Mr. Justice Mahmood, but because Mr. Justice they do not deal with cases in which persons, although ^^nf 8 not formally parties to the action, were sufficiently repre- considered, sented by the party in the original suit. (Ahmedbhoy v. Vulleebhoy, I. L. R., VII Bom., 703, and the cases cited therein.) A Mitacshara father, for instance, represents the family in a suit regarding ancestral property with a third party, and, in the absence of fraud, an adverse judgment would bind the sons, although they do not claim under the father. So, also, a decree obtained against a mohunt or shevait will bind his successors, because he fully represents the estate for the purpose of litigation, although an alienation or incumbrauce created by him would not be binding on the successor. (Golap Chand Babu v. Prosonno Coomary Ddbea, XX Suth. W. R., 86 ; affirmed in appeal L. R., II Ind. App. 392.) A similar principle is recognised in Continental systems, where it seems that a judgment obtained against the owner of a restricted estate, will operate as an estoppel against the substituted heirs, and, according to the Scottish law, an action bond fide litigated by an heir of entail is res judicata in questions with succeeding heirs. A restricted 112 LAW OF MORTGAGE. LECTURE power of dealing with property, therefore, does not, as IIJ - assumed by the Allahabad court, involve an incapacity to represent the estate and to bind others having an interest in such estate by the result of litigation conducted in good faith with a stranger. (See the observations of West, J., in Radhabai v. Anantrao, I. L. R., IX Bom., pp., 217 225). Indeed, it would be little short of disastrous if no person could acquire a safe title by res judicata if his opponent, the owner in possession, happened to create an interest even though it might be of the most insignificant character in favour of a third person, by way of mortgage, and of which the plaintiff might very well be ignorant; again this would be still more startling such person might be brought into the Court by the mortgagor as defendant, in which case he could not compel the mortgagee to join as plaintiff. It seems to me that a mortgagor may not un- reasonably be taken to represent the estate for all practi- cal purposes; as it is not at all likely that he would be so indifferent to his own interest as not to put his case properly before the Court. (See Anachala v. The Zamin- dar of Sevagiri, I. L. R., VII Mad., 328 ; also see the observations on p. 335.) It is suggested, in the judg- ment of Mr. Justice Mahmood, that the fact, that limitation which bars the mortgagor also bars the mortgagee, has nothing to do with the question of estoppel; but I venture to doubt whether this is really so. The two questions are intimately connected, as they both rest upon the supposed inability of a person, having a limited power of dealing with property, to allow, either by an adverse judgment or by adverse possession, a right to grow up in a third person which would destroy the rights of others interested in the property. (See the observations of West, J., in Radhabai v. Anantra, I. L. R., IX Bom., p. 255.) Mortgagee But although a mortgagor does not represent the mort- bdund by S a o ee so as * bind him by the result of an adverse liti- the acts of gation, he may, in certain circumstances, bind the mort- gagor "" a ee ky his acts. An illustration of this principle is to be found in the case of Lalla Mitterjeet Singh v. Raj Chunder Roy (XV Suth. W. R., 448), where it was held that a mortgagee of a tenure was bound by an agreement to pay a higher rent entered into by the mortgagor in possession. Reliance seems to have been placed to a certain extent on the fact, that the landlord was ignorant of the mortgage, but it is not quite clear whether his knowledge would have EIGHTS OF THE MORTGAGEE. 113 made any difference in the case. The interest of the mort- LECTTTBE gagee in the mortgaged premises cannot, however, be de- feated by the fraudulent conduct of the mortgagor ; and a mortgagee has been, therefore, allowed to enter a caveat against the grant of probate of a will, on the ground of the will being a forgery and a fraud upon the mortgagee, although the mortgagor, the heir-at-law, remained silent. (Sarbomon- gala Dassi v. Shashibhoosun Biswas, I. L. K., X Gal., 413.) It has been held in England that a mortgagee will not be bound by a valuation or other proceedings taken Rights of under the Land Clauses Consolidation Act without his con- gag rt ~ currence or service of notice of the proceedings on him (Ranken v. East and West India Dock Co., XII Beav., 298). I am not aware of any Indian case on the point, but the mortgagee in this country may exercise by delegation the powers conferred by statute on the owner, the ques- tion in each case, however, depending partly upon the language of the instrument and partly upon the words of the statute. (Saadat Ali v. Collector of Sarun, 5 S.D.A. 1858, .p. 840; Bhaiuani v. Dalmardan, I. L. R., III All., 144 ; Vellaya v. Tirna, I. L. R., V Mad., 76 ; Narayana v. Makunda, I. L. R., V Mad., 87.) Other cases may also occur in which the Court will interfere for the protection of the mortgagee. Thus for instance, in England the trustee in bankruptcy of a mort- gagor, may be prevented from affecting the rights of the mortgagee of a lease-hold interest by disclaiming under the Bankruptcy Acts, although if the disclaimer be once executed the title of the lessor will be complete, and the rights of the mortgagee extinguished (Buxton, Exp. 15 Ch. D., 289 ; Ditton, Exp. 3 Ch. D., 459; Sadler, Exp. 19 Ch. D., 122). The mortgagee has similarly been allowed to restrain the trustees of a turnpike road from reducing the tolls which were the subject of the mortgage. (Lord Crewe v. Edleston, III Jur. N. S., 128, 1061 ; I DeG. and J., 93.) The mortgagee has a substantial interest in the pledge, and it has been held in England that he ma3 r , for the pur- pose of enforcing his security upon the interest of the mort- gagor in an agreement, sue for the specific performance of the contract, if the mortgagor neglects to assert his rights (Brown v. London Necropolis, &c., Co., VI Suth. W. R., 188.) A mortgagee, where the mortgage deals with the whole Mortgagee interest of the mortgagor in the mortgaged premises, is detain the entitled to the title-deeds, and it has been said that he is title-deeds. R. B. G., M, 8 114 LAW OF MORTGAGE. LECTURE not bound to produce them or even his deed of mortgage IIL until his claim is satisfied (Beattie v. Jetha Dungarsi, V Bom., H. C. Rep., O. C. J., 152) ; but this decision, which was based solely on the English law on the point, can hardly be regarded as satisfactory, it being, to say the least, open to considerable doubt (notwithstanding the dictum of Wigram V. 0. in BentincJc v. Willink, II Hare, 1), how far the practice of the English Court was founded on princi- ples of abstract justice. The law has now been altered in Mortgagor England by statute (See Conveyancing and Law of Pro- en titled to per ty Act, 1881, c. 41, sec. 16), and the mortgagor is now them. C entitled, notwithstanding any stipulation to the contrary, to inspect, at all reasonable times, the title-deeds in the custody or power of the mortgagee. The case in the Bombay High Court is an instance, and it is by no means a solitary one, of the influence exercised, not always benefi- cially, by the English law on the practice, of our Courts. It is true that in the absence of any well defined rule, our Judges may very well borrow from the practice of the English Court of Chancery as successive generations of Equity Judges have borrowed, not unfrequently without any acknowledgment, from the Roman law, but an indis- criminate introduction of English law, although it might render the task of the Indian Judge comparatively less laborious, can scarcely be regarded with unalloyed com- placency by suitors in this country. The artificial character of the English law of mortgage is well illustrated by the position of a mortgagee of lease- hold property. In England, if the whole term is mortgaged, the mortgagee may be sued on the covenants by the lessor, whether he does or does not enter into possession. (Wil- liams v. Bosanquet, I Bro & Bing, 238 ; III Moore, 500.) Lord Mansfield, in one case, it is true, decided differently being of opinion that the Court must have regard to the real nature of the transaction, but his decision was shortly afterwards over-ruled by Lord Kenyon, that 'stickler for antiquity,' who thought that the precedent confused law and equity, and was, therefore, a dangerous innovation. But, happily in this country, we know of no distinction between law and equity. Liabiiityof But where the subiect of mortgage is lease-hold property themort- i ,v . J , . -L i gagee of a an d * ne mortgagee is put in possession of it under circum- leasehoid stances which amount to an assignment or transfer of the 5nt- lease-hold interest, the mortgagee becomes liable, as a rule, to pay the rent (Kannye Lall Sett v. Nistoriny Dossee, POWER OF SALE. 115 I. L. R., X Cal., 443). T hemortgagee may also make himself LECTURE liable by having his name entered in the landlord's books ^ as the tenant of the property. I will conclude by a few observations on the validity of a Power of power of sale contained in a mofussil mortgage. The ques- mofussu!! 6 tion appears to have been for the first time raised in the case of Bhowani Churn Mitter v. Joykissen Hitter, heard before the late Sudder Dewany Adawlut of Calcutta in the year 1842, when the Judges were unanimously of opinion that a sale by the mortgagee under the power did not pass a valid title to the purchaser. The decision has been criticised by Mr. Justice Mac- pherson in his work on Mortgages (pp. 139 148), and there is no doubt that some of the reasons given by the learned Judges will not bear examination. But the judgment of the Court substantially rests upon the broad ground that it would be inexpedient to allow the mortgagee in this country to exercise the power. It is true that such a power has been found beneficial in England, but English mortgagors, as a class, are perfectly competent to take care of their own interests. In India, however, we have to Validity of deal with a very different order of men. The mass of? ^. * mortgages in this country consists of mortgages of ancestral cussed, fields by ignorant peasants to a class of people not remark- able for their scrupulousness, and any one having experi- ence of Indian litigation, must admit the danger of arm- ing our money-lenders with the right to sell the properties pledged to them without the intervention of a Court of Justice. As observed by the Court in Bhowani Churn Mitter v. Joykissen Mitter : " This Court has only to de- clare such a condition legal, and in the course of a short time not a mortgage-bond would be without it. The mortgagee would then sell his debtor's property to suit his own time, and in such manner and with such publicity and formalities as he thought proper. Fraud, it is to be feared, would frequently accompany the transfers, and the property fall into the hands of the mortgagee, or some of his connexions even (as in this case it is alleged the purchaser is the son-in-law of the mortgagee) at an inadequate price, leaving the lender at liberty still to pursue the borrower for the balance that may remain after the sale." (VII Macnaghten's Sel. Rep., 429.) With reference to the argument that the exercise of the power of sale was not unfair to the debtor, the learned 116 LAW OF MORTGAGE. LECTTTEE Judges observed : " It is urged for the plaintiff that the ^ public sale of the mortgagor's property cannot be a disad- Bhowani vantageous mode of proceeding towards the latter ; that Chum his property is sold to the highest bidder ; and that, if a Case*' 3 sur pl us remains, it belongs to himself. We have not to deal with abstract theories or bare possibilities, but with what experience and the principles of the Regulations fur- nish us as our guides in the determination of a novel and unprecedented case. In a case of execution of a decree of Court, the proclamation of sale is an invitation to others interested to come and state their claims. If no claim is preferred, the title of the purchaser may generally be considered a pretty fair one. If claims are preferred, they are summarily investigated, and, should they appear fraudulent, are rejected; and, in this case, too, the purcha- ser may generally be considered in a good position, as few are willing to incur the expense of a regular action on grounds already declared by a Court of Justice to be primd facie fraudulent. And yet, with all the formalities and securities of a transfer of real property by sale made by a Court of Justice, how frequent are the complaints that the property has been sold at an inadequate price, how much more frequent would they be, had not this Court held that inadequacy of price, at a regularly conducted sale, forms no ground for its reversal ! If such be the case in such sales, the evils to be apprehended from permit- ting private individuals to sell their debtor's property, in satisfaction of their claims, must be ten-fold. But few purchasers at a fair price will be found, when, in all pro- bability, a law-suit (as the order granting the review expresses it) will be tacked to the purchase. The object of the Regulation is to prevent improvident and injurious transfers of landed property at an inadequate price ; the result of such a practice as that which the contract be- fore us involves would be to render them universal." (VII, Macnagh ten's Sel. Rep., pp. 440-441.) Sale under it is true that the utmost latitude ought to be given to ought to* 5 the parties to contract in any manner they please, but be con- freedom of contract wears a very different aspect accord- Court. y i n & as ^ * s allowed to the English landowner or the Indian peasant, and I am fortified in my view by the recommend- ation of the Indian Law Commissioners, who propose, in their Sixth Report, that a sale under a mortgage should in every case be conducted by the Court. (See also the POWER OF SALE. 117 observations of Melvill, J., in Kesub Rao v. Bhowaneejee, LECTURE VIII, Bom. H. C. Rep., A. C. J., 142.) We have already seen that in most continental sys- p ower { terns, a sale without judicial process, is absolutely void, sale not Article 2078 of the French Code says: "The creditor cannot in default of payment dispose of the pledge, saving code, to him the power of procuring an order of the Court that such pledge shall continue with him in payment, and up to its due amount according to an estimate made by com- petent persons, or that it shall be sold by auction. " " Every clause which shall authorise the creditor to appropriate the pledge to himself, or to dispose thereof without the above-mentioned formalities, is void." You will remember that the French Code, equally with the other systems of law on the Continent, has been largely shaped by the Roman law, and if the power which the Roman pledgee possessed has not been retained in those systems, it may fairly be presumed that the exercise of the power is not suited to every condition of society. But for the peculiar economic conditions under which land is owned in England, it may, indeed, fairly be doubted whe- ther the system would have worked well even in that coun- try. Be that, however, as it may, there can be no doubt that it would be dangerous to trust the Indian money-lender with a power which is so much liable to abuse (/c). (&) My attention was called since the delivery of these lectures to an unreported judgment of Bayley and Hobhouse, JJ., which was printed in the Appendix, in the first edition of this book. The learned Judges in that case refused to follow the law laid down by the Sudder Dewany Adawlut in Bhowani Churn Mitter's Case. The question has also been since discussed in two cases in the Bombay High Court, in both of which the Court upheld the validity of the power ; but I do not think that any general rule can be extracted from either of these cases. In the first case, Petamber v. Vanumali, (I. L. R., II Bom., 1), the mort- gage was in the English form, and the mortgagees were a joint-stock company having their head office in London, and the Court in uphold- ing the validity of the power relied upon both these circumstances. In the other case Jagjivan v. Skridhar, (I. L. R. , II Bom., 252), the Court expressly upheld the validity of the power on the ground that, although the land was outside the Island of Bombay,both the parties to the transaction were residents of that city, and that, the mortgage being in the English form, the parties must be taken to have contracted with reference to the English law on the principle laid down by the Supreme Court of Calcutta in the case of Bholanath Kundu Chondhry v. Aunnoda Prosad Roy, (I Bouln, 97). I may also mention that in Bhannu- motee v. Premchand, (XV Ben. L. Rep., 28), Mr. Justice Jackson seems to have expressed a doubt as to the soundness of the decision of the Sudder Dewany Adawlut in Bhowani Churn Mitter's case. But it was not found necessary to decide the question. The matter, however, has now been set at rest by Sec. G9 of the Transfer of Property Act. LECTURE IV. WHAT constitutes simple mortgage Simple mortgage an equitable lien, and really comprises two transactions Questions of construction Miller v. RangaNath Personal liability of the mortgagor Noratum v. Sheo Perqush No parti- cular form of words necessary to constitute simple mortgage Intention of the parties Cases on the point Power of sale Nature of security possessed by simple mortgagee Simple mortgage how made available Agreement as to rate of interest Nature of decree for sale Mortgage decree liiht of mortgagee to sue Period of grace allowed by some courts to mortgagor Rights of a purchaser under a decree not for sale Conflicting views of the Allahabad and Madras, and the Calcutta and Bombay High Courts What passes in a sale under a money-decree Doctrine of merger as explained in Venakata v. Rainiah Difference between money-decree and decree for specific enforcement of lien Rights of puisne incumbrancers Cases on the point Case of more than one incumbrancer Law oi Procedure Knowledge of subsequent incumbrances not essential Who ought to be made parties to the suit; case of mortgagor, owner of equity of redemption, person with contingent interest, execution-purchaser and Mitakshara father Doctrine of virtual representation Cases on the point Rights of an absent transferree of equity of redemption Gopibundhoo v. Kalipodo Sale by puisne incum- brancer Rights of the first buyer of the equity of redemption Baijnath v. Gobardhan Right of redemption of an absent interested party Account of mortgage debt Practice of mofussil courts Mortgagee not entitled to sell equity of redemption under money-decree Right of transferee to redeem purchaser Cases on the point Mortgagee sells the property discharged of his own lien Nature of a simple mortgage Purchase by mortgagee Criti- cism of Bombay cases on the point Law of execution Practice of Con- tinental courts Right passing under a sale Relation of second to subsequent mortgagees Effect of clause against alienation in mortgage deed Breach of such a clause valid to what extent Roman law on the point Lis Pendens Provisions of the Procedure Code Right of prior mortgagee to sue for re-sale of property Mortgagee not bound to proceed against pledge Rela- tive rights of the parties Practice of the Court of Chancery Exceptional cases Case of portion of mortgaged premises converted into money Joint mortgage by two or more mortgagors English law on the point Right of one of several mortgagees to sue Suit for foreclosure Mortgagee free to proceed against any property to what extent Limitation of this ri<;lit Section 271 of Act VIII of 1859 Mortgagee may waive his rights Fakir Bux's case Decree upon a simple mortgage a decree for money Right of court to restrain mortgagee in case of collusion Section 287 of the Civil Procedure Code Section 295 how construed Remedies of mortgagor Sale of property "subject to mortgage "Section 271 of Act VIII of 1859 Defence of bond Jide purchaser for value without notice not available Roman law on the subject Cases on the point Right of simple mortgagee a real right Statutes of limitation Period within which security must be enforced Court in which mortgagee must sue Conflicting decisions Question of pecuniary jurisdiction. A SIMPLE mortgage is a mortgage in which the land is pledged as a collateral security, the right of the creditor, in default of payment, being limited to a sale by judicial process of the land hypothecated to him. -In this kind NATURE OF SIMPLE MORTGAGE. 119 of mortgage the personal liability of the mortgagor is LECTURE not excluded. It corresponds to the hypothecation of the Civil Law and the systems which are founded upon it. In a pure simple mortgage the mortgagor is not put What con- into possession of the property pledged to him. He ^1* has not, therefore, the right to satisfy the debt out of mortgage. the rents and profits, nor can he acquire the absolute ownership of the estate by foreclosure. To borrow the language of English law, a simple mort- Simple gage is in the nature of an ' equitable lien.' It does not J,e tg u *^ vest any ' estate ' in the mortgagee, but only creates a lien ble lien, as incident to the debt (Nadir Hossein v. Boboo Pearoo, XIX Suth. W. R, 255; cf. 259). Notwithstanding the hypothecation, the mortgagor remains the owner of the property, and may deal with it in any manner he pleases not inconsistent with the conditions of the mortgage. But subject to the charge created by the mortgage, he may alienate his property either by gift, sale, by a second mortgage, or otherwise. (Per Turner, J., in Akhe Ham v. Nand Kishore, I. L. R., I AIL, 236 ; cf. 244.) A simple mortgagee in this country is not entitled to appear at a revenue-settlement either as a claimant or otherwise, nor can he sue for a partition (Sheik Torabali v. Khoda Buksh, N.-W. P., 1853, p. 489; Kussoo Beg v. Thakoor Bhowanee Singh, N.-W. P., 1855, p. 453). A simple mortgage, strictly speaking, consists of two parts, a covenant on the part of the mortgagor to pay the debt and an agreement empowering the mortgagee to realize his money out of the property pledged as a collateral security. The pledge, however, does not direct- ly confer on the mortgagee the power of sale. He must obtain a decree directing a sale in order to make his security available for the purpose of discharging the mortgage-debt. In the case of a simple mortgage, therefore, the mortgagee has, generally speaking, on the default of the debtor, a two-fold cause of action, the one arising out of the breach of the covenant to repay, and the other arising out of the hypothecation. He is at liberty to sue the mortgagor on both the causes of action in one suit at once, or he may pursue the one remedy at one time, and the other at another (a). If the mortgagee sues (a) His right to do so is, however, subject to the provisions of sec. 43 of the Civil Procedure Code, the effect of which will be discussed later on ; Cf . sec. 99 of the Transfer of Property Act. 120 LAW OF MOETGAGE. Really comprises two trans- actions. LECTURE ou the covenant only, he obtains what is known as a money- Iy> decree ; if he sues on the contract of hypothecation only, he obtains merely an order for the sale of the property pledged to him. But if, as is generally the case, he sues on both the causes of action, he obtains a decree for the money, with a declaration that he is entitled to have it satisfied by the sale of the land. A simple mortgage, therefore, in reality comprises two transactions, which are distinct from one another. It imposes a personal liability for the debt on the obligor, while it effects, at the same time, a mortgage of the debtor's property, thus creating a personal as divisible from a property obligation, the loan being separable from the hypothecation. This distinction is clearly pointed out in those cases, in which questions have been raised as to the right of a simple mortgagee to bring an action for debt where the instrument of mortgage was inadmis- sible in evidence under the Registration Act as embodying a transaction affecting land. (Luchmeput Singh Dugor v. Mirza Eharial Ali, IV Ben. L. Rep., F. B., 18 ; Vallaya Padayachy v. Moorthy Padayachy, IV Mad., H. C. Rep., 174 ; Tukoram Vithoji v. Klmndoji Malhorji, VI Bom., H. C. Rep., 0. C., 134 ; Sangappahin Nangappa v. Basappa, Bin Parrappa, VII Bom., H. C. Rep., A. C., 1 ; Raja Balu v. Krishnarao Ramchandra, I. L. R., II Bom., 273 ; Krishtolal Ghose v. Bonomali Roy, I. L. R., VI Cal., 611 ; Sheo Dial v. Prag Dat Misser, I. L. R., Ill All., 229 ; Ulfatunessa Allahijan v. Hossain Khan, I. L. R., IX Cal., 520 ; in the last case, however, the decision turned upon a somewhat different point.) But the transaction may not always be divisible, and difficult questions of construction often arise owing to the loose manner in which mortgages are drawn up in this country. Legal experts are very seldom employ- ed in India, and the most important documents are prepared by persons of little education and with as much knowledge of the law as the traditional village schoolmaster of the English bar. The consequence of this state of things is, that a great deal of most expensive litigation arises out of questions of construction of extremely ill-drawn deeds, which could have been easily avoided by the employment of experts to make them. This is well illustrated in some recent cases to which I will ask your attention. In the case of Mutungini Dasseee v. Questions of con- struction. QUESTIONS OF CONSTRUCTION. 121 Ramnarayan Sadkhan, (II Cal. L. Rep., 428), the mortgage- LECTTTBE bond, after setting out a list of properties belonging to IV> the defendant, proceeded as follows : " I borrow the sum of Us. 100 from you on mortgage^ thereof (of the land before mentioned) with interest at the rate of 24 per cent, per annum, which interest I shall pay monthly, and shall repay the whole amount within the 23rd of Chytro of this year (April 5th, 1875). In default of my paying the debt within the term aforesaid, you shall have to get the mortgaged property sold by instituting legal proceedings. Should the sale thereof not cover the whole amount, you shall have to realize the balance by having my other landed properties disposed of. On the above condition I do hereby execute this mortgage-deed, having mortgaged the above piece of land, together with the title-deeds thereof." The Court held that the document was not divi- sible, as it disclosed only one transaction, and was therefore not admissible in evidence even in an action only for the money secured by the mortgage. The learned judges also expressed a very serious doubt whether having regard to the terms of the loan, the defendant was at all personally liable for the money, and whether the only remedy of the plaintiff was not against the mortgaged property. At any rate, the personal liability which was to arise only in the event of there being any balance after the sale of the mortgaged properties could not be dissociated from the hypothecation. (See also Jogeswar v. Nitai- chand, IV Ben. L. Rep., App. 48, where a decree was given only against the defendant's movable property. But see Umasundari v. Uma, VI Ben. L. Rep., App. 117.) The recent case of Miller v. Ranga Naih Mowlik, (I. L. R., Miller v, XII Cal., 389) also furnishes another instance of the jjy embarrassments which arise when you have to deal with badly-drawn instruments. In that case the mortgage-bond provided as follows : " If the executants thereof fail to pay the money, according to the terms thereof, the creditor shall immediately institute a suit and realize the debt by the sale of the mortgaged property ; and that if the pro- ceeds of the sale fall short, from the personal and other properties of the mortgagors." It was contended and the contention undoubtedly received some colour from the language of the instrument that no action could be brought to make the mortgagor personally liable till a suit had been brought on the mortgage, and an endeavour 122 LAW OF MOETGAGE. LECTURE made to realise the debt by the sale of the property IV - pledged to the creditor, but the Court was of opinion that the contention was not well-founded, the bond pro viding,how- ever inartificially, for two remedies by means of one and the same suit, although both the remedies were not to be simul- taneously available the personal remedy against the mort- gagors being available only in the event of the first remedy ugainst the mortgaged property being found insufficient. I have said that a simple mortgage does not, as a rule, exclude the personal liability of the mortgagor ; whether it does do so or not in any particular case must depend on the terms of the document, and if the language employed in it is such as to create only a hypothecation, the mort- gagee will not be entitled to sue the mortgagor personally for the debt. Personal In the case of Noratum Das v. Sheo Perqush Singh, th? mo y rt- f ( T - L -. R -> X Cal " 740), their Lordships of the Privy gagor. Council were called upon to construe a document which commenced by stating that the mortgagor had borrowed the sum of Us. 4,100 at a certain rate of interest. It then went on to say: " I have by this instrument hypothecated the whole of my property in Taluk Chandipore, situate in Fyzabad. As the aforesaid Taluk of Chandipore Birhar is under management under the Encumbered Estates Act, and I have already filed in the office of the Superintendent a schedule of my debts specifying the names of my creditors, I do hereby promise and give it in writing that I shall without any plea repay the principal, with interest, within the term of two years. The mode of payment will be, that after paying up the scheduled debts, I shall first of all pay up the debt covered by this bond, including interest. I shall thereafter appropriate the profits of the estate and attend to the liquidation of other debts. I shall not take the profits of the estate, without paying up the present debt with interest ; if I do take the Noratum v. profits, it will be for the payment of this debt. I shall, qush Per " un til this debt is repaid, abstain from contracting other debts from the bank or anywhere else. When my estate is released from management under the Encumbered Estates Act, I will immediately, first of all, pay the debt due to the said banker, and will pay the other creditors afterwards. In both cases that is, while the estate is under management and after it is released the repayment of this debt will be the subject of my first consideration. In the eventof any SIMPLE MORTGAGE. 123 breach of contract taking place on my part, the said banker LECTURE is at liberty to institute a suit within the time fixed in this Iv - bond and recover the money. I will not transfer or mort- gage to any one the hypothecated property till the principal and interest of this debt is paid up ; if I do so it will be illegal. These few lines have, therefore, been written as an unconditional bond hypothecating my property, so that it may serve as a document, and be of use when required." It was contended on behalf of the mortgagee that the instrument contained a promise to pay distinct from the hypothecation, and that an action could, therefore, be maintained to make the mortgagor personally liable for the debt ; but their Lordships were of opinion that, looking at the whole of the deed, they could not place any other interpretation upon it than that it was a mere hypotheca- tion of the taluk and nothing more. No particular form of words is necessary to constitute a Whatcon- sirnple mortgage. But it must contain, either expressly or gj ltu i es by implication, a right to convert the security into money, mortgage, without which the transaction, whatever else it may be, cannot certainly be called a simple mortgage. Difficulties, however, as I have already had occasion to observe, not unfrequently arise owing to the extremely inartificial language of Indian instruments. In the case of Gunga Persad Singh v. Lalla Behary Lall, (S. D. A., 1857, p. 825), in which the question arose whether a bare covenant by the debtor not to alienate his -property till the debt was repaid, constituted a simple mortgage so as to confer a real right on the creditor, the Court observed : " As a general rule, we adhere to the principle laid down in the case of Chunder Kishore Surma (9th July, 1855), that the title of a person who purchases in good faith is not vitiated by any contract into which the vendor may have previously entered with a stranger binding himself not to alienate his property. If a party is desirous of obtaining a valid lien on any particular property, he should adopt the simple means which the various kinds of mortgage in use in this country afford. If he does not choose to do so, the fault is his own, and the innocent purchaser should not be made to pay the penalty of his negligence." (6) (5) It must be observed that this is a different question from that of the validity of a mortgage in which no specific property is pledged. To constitute a mortgage there must be operative words in addition to a specific description of the property. 124 LAW OF MORTGAGE. LECTUEE It may, no doubt, be said that such a doctrine would IV - very frequently defeat the intentions of the parties ; but intention the rule of construction founded on the presumed intention of the of the parties, unless carefully fenced in, is calculated to parties. introduce the very greatest confusion. It would carry me much beyond the limits of the present lecture to examine the various aspects of this doctrine, and there are, probably, many among you who are familiar with the controversies on the point in some famous writings, both ethical and juri- dical. The rule, however, has an undoubted air of plausi- bility, and the fallacy which lurks in it is betrayed only on careful examination. It is true that if the intention can be collected from the instrument, the form of expression is not material. But the real difficulty lies in collecting the in- tention when it is not formulated in apt words. Agra cases In the Reports of the Agra High Court you will find point! 6 two cases, in one of which the Court thought that the debtor intended to create a mortgage, while in the other, it was held that there was nothing to show any such intention. The language of the two instruments, how- ever, so far as can be gathered from the report, was almost precisely the same, the debtors covenanting with their creditors in both the cases not to alienate their pro- perties till the debts due to the creditors should have been repaid. (Chunny Loll v. Pallowun Sing, IV Agra H. C. Rep., 217 ; Martin v. Purrissram, II Agra H. C. Rep., 124. See also Bolakeelal v. Bungsee Singh, VII Suth. W. R., 309 ; Ram Gopal v. Ram Dutt, XII Suth. W. R., F. B, 82; cf. VII N.-W. P., 124; VIII N.-W. P. 669.) The caustic observations of Fearne on Perrin v. Blake, will suggest themselves to every one familiar with the writings of that accomplished lawyer. I should men- Bombay tion that according to some recent authorities, to con- stitute a simple mortgage, the power of sale conferred by it should be one capable of being exercised without the intervention of a Court of Justice. A document is not, it has been said, necessarily a mortgage simply because it is so styled, nor is a recital that the land " stands security " for the money borrowed, sufficient to create a mortgage. The property, too, may be spoken of as mortgaged ; but even then the transaction might not be a mortgage. In such cases the creditor would have only a charge upon the property within the meaning of section 100 of the Transfer of Property Act. He would have the POWER OF SALE. 125 right, it is true, to have his charge realized by sale under LECTUBE a decree, but he would not be a mortgagee, no power being IV> given to him, either expressly or by implication, to sell the property out of Court. Until, therefore, he obtains a decree against the land, no interest in it is transferred to him such as is transferred by a power of sale in an ordinary mortgage. (Khemgi v. Rama, I. L. R., X Bom., 519. Cf. Oopal Pandey v. Parsotum Dass, I. L. R., V All., 121. But see Sheoratan v. Mahipal, I. L. R., VII All., 258, F. B. ; Bishen Doyal v. Udit Narayan, I. L. R., VIII All., 486 ; Oovind v. Kalnaclc, I. L. R., X Bom., 592.) I am, however, bound to say that very few mortgages, Power of if any, at least in this part of the country, confer a power 8ale - of sale without the intervention of a Court of Justice. Indeed, as the law stood before the passing of the Transfer of Property Act, such a power was of very doubtful vali- dity in cases not governed by the English law, and now by Statute the power is, as a rule, incapable of being exercised in the mofussil. If, therefore, the broad rule laid down by the Bombay High Court is accepted as law, documents which we have been hitherto in the habit of regarding as simple mortgages, must no longer be viewed in that light, but should be treated as creating only charges upon land. I may also mention that a power of sale, even under an order of Court, is not always expressly given in mortgage- deeds, and has, in many cases, to be inferred from the lan- guage of the document. But a power of sale without the intervention of a Court of Justice is, as might be expected, seldom, if ever, given by a mofussil mortgage. The ques- tion in the Bombay High Court as to what constitutes a mortgage, as distinguished from a charge, arose, however, upon the construction of Article 132 of the Limitation Act ; but it does not follow that the distinction, if well founded for the one purpose, must be equally well founded for other purposes (c). I will now proceed to discuss the rights of the mort- Nature of gagee under a simple mortgage. We have seen that he possessed has no right to enter upon possession of the property by simple mortgaged to him, or to foreclose the mortgagor's equity mort s a g ee - of redemption, and that the only mode in which he can avail himself of his security is by a sale, through judicial process, of the property pledged to him under a decree of (c) See the notes to clause (b), sec. 58 of the Transfer of Property Act. 126 LAW OF MORTGAGE. LECTUBB Court, the mortgagee having, by virtue of the mortgage, a IV - preferential right to be paid out of the purchase-money. SinTie" According to the usual practice of the mofussil Courts, mortgage the mortgagee asks by his plaint for the sale of the mort- avaiiabie 5 ^ a e( ^ property, and, if he succeeds, he obtains 'a decree for the money due to him, with a declaration that the mortgaged property should be sold for the realization of the money. It seems that in taking the account, the Court is not bound in a suit upon a mortgage to allow the plaintiff interest at the rate agreed upon between the par- ties after the institution of the suit ; the rate of interest after the institution of the suit being in the discretion of the Court (Mangniram Marwari v. Dotvlut Roy, I. L. R., XII Gal., 569, F. B. ; but see Ord v. Skinner, L. R., VII, I. A., 196 ; S.C., I. L. R., Ill All., 91 ; Bandaru v. Atchayamtna, I. L. R., Ill Mad., 125 ; Dhunput Singh v. Golam Hadi, Cory ton's Rep., 12 ; S.C., II Hyde, 106. See also the cases collected in a note to page 188 of Belchambers' Practice of the Civil Courts). The Court, however, is bound to allow interest at the contract rate down to the institution of the suit (d). Agreement The above observations apply to cases in which, as is of interest generally the case, interest at the rate agreed upon is pay- ' able by the terms of the bond down to the date of the realization of the money by the mortgagee. Where, however, there is no express agreement as to the rate of interest payable after the debt becomes due, interest as such may not be claimed by the mortgagee after due date ; although compensation may be awarded for the use of the money post diem, which may be, but is not necessarily, regulated by the rate specified in the deed of mortgage. (Dickenson v. Harrison, IV Price, 282 ; A tkin- son v. Jones, II A. and E., 439 ; Price v. G. W. Ey. Co., XVI M. and W., 244- ; Cooke v. Fowler, L. R, VII H. L, 27.) Cases also may arise in which the Court may refuse to give the mortgagee any interest as damages, except, perhaps, a nominal amount. But the circumstances which would justify such a course must be of a very exceptional character, as, for example, where the interest which the mortgagor contracted to pay was exorbitant or extor- (d) On the Original Side of the High Court, however, the practice of the English Courts, now embodied in section 86 of the Transfer of Pro- perty Act, has always been followed, and interest is allowed at the rate specified in the mortgage down to date of decree. DECREE FOR SALE. 127 tionate. The question whether the mortgagee has been LECTURE guilty of unnecessary delay in bringing his action may also be fairly taken into account in determining the amouut of damages or compensation to which he may be entitled. But no rigid or inflexible rule can be laid down as to the standard by which the damages should be measured, and the decision of the question must turn in a great measure upon the special circumstances of each case (Bishen Dyal v. Udit Narayan, I. L. R., VIII All., 486 ; Juala Prosad v. Khumur Sing, I. L. R., II All., 617). I have said that a mortgage decree should always direct Nature of a sale of the mortgaged property. Difficulties, however, S %\ Q occasionally arise from inartificially drawn decrees which are well illustrated in some recent cases, in which the question arose whether a decree obtained by a mortgagee should be regarded as a mere money-decree or as a mortgage-decree. (See Harsukh v. Meghraj, I. L. R., II All. v 345 ; Janki Prasad v. Baldeo Narain, I. L. R., III All., 216, F. B. ; Debi Charan v. Parbhu Din Ram, I. L. R., Ill AIL, 388, F. B. ; Mr Chunder v. Afsaroodeen, I. L. R., X Cal., 299.) It would serve no useful purpose to go through all the various cases on the point which are not always easy to reconcile. Indeed, as the construction of a document must vaiy according to the varying terms employed in framing it, it would be difficult, if not impos- sible, to lay down any well-defined rules. The cases, how- ever, may be useful as showing the spirit in which our Courts are in the habit of reading decrees seldom very artis- tically drawn, and not unfrequently absolutely unintelli- gible. Tlie leaning of the Court, however, at least in the later cases, seems to be in favour of a liberal construction. The expression ' mortgage-decree ' which is used in the Mortgage mofussil Courts in contradistinction to a 'money-decree,' decree% generally means a decree for money as in an ordinary action of debt, coupled with an order directing a sale of the mortgaged property in satisfaction of the judgment-debt. It may, however, in exceptional cases, mean a decree for money to be realized in a particular manner, that is, by a sale of the mortgaged property, and not otherwise. (Solano v. Moran, IV Cal. L. Rep., 11 ; Budun v. Ram, I. L. R., XI Bom., 537.) A decree on a mortgage-bond ought, however, to be so drawn up as not to restrict the cre- ditor only to proceedings in rem, that is, to proceedings taken with the object of selling the pledge. Decrees on 128 LAW OF MORTGAGE. LECTUBE mortgage-bonds are also sometimes drawn up with a IV - provision that the pledged property should be sold first ; the general property of the debtor being liable to be seized only in the event of a deficiency. It is to be regretled that there is no prescribed form, as the language of the decree regulates the mode of execution and often gives rise, as we shall presently see, to considerable embarrassment ; in some cases, however, the difficulty cannot be avoided by the Court as the language of the decree must follow the terms of the bond, and it is no exaggeration to say that no two bonds in this country are worded alike. Right of The mortgagee may bring his suit at any time after Default has been made by the debtor ; he may also sue for any interest which may have fallen due without suing for the principal, if, under the terms of his mortgage, he is not entitled to call in the principal money, although such a course is sometimes liable to be regarded as oppressive, and the mortgagee, if he should sell the mortgaged pro- perty under a decree for the interest only, might find himself in an embarrassing position when seeking to recover the principal. But if the payment of the principal is not deferred for any specified time, or in other words, if the principal is payable on demand, a suit should not be brought only for the interest, but for an account and payment of what remains due on the mortgage for principal and interest up to the filing of the plaint (Annapa v. Ganpate, I. L. E, V Bom, 181)! Period of I may mention that in some Courts a period of six grace. months is usually allowed to the mortgagor to pay the money found due to the mortgagee on his security. This indulgence, however, which seems to be borrowed from the practice of the English Court of Chancery, is not allowed to the mortgagor everywhere, and the propriety of extending it to a decree for sale is, perhaps, open to question, such a decree standing upon a very different footing from a decree for foreclosure (e). Even in England an immediate decree for sale is not unfrequently made by the Court. The question, however, is not of much practical importance, and I have referred to it only to show how very largely, even in details, our law of mortgage has been shaped by the prac- tice of the English Courts of Equity. Rights of It used to be thought at one time that a purchaser under a purchaser a (J ecre e on a mortgage which did not direct a sale, acquired (e) See, however, sec. 88 of the Transfer of Property Act. BIGHTS OF PURCHASER. 129 no higher rights than a purchaser under an ordinary execu- LECTUBE tion. And this vie w.although now negatived by the Calcutta as well as the Bombay High Courts, is still adhered to by the un d e r a Allahabad and, to acertain extent, by the Madras High Courts, decree not In support of the proposition that a sale under a money- decree passes to the purchaser only the rights and interests of the debtor as they stand at the date of the execution- sale, or, more properly speaking, at the date of the attach- ment which precedes the sale, it is said that there is a con- siderable difference between a suit to enforce the contract of hypothecation and an action merely on the covenant. A suit to enforce a pledge of land must be brought in the Court within the local limits of which the property is situat- ed, and to such a suit all persons interested in the equity of redemption must be made parties. But an action on the covenant only may be brought in the district in which the defendant resides, and in such an action only the mortgagor View of the is a proper party. The mortgagee has, besides, a right to elect the form in which he should proceed ; and if he does High not choose to avail himself of the collateral security, the ^ execution-purchaser ought not to be allowed to take advan- tage of it. The lien can pass by the sale and be used by the purchaser for his protection only when the mortgagor elects to avail himself of it and takes the steps which are neces- sary to entitle him to enforce his pledge (Khub Chand v. Kalian Das, I. L. K., I All., 240, F. B.). It has also been suggested that where the mortgagee brings his action only on the covenant, and gets a money-decree, the mortgagor's original obligation is gone transit in rem judicatum. A new obligation arises by virtue of the judgment and decree, namely, an obligation to satisfy the decree which has been passed in favour of the creditor, and the mode in which this obligation can be enforced is pointed out by the Code of Civil Procedure. The lien which was incident to the original debt is extinguished with the con- version of the original obligation into a judgment. It is said there cannot be two debts, one leviable by execution, and the other, continuing to be a charge on the property. The original debt is gone transit in rem judicatum. A fresh debt is created with different consequences (/). (Per Bramwell, B., European Central Railway Co., IV Ch. D., 33.) (/) In Drake v. Mitchell (3 East, 251), Lord Ellenborough said : "I have always understood the principle of transit in rem judicatum to relate only to the particular cause of action in which the judgment is recovered R. B. Q., M. . 9 130 LAW OF MORTGAGE. LECTURE But, as you have already heard, both the Calcutta and the Iy - Bombay High Courts take an entirely different view. In View of (he the Full Bench Case of Syed Imam Mumtazudden Malw- Caicutta m ed v. Raj Coomar Dass, (XXIII Suth. W. R., 187 ; cf. bay ffigh" 190), Sir Richard Couch, in delivering the judgment of Courts." the majority of the Judges, observed : " There is, we think, no warrant for holding that, when a sale is under a decree for sale, it conveys the rights of both creditor and debtor, but that when it is in execution of a simple money-decree, only the rights of the debtor pass, and the creditor retains his lien. The object of a sale of mortgaged property in execution of a decree is not to transfer the debt from the debtor to the purchaser of mort- gaged property, but to obtain satisfaction out of the secu- rity. Thus, whether a decree do or do not direct the sale of the mortgaged property, the mortgagee, when he puts that property up for sale, sells the entire interest that he and the mortgagor could jointly sell." Sir Richard Couch then goes on to point out that the mere taking of a money- decree does not extinguish the creditor's lien, and that, if the lien continues an incident of the debt when it passes from a contract-debt into a judgment-debt, as the creditor cannot sell the property and retain the lien, it must con- tinue in existence, so far as may be necessary, for the protection of the purchaser. The same principle has been adopted by the High Court at Bombay. In the case of Nursi Dass v. Je Jugalkor, (I. L. R., IV Bom., 57), the learned Judges say: "We think that the principle now recognised by the High Court at Calcutta is the correct one, and that it is impossible to hold that the particular nature of the right acquired under the sale depends on the form of the decree on which the mortgagee has proceeded to satisfy his judgment-debt. The idea that the mort- gagee only sells under a money-decree the right, title, and interest which the mortgagor has, at the time of the sale, appears to be a creature of the old Civil Procedure Code. What the mortgagee really seeks when he proceeds to sell, whether under a decree for sale, or a simple money-decree, is to obtain satisfaction out of his security, in fact, to operating as a change of remedy from its being of a higher nature than before. But a judgment recovered in any form of action is still but a security for the original cause of action until it be made pro- ductive in satisfaction to the party ; and, therefore, till then it cannot operate to change any other collateral concurrent remedy which the party may have. See also Bigelow on Estoppel, p. 13i. MONEY-DECBEE. 131 enforce his lien ; and we do not see on what principle it LECTUEE can be said that, when the proceeding is in execution of a money-decree only, he still retains his lien for enforcement qud mortgagee, if the debt be not discharged, by a second sale of the same property" (I. L. R., IV Bom., 63-64-). I told you that the doctrine, that a sale under a money- What decree only transfers the right, title, and interest of the gafe^und'er debtor, has also been sometimes attempted to be supported a money- on the ground that the passing of a money-decree has the decree - effect of extinguishing the lien; but there is very little authority in support of t.he proposition ; it being conceded, even by the Allahabad High Court that a mortgagee does not lose his lien by taking a money-decree. (Khub Ohand v. Kallian Das, I. L. R, I All., 240 ; cf. 246. See also Ram Churn v. Raghoobeer, XI Suth. W. R, 481 ; Nadir Hossein v. Baboo Pearoo, XIX Suth. W. R., 255 ; cf. 259 ; Gopee- nath v. Sheosahoy, I Suth. W. R., 315 ; Surwan Hossein v. Golani Mahomed, IX Suth. W. R., 170 ; Syed Emam Mom- tazudeen v. Rajcoomar, XXIII Suth. W. R, 187, overruling Suduth Singh v. Bheemjek, XII Suth. W. R., 572 ; Kokil Singh v. Mitterjeet Singh, V Cal. L. Rep., 243.) All these cases distinctly recognise the survival of the lien after the taking of a money -decree, and there are numerous other deci- sions to the same effect in our books. In the English law also, the conversion of a debt into a judgment-debt, has not the effect of extinguishing an equitable lien incident to such debt. It is true that the Court may, if a proper case is made out, restrain the holder of the lien from pursuing both his remedies simultaneously ; but there is nothing to prevent him from availing himself of his lien, if he has not been able fully to realize his money upon a judgment for the debt (Barker v. Smart, III Beav., 64.) The judgment of Baron Bramwell in the case to which I have already refer- red only lays down that, if the debt is turned into a judg- ment-debt in the absence of a covenant to pay the stipu- lated rate till realization, interest would run on the debt only as if it were a judgment-debt; but it is no authority for saying that the lien will be discharged although the debt remains due (Per Pontifex, J., in Janmojoy Mullik v. Dasmoni Dassi, I. L. R., VII Cal., 114. See also Feiuings, Exp., XXV Ch. D., 338 ; distinguishing Popple v. Sylvester, XXII Ch. D., 98). In the case of Venkata Nara Summah v. Ramia, (I. L. Doctrine oi R., II Mad., 108), it seems to have been contended that, merger. 132 LAW OF MORTGAGE. LECTURE where a decree directs the sale of the mortgaged property, IV< the security is merged in the decree ; the contention which betrayed a curious misapprehension of the doctrine of merger was of course over-ruled. In giving judgment Venknta the Court said : " Now, it is quite clear that the decree ^"immnk ^ & ^ ourt ^ Equity giving effect to the mortgage-security v""lt(imia. which it preserves, is entirely different from a judg- ment which merges the cause of action. If the decree is a substitute for the mortgage, then the mortgage will be no longer existing. This result would lead to the destruc- tion by a decree of Courts of Equity, of securities intended to be given effect to. For if the right to the security under the decree only takes the date of the decree, then all securities given by the mortgagor after the mortgage of 1864 and up to October 1871 (the date of the decree) being prior to the decree, the decree-holder would lose the benefit of his mortgage. The decree in a moi'tgage-suit is made according to the doctrines and practice of Equity, which would be utterly inconsistent with merger. It is the settled practice, when there is a decree of a Court of Equity for sale, and a sale thereunder for the mortgagee if he has a legal estate, to join in the sale and conveyance ; the mere decree gives no title; it is the sale and conveyance which gives title. Again, this doctrine only affects the parties to the suit in which the judgment is obtained, if there is a suit on a joint and several bill of exchange against one of several debtors and against the other separate debtors (King v. Hoare, supra, XIII M & W., 494 & 504). The defendant in this present case was no party to the original suit on the mortgage of 1864, and is neither bound by it nor entitled to have any advantage from it. In this par- ticular case, it is not necessary to determine whether a purchaser under a sale " only " of rights and interest of the defendant in the property (section 249, Act VIII of 1859) under a decree in a mortgage suit acquires not only those rights and interest, but also the interest of the mort- gagee under tlie mortgage." I may, however, observe that there is no express provision in the late or the present Code providing for the sale or conveyance of the mort- gagee's rights to the purchaser. Sections 223 to 231 of the old Code refer to decrees for delivery of possession of immoveable property, and section 249 relates to sale of rights and interest of the defendant only. However, as the sale of the interest of such mortgagee must have PUISNE 1NCUMBRANCERS. 133 been intended to be provided for, and as there is only the LECTURE one process for the sale of iraraoveable property under the IV Code, I think that the construction put upon the Code by the Calcutta High Court is a necessary result, viz., that under a sale in execution of a decreee for sale in a mort- gage-suit, the right and interest which the mortgagee and the mortgagor could jointly sell pass to the pur- chaser (Syed Imam v. Raj Coomar Dass, XIV Ben. L. Rep., 421). In the High Court on the Original Side it has been our practice to have sales made in execution of mortgage- decrees by auction, without the intervention of process of attachment. The present Civil Procedure Code, section 286, contains provisions to enable the creditor and the purchaser to know what interest is really to be sold ; but still the question in this case is not satisfactorily provided for, and cannot be so, until provision is made for the mortgagee joining in the conve3 7 ance, or unless effect is expressly given by legislation " to the sale by the officer as if the mortgagee had joined." It is, however, important to observe that a money-decree Money- and a decree for the specific enforcement of the lien differ Decree a "or in one respect. A money-decree creates a judicial lien specific en- only from the date of attachment and the judgment-creditor cannot, therefore, seize the property pledged to him under a mere money-decree, if it has been previously transferred by the mortgagor without bringing an action for the purpose of making it available in satisfaction of his debt. A decree for the specific enforcement of his lien, therefore, gives the mortgagee a somewhat higher right as against transferrees of the mortgaged property, for, not only may he disregard all alienations made after his decree, but the mortgagee is also protected by the principle of lispendens against any transfer made after the institution of his suit. A mortgagee, who obtains a decree for sale, is, therefore, a judicially secured creditor holding a much stronger position than one who obtains merely a money-decree. Again, it used to be thought that a sale undera mort- Rights of gnge in every case passed the property to the pur- chaser as it stood at the date of the mortgage, and that cers. a decree for sale made in the presence of the mort- gagor, but in the absence of the puisne incumbrancers or other persons possessing only a qualified interest in the 134 LAW OF MOHTQAGE. . LECTURE equity of redemption, was a good decree, and passed a IV> complete title to the purchaser ; although an exception seems to have been recognised in favour of a purchaser out and out of the equity of redemption. (Gopeenath Singh v. Sheosahoy Singh, I Suth. W. R., 315; Ben. L. Rep., Sup. Vol., 72.) Now, this view, although it has been departed from by the other High Courts, is still maintained, to a certain extent, in the Allahabad Court. I am, of course, speaking of cases not affected by the Viewof the Transfer of Property Act. It would seem that, according AUahabad ^ ^ prac ti c e of the Allahabad Court, it is not ab- Court. solutely necessary for the first mortgagee to make a puisne incumbrancer a party to a suit to enforce his security ; and if the property is sold under a decree for sale made in the absence of the posterior mortgagee, his rights will be defeated, unless he can show some fraud or collusion. It is true, that if he is not made a party, he may, at any time before the sale, come in and redeem; but if he does not do so, and a sale actually takes place, his lien will be defeated unless he can show something more than the mere existence of his mortgage some fraud or collusion, which entitles him to defeat the first incumbrance, or to have it postponed to his own. By saying that his lien will be defeated, I do not mean to convey the impression that it will be absolutely extinguished. It will only be transfer- red from the land to the purchase-money, and the pur- chaser under the sale will acquire an absolute title so far as the second mortgagee is concerned. (Khub Chand v. Kulian Das, I. L. R., I All., 240 ; AH Hasan v. Dhirja, I. L. R., IV All, 518 ; Sita Ram v. Amir Begam, I. L. R., VIII All., 324.) It is not quite clear, however, whether the same principle is applied by the Allahabad Court to lessees or other persons possessing a qualified interest in the mortgaged property. The necessity for making all persons interested in the equity of redemption either by way of second mort- gage or otherwise, parties to a suit by the mortgagee to enforce his security, was very fully discussed in the Full Bench Case of Syed Mahomed Maumtaz-ud-din by the Calcutta High Court (XXIII Suth. W. R., 187), in which it was held that a decree not made in the presence of persons who, either by way of second mortgage or other- wise, have acquired an interest in the equity of redemp- tion, is not binding on the latter. PUISNE INCUMBRANCERS. 135 "If there be persons not parties to the suit claiming LECTUBE an interest in the property, no form of dealing with the pro- perty in their absence can prejudice their rights" (Per naran Couch, C. J., in Haran Chunder Gkose V. Dinobundhoo Chunder Bose, XXIII Suth. W. R., 190). The rights of such persons, L- however, are nowhere defined in the judgment. It is only dhoo base. said that the purchaser under a decree made in their absence purchases the property subject to their rights. He only buys the lien of the creditor and the equity of redemption, or such portion of it as resides in the debtor, that is to say, the entire interest which the mortgagor and mortgagee could jointly sell. It is, therefore, only where there are no third persons interested in the property, that it becomes absolutely vested in the purchaser, The doctrine, therefore, which is to be found in some of the cases in the books that a sale by a mortgagee con- veys the property to the purchaser free of all subsequent incumbrances must now be received with some qualifica- tion. A mortgagee is no doubt competent to transfer the property to the purchaser in the state in which it was pledged to him, but it can only be effected by a sale un- der a decree in which all persons interested in the equity of redemption are represented. If the sale takes place un- der a decree against the mortgagor alone, no complete title can pass to the purchaser, if there are others interested in the property. You must remember that the effect of a mortgage is to Case of transfer to the mortgagee only a portion, more or less ex- mor ? ^ tensive according to the nature of the mortgage, of the brancer. estate possessed by the mortgagor. Such transfer, how- ever, does not preclude the mortgagor from dealing with the interest which remains in him after the execution of the mortgage ; and where the mortgagor transfers, either wholly or in part, such interest, the transferree acquires against the mortgagee similar rights to those possessed by the mortgagor, so far as they are necessary for the protec- tion of the interest conveyed to him. It follows that if the mortgagee desires to foreclose the mortgagor or to bring the property to sale, a purchaser from the mortgagor or a second mortgagee will be entitled to redeem the first mort- gage, and thus to protect his own interest in the mortgaged property. Hence it has been held that to render a decree for foreclosure or sale effectual, the mortgagee must make sub- sequent purchasers or incumbrancers parties to the suit, 136 LAW OF MORTGAGE. LECTURE at least if he has notice of them or circumstances exist IV - which should have put him on inquiry. ( Venkata v. Canna, I. L. R., V Mad., 185. See also Venkata, Narsammah v. Ramiah, I. L. R., II Mad., 108 ; Nara v. Gulab Sing, I. L. R., IV Bom., 83; Kanitkar v. Joshi, I. L. R., V Bom., 442 ; Damodar Dev Chand v. Naro Mihadev Kalikar, I. L. R., VI Bom., 11 ; Sobhag Chand Golab Chand v. Bhai Chand, I. L. R., VI Bom., 193; Naran Purshotom v. Dalatram Virchand, I. L. R, VI Bom., 538; Rupchand Dagdusa v. Davlatmv Vithalrav, I. L. R., VI Bom., 495 ; Radhavai v. Shamrav Vinayak, I. L. R., VIII Bom., 168.) It would seem that, according to the practice of the Cal- cutta High Court, the question of notice is immaterial. Law of (Madhub Thakoor v. Jhoonuck Loll Dass, XII Suth. W. R., Procedure, ^5. G un g a G i)i n dMondulv.BaneeMadhubGhose,ltil.Svii\\. W.R., 548; No render Narain Singh v. Dwarka Loll Mondul, I. L. R., Ill Cal., 397.) But the question is still a moot point in the Bombay as well as in the Madras High Court (See Sankane Kalana v. Virupakshaha, I. L. R., VII Bom., 146, and the cases cited above.) The mortgagee, however, is bound to make subsequent transferrees parties to his suit if he has notice of such transfer or if circumstances exist which should have put him on inquiry, and possession is regard- ed as sufficient to put the mortgagee on inquiry and to fasten him with constructive knowledge of the subsequent transfer. It is important to observe that registration is regarded by the Bombay High Court as constructive notice ; but this rule, which is not in accordance with the English law, has not yet been adopted by the other Courts. (See Rup Chand Dagdusa v. Davlarao Vithalrao, I. L. R., VI Bom., 495 ; Laru v. Gulab Sing, I. L. R., IV Bom., 83 ; Radhai Vai v. Shamrao Vinayak, I. L.R., VIII Bom., 168; cf. Venkata Narsammah v. Ramiah, I. L. R., II Mad., 108 ; Venkata Somayazula v. Cannam Dhora, I. L. R., V Mad., 184 ; Ganga Dhara v. Sivarama, I. L. R., VIII Mad., 246.) I may mention that in the English law, registration is not by itself notice ; if, however, a person actually search the register, he will be deemed to have notice ; but if a search is made for a particular period, the purchaser will not, by the search, be deemed to have notice of any instrument not registered within that period. (Sugden on Vendors and Purchasers, p. 761.) A different rule, however, prevails in America, and it has been adopted, as you have just heard, by the Bombay High Court. PARTIES TO THE SUIT. 137 It seems that according to the English law, knowledge LEOTUBB of subsequent incumbrances is not essential, and that a IV - person claiming under a judgment of foreclosure or a de- Knowledge cree for sale will not acquire a good title as against claim- of subse- ants under a puisne title, although the mortgagee had no H"^. notice of their existence. But a person who is a party tobnmcesnot a suit for sale or foreclosure will be bound by the decree, and es8enual - it would be no answer for him to say that other persons who had also a right to redeem were not represented in the action. Again, a person who is a defendant in his charac- ter of mortgagor will be bound by the decree in respect of any interest possessed by him in another character, although such interest does not appear upon the proceedings. This principle, however, does not apply to a person who becomes entitled to another interest in the mortgaged estate derived from a person, after the decree, who was not a party to the suit. A mortgagor, however, may sometimes be bound by a decree in an appeal to which he is not a party if his interest is identical with that of the sippellant. At any rate he cannot get rid of the decree otherwise than by a proceeding in the suit out of which the appeal arose (Fisher's Mortgage, pp. 680-81). It is, therefore, clear, that in a suit by a mortgagee all Who onpht persons claiming any interest in the mortgaged premises 'a^^' 16 should be made parties, and that the rights of such persons the suit, cannot be prejudiced by a decree for sale made in their absence. But in no case whatever can a person claiming a paramount title be effected by the decree. A second or other puisne mortgagee may thus foreclose those subse- quent, without joining those prior to themselves, nor are the owners of prior iucumbrances necessary parties to a suit for sale, as the sale is made subject to those incumbrances. ( But see sec. 85 of the Transfer of Property Act.) In the case of a derivative mortgage, however, the original mortgagee should be made a party. The mortgagor of an estate which Mortgagee has been pledged as a collateral security is also a necessary a P art J- party to a suit for foreclosure against the principal mort- gagor, and so also is a surety, although bound only by a personal covenant if he has paid off p;irt of the debt due from the principal (Fisher's Mortgage, p. 813). In every suit for foreclosure or sale, the owner for the time being of owner of the whole or any share of the equity of redemption must equity of be present, and it is incumbent on the mortgagee where the T t f^ m ^' estate has been sold in lots to proceed against all the party. 138 LAW OF MORTGAGE. LECTURE purchasers (Peto v. Hammond, XXIX Beav., 91). In this IV - country a purchaser under an execution-sale, if his purchase Execution h as n t been confirmed under the Code of Civil Procedure, purchaser is not a necessary party, as his title accrues only from the nartv ^ a ^ e on wn i c ^ the sale is confirmed under Section 316 of the Civil Procedure Code. Under Act VIII of 1859 the purchase related back to the date of the sale, and a pur- chaser under that Act, although his sale might not have been confirmed, was a necessary party to a suit by the mortgagee for sale or foreclosure (Bhairob Ckunder Bondopadhya v. Showdaminy Debi, I. L. R., II Cal., 141. See also Rameshur Nath Singh v. Mewar Jagjit Singh, I. L. R., XI Cal., 341, in which latter case, however, the attention of the Court was not drawn to the difference between the effect ot a sale under Act VIII of 1859, and one under Act X of 1877. See also the unreported judgment in second appeal No. 54 of 1886 decided by Petheram, C. .J. and Beverly, J., on the 7th December 1886 Kali Dass Mookerjee, appellant v. Sheikh Arshad and others, respondents.) Party with It must not, however, be understood that every person having a contingent interest must be made a party to an action by the mortgagee. In England, where the right of redemption has become the subject of settlement, it is sufficient to bring before the Court the first person entitled to the inheritance, and where there is no such person a decree against the tenant for life, will, it appears, bind the inheritance (Fisher's Mortage, p. 815). In this country the widow would seem to be entitled to represent the estate in an action by the mortgagee except where the mortgage is one by the widow herself, in which case the reversioners ought to be made parties (Nugender Chunder Ghose v. Kaminee Dossee, XI Moore Ind. App., 241 ; VIII Suth. W. R., P. C., 17 ; Mohima Chunder Roy v. Ram Kishore, XXIII Mitakshara Suth. W. R., 174.) Similarly in cases governed by the Mitakshara, it is sufficient to m:ike the father a party with- out bringing in his sons. (Krishnama v. Perumal, I. L. R., VIII Mad., 388). Virtual re- The question as to how far a person not a party to a presenta- su jt will be bound by a decree made in his absence, is fre- quently complicated by questions of substantial or virtual representation as it is sometimes called, which have intro- duced the greatest uncertainty into the law. The topic properly belongs to the law of procedure ; but a few words on it will not, I trust, be wholly out of place. The general PARTIES TO THE SUIT. 139 rule, no doubt, is that no person can be affected by a LKCTUBM decree in a suit in which he is not represented ; but excep- IV. tions have been engrafted from time to time upon the principle which have had the effect of 'well nigh eating up the rule.' It is probable that our Courts have been in- duced by a desire to do substantial justice to depart from the fundamental principle that no person can be affected by a decree made behind his back. But a too excessive regard for the interest of the execution-purchaser, which has presumably brought about this relaxation of the rule, has led to a great deal of uncertainty advantageous only to the ' prowling assignee/ and the trafficker in doubtful litiga- tion. Those of you who wish to study the subject, will do well to consult the following cases, which, however, are only a few out of the many that could be cited, and in some of which the question of the proper representation of Cases on minors in suits by or against them was also involved: Lalla the P int - Seetaram v. Rambaksh Thakoor, XXIV Suth. W. R., 383 ; Court of Wards v. Maharaja Coomar Ramaput Singh, X Ben. L. Hep., 294 ; S. G, XIV Moore Ind. App., 605 ; Ishan Chunder Mitter v. BukshAli Soudagar, Marshall, 614 ; S.C., Spl. No. Suth. W. R., 190; Sadabut Prosad Shahoo. v. Full Bash Koer, III Ben. L. Rep., F. B., 31 ; Baijan Doobey v. Brij Bhookun Lall Aivaste, I. L. R., I Cal., 133; Mohima Chunder Roy Chowdhry v. Ram Kissari Acharjee Chow- dhry, XV Ben. L. Rep., 142 ; Hendry v. Mutty Lall Dhur, I. L. R., II Cal., 395 ; Sham Coomar Roy v. Jotton Bibee, XIV Suth. W. R., 448 ; Hukeem Bibee v. Khaja Gawhurali, V. Wym., 27 ; Hamir Singh v. Mussammut Zakia, I. L. R., I All., 57 ; Rajkristo Singh v. Bungshee Mohon Babu, XIV Suth. W. R., 448 note ; Sheikh Abdool Kurreem v. Syed Jaun Ali, XIV. Suth. W. R. 56 ; Raja Roghoo Nundon Singh v. Wilson, XXIII Suth. W. R, 301 ; Mussammut Nuseerun v. Moulvi Ameer Udden, XXIV Suth. W. R, 3 ; Lalla See Ram v. Ram Baksh Thakoor, XXIV Suth. W. R., 383 ; Powell v. Wright, VII Beav., 444 at p. 450 ; Cockburn v. Thompson, XVIV esey, 321, at pp. 325-26. In the Mat- ter of the Petition of Hira Lall Hooker ji, VI. Ben. L. Rep., Ap., 100 ; Syud Emam Mumtazuddeen Mahomed v. Ram Coomar Doss, XIV Ben. L. Rep., 408 ; Lekraj Roy v. Becha Ram Misser, VII Suth. W. R., 52 ; Hunooman Persad Pan^- dey v. Mussammut Koonwarree, VI Moore Ind. App., .393, at p. 413; Qopee Choron Burral v. Mussammut Lukhee Ishivaree Dibia, III Macnaghteu Sel. Rep., 93 ; Deen Dyal 140 LAW OF MORTGAGE. LECTURE Lall v. Jagdeep Narain Singh, I. L. R., Ill Cal., 198 ; IV - Assamathem Nissa Bibee v. Roy Luchmiput Singh, I. L. R., IV Cal., F. B., 142 ; Shekh Abdoollah v. Haji Abdullah I. L. R., V Bom., 8 ; Jathanaik v. Venkatapa, I. L. R., V Bom., 14 ; Akoba Dada v. Shakha Ram, I. L. R., IX Bom., 429 ; Sotish Chunder Lahiry v. Nil Komal Lahiry, I. L. R., XI Cal., 45. See also the cases collected in Vithal Doss v. Karson Doss, V Bom. H. C. Rep. (0. C. J.) 76. As to the right of a Hindu widow to represent the estate, see Oopee Mohon Thakoor v. Sebun Koer, East's Notes, No. 64 ; II. Morley's Digest, 105. See also the cases cited inLalchand Ramdayal v. Gumtibai, VIII Bom. H. C. Rep. at p. 156, 0. C. J. I will now proceed to consider the rights of transferrees of the equity of redemption if the property under mort- gage is sold in their absence. It will be convenient to discuss in the first place the privileges of subsequent in- cumbrancers and then those of other transferrees of the rights of the mortgagor. Eights of The rights of the puisne mortgagee were discussed transferee t>y the Calcutta High Court in the case of Gopibun- of equity dhoo Shatra v. Kalipuddo Banerjee (XXIII Suth. W. R, of redemp- 333) j n t ] ia t case ^e debtor having mortgaged his tion, ' . , p property to two persons in succession, the first mort- gagee brought a suit and obtained a decree but only against the mortgagor. The property was afterwards sold under the decree and purchased by the mortgagee himself. The second mortgagee also sued the debtor, and the property was again sold under his decree and Gopibun- purchased by the creditor. The Court held that the pur- dhu Shatra chaser under the first decree was entitled to possession ; but that, as the puisne mortgagee was not a party to the decree under which the purchaser acquired his title, the purchaser under the second decree had a right to pay off the amount due under the first mortgage, and that upon such payment he would be the "holder of the first charge" on the property. You will observe that this case recognises the right of a puisne incumbrancer to pay off the debt on account of which the estate may have been sold, and thus to treat the purchaser as the owner of the estate subject to his claim. As to the question of possession, the Court held that the right to the possession of the property was vested in the debtor and passed to the purchaser under the first execution. I shall try to illustrate the principle laid down by the Court by putting a hypothetical case. RIGHTS OP ABSENT TRANSFERREE. 141 Suppose an estate is worth Rs. 20,000, and that it is raort- LECTUBK gaged first to A for Rs. 15,000 and then to B for Rs. 3,000. IY - The interest which remains in the debtor after the execu- tion of the two mortgages is, therefore, worth only Rs. 2,000. Now, suppose the property is sold by A in exe- cution of a decree against the debtor and in the absence of B. Th purchaser purchases only the lien of the cre- ditor and the right of redemption subsisting in the debtor, which together is by the hypothesis worth Rs. 15,-COO, plus 2,000, = Rs. 17,000. Now B would have a right to pay off the debt due under the first mortgage, and to treat such payment, together with the amount due to him, as a charge on the property, i.e., by paying off to the pur- chaser the fifteen thousand due under the first mortgage, he would acquire a charge on the property for Rs. 15,000, plus 3,000, = Rs. 18,000. But, in order to enforce that charge he would have to bring a suit against the purchaser who, as we have seen, has acquired the right of redemp- tion of the debtor. Now, if the purchaser pays him off, he acquires an absolute title to the property. But in that case he would have to pay altogether Rs. 17,000 minus 15,000, i.e., Rs. 2,000, plus 18,000, = 20,000, which we have assumed to be the value of the property. But suppose the purchaser does not choose to pay off the consolidated charge on the property, the property must be sold, and assuming that it fetches its proper price, the mortgagee gets Rs. 18,000, and the purchaser gets back the two thou- sand rupees which he had paid. If the property is so heavily burdened that the right of redemption is worth nothing, the purchaser would not be safe in paying any- thing for it in excess of the debt due under the first mort- gage. To that extent, however, he would be secure against the claims of subsequent incumbrancers. If the purchaser pays less than the amount of the debt secured by the first mortgage, he may not perhaps be able to insist upon the second mortgagee paying to him anything in excess of the purchase money, although I am not to be understood as saying that the case would not be different if the creditor himself became the purchaser. When a second mortgage is created in favour of any Sale by person, he becomes entitled to pay off the first mortgage or P" 1 ^ to sell the property subject to the prior security ; and this brancer. right is not destroyed by the acquisition by the first mortgagee of the right remaining in the owner after the 142 LAW OF MORTGAGE. LECTURE creation of the second mortgage as his right to call for a sale IV. of the property, subject to the rights of the prior incum- brancer, cannot obviously be defeated by a transaction to which he is no party. A sale by a puisne incuinbrancer, therefore, will pass to the purchaser whatever rights re- main in the owner ; and if the right of possession has not been parted with, the sale will carry with it a right to recover possession of the mortgaged property (Vencata- chella Kandian v. Panjanddien, I. L. R., IV Mad., 213. See however, Rdmu Ndikan v. Subbaraya Mudali, VII Mad. H. C. Rep., 229). If, however, the first mortgagee is in lawful possession by virtue of his agreement with the mortgagor or otherwise, his possession cannot be disturbed by a purchaser under a second mortgage. (Mudhun Mohun Dass v. Gokul Doss, X Moore Ind. App., 563 ; V Suth. W. R., 91 ; Maghunath Prosud v. Jurawar, I. L. K, VIII All., 105.) As between two purchasers, the right of possession is determined by the priority, not of the respective mortgages, but of the respective sales, provided, of course, that the possession continued with the mortgagor when the property was first brought to sale. (Nanack v. Teluck, I. L. R., V Cal, 265 ; Dirgopal v. Bolakee, I. L. R., V Cal, 269.) Rights of It follows from what I have said that the person who buyerof ^ rs ^ b uvs ^ e equity of redemption will be entitled in his the equity character of transferree to redeem all mortgages on the pro- of : redemp- perty (> amo dur Devachand v Mahadev, I, L. R., VI Bom., 11.) I may mention that it is not usual in the mofussil where a puisne mortgagee is a party to take an account of what is due to him on his security. It seems, however, that a different practice is observed on the original side of the High Court, which may well be followed in the moffusil Courts. (Auhindro Bhoosun Chatterji v. Chunnoo Lall Johnny, I. L. R., V Cal, 101.) The principle applicable to subsequent mortgages has been extended to other persons possessing a qualified in- terest in the equity of redemption lessees, for instance, holding under beneficial leases created subsequently to the mortgage. As I have already pointed out, the fact of the existence of a first mortgage is no bar to the creation of a second mortgage or to an alienation of the whole or a part of the interest of the debtor, subject to the first mortgage. RIGHTS OF THE BUYER. 143 If, therefore, the mortgagor carves a tenure out of the rnort- LECTUEB gaged property, the Court cannot in the absence of the IV - tenant sell anything except the rights of the creditor and the outstanding right of the debtor, namely, the right of the former to a charge on the land and of the latter to the reversion. The tenant, therefore, cannot be affected by a sale conducted behind his back, nor can the purchaser disturb his possession. (Kokil Sing v. Dulichand, V Cal. L. Rep., 243.) A similar rule was laid down in the case of Baij Nutli Bay Nath Sing v. Gobordhone Loll (XXIV Suth. W. R, 210), in which f "/ G - , . bordhone the purchaser at a sale by the mortgagee sought to set aside Lull. a lease created by the mortgagor after the mortgage. The lessee was not a party to the suit by the mortgage creditor, and the order directing the sale was made in his absence. It was contended, on behalf of the purchaser under the execution, that the lessee was not a necessary party to the suit, and that as the lease had been executed subsequently to the mortgage, it was not binding upon the purchaser. The Court, however, held otherwise, being of opinion that the sale did not pass the property absolutely to the pur- chaser, and that the rights of the lessee who claimed an interest in the property could not be prejudiced by a sale under a decree made in his absence. It would, however, seem, although the point was not before the Court, that the purchaser, as assignee of the lien of the creditor, would have a right to insist upon the lessee's redeeming him, and, on his failure to do so, to sell the property, the purchaser being entitled to a charge for the price paid by him on the proceeds, to the extent of the lien of the mortgagee who first put up the property to sale ; and this would seem to be the only course open to the purchaser if the mort- gage-security was impaired by the creation of the term. The price paid by the purchaser will, as you have just heard, be a first charge on the property. The tenant would then have a right to be reimbursed out of the proceeds, the purchaser obtaining the surplus, if any, as represent- ing the value of the outstanding right in the mortgagor. Under the law as it stood before the Full Bench ruling in Haran Chunder Ghose's case (XXIII Suth. W. R., 187), the sale by the mortgagee would have avoided the lease, and the right of the .tenant would have been confined to the surplus proceeds of the sale. (Brojo Kislioree Dassee v. Mahomed Salim, X Suth., W. R., 151; I Ben. L. Rep., 144 LAW OF MORTGAGE. LECTCBK A. C., 154. See also Raj Narain Singh v. Sheera Mean, IV- VII Suth. W. R., 67; Beejoy Gobind Bural v. Bheekoo Roy, X Suth. W. R., 291.) Right of I have already said that the effect of not making a redemption p eraon W 1 1O nas an interest in the equity of redemption a absent in- party, would be to let him in to redeem. It seems that terested at one ^ me some reluctance was felt by the Court in carry- ing out this principle to its logical consequences and the case of Moihura flath Paul v. Chunder Money Dabee (I. L. R., IV Gal., 817) is sometimes cited as an autho- rity that it is not always necessary to make the trans- ferree a party defendant in order to bind his interest. But that case was very peculiar in its circumstances, and the purchaser, at the sale by the mortgage, was the holder of a subsequently created putnee who was in actual posses- sion of the property, but it was neverthless sold under the decree to which he was no party, although he had, equally with the donee of the original mortgagor, a right to be repre- sented in the suit. The putneedar in that case was in a man- ner forced to make the purchase for the protection of his own putnee rights. As between him and the donee the Court seems to have thought that there was an equity in his favour overriding the claims of the donee. It must also be noticed that the rights of the donee were expressly re- served, the Court observing that if she could establish her title to the property in any suit properly framed for the purpose, she would be at liberty to do so (g). Account of There appears to be some difference of opinion as to ^ e P l 'i uc 'p' e n which the account of the mortgage- debt should be taken in such cases. In some cases the account has been taken on the basis of what has been found due under the previous decree. (Mohan Manohwar v. Tognuka, I. L. R., X Bom., 224.) In other cases, however, the account has been taken on a somewhat different basis. (Sheikh Abdoollah Saiba v Hajee Abdoollah, I. L. R., V Bom., 8.) I need scarcely point out that the right of redemption must, if the mortgagee insists upon it, be exercised in respect of the mortgage as a whole, as no redemption can be allowed of a part in this any more (g) There are, however, some reported cases in which this right does not seem to have been given effect to. (Jfhevraj Jusrup v. Lingaya, I. L. R., V Bom., 2 ; Sheshgiri v. Salvador, I. L. R., V Bom., 5. But see Sheikh Abdoollah v. Haji Abdoolah, I. L. R., V Bom., 8 ; Jatha Naik v. Venltatapa, I. L. R., V Bom., 14 ; Mohan Manohwar v. Tognnka, I. L. R., X Bom., 224, and the cases cited therein.) MONEY DECREE. 145 than in other cases, although the effect of this might be LECTURE to keep alive the right of redemption even of those who were parties to the decree, and, therefore, in one sense bound by it. You have heard that it is not the practice in the mofus- practice in sil Courts for the mortgagee, who sues for and obtains a n of " ssl1 sale of the mortgaged premises, to make a formal convey- ance to the purchaser, and yet the property itself, as it stood when the mortgage was made, passes to the pur- chaser, whatever may be the language of the certificate of sale. The mortgagee who puts the Court in motion, and at whose instance the property is sold, is estopped from denying the title of the purchaser, although he does not execute a formal conveyance to the purchaser. (Ravji v. Krishaji, XI Bom. H. C. Rep., 139, 142; Kasan Dass v. Pranjivan, VII Bom. H. C. Rep., 146, A. C. J. ; Shringarpure v. Pethe, I. L. R., II Bom., 662 ; Khevraj v. Lingayar, I. L. R., V Bom., 2 ; Sheshgiri Shamvaj v. Salvadorvas, I. L. R., V Cal., 5; Sheikh Abdoollah v. Hajee Abdoollah, I. L. R., V Bom., 8). It is immaterial whether the mortgagee is himself the purchaser, as the fact cannot affect the estate which passes by the sale. (Damodor Dev Chand v. Naro Mohoder, I. L. R., VI Bom., 11 ; Mohan Manor v. Tognaka, I. L. R., X Bom., 224.) Although an equity of redemption is saleable in exe- Mortgagee cution under the Code of Civil Procedure, a mortgagee ecUo'sefi" is not entitled to sell the bare equity of redemption equity of under a mere money-decree (A). We have seen that in u^,^ 1011 the mofussil whenever a mortgagee sells the property money- pledged to him, whether the decree is a mere money- decree - decree or a decree for sale of the mortgaged property, the mortgagee is estopped from denying that the lien is trans- ferred to the purchaser. The evils, therefore, so forcibly pointed out by Mr. Justice Macpherson, as attending a sale of the bare equity of redemption, cannot arise in the mofus- sil. (Kamini Devi v. Mam Lochon Sircar, V Ben. L. Rep., 450 ; see also Raja Ajudha Ram Khan v. Shama Choron Bose, 6th July 1852 ; Supreme Court, Bourke's Rep., 161, note.) The only disadvantage under which the mortgagor labours is that he does not get the benefit of a period for redemption. According to the practice on the original (7t) See Sec. 69 of the Transfer of Property Act. R, B. G., M. 10 146 LA.W OF MORTGAGE. Right of a sale- purchaser. LECTURE side of the High Court, the lien of the mortgagee does not IV - pass to the purchaser upon a sale under a mere money- decree, and the execution of such a decree is, therefore, limited to property not comprised in the mortgage. ( Belchamber's Practice, pp. 336-337. But see Bhugo- butty v. Shama, I. L. K, 1 Cal., 337. ) But the mofussil practice is different; and, it seems to me, therefore, that the observations of some of the learned Judges as to the effect of a mortgagee buying the property mortgaged to him in the mofussil are based on the erroneous supposition that unless the mortgagee joins in the sale so as to pass his interest, a sale by the Court would only transfer the equity of redemption. The next question which presents itself is in respect of ^ ne terms on which a transferee would be entitled to redeem a purchaser at a sale by the mortgagee under a decree made J Q ^ e absence o f } ie transferee. In the case of Kassim- munnessa Bibi v. Nil Rotton Bose, the Court said in determining the terms on which the putneedar should be allowed to redeem : Now, " the price paid by the plaintiff f r t ne l an d i n dispute when he purchased on the 30th of November 1867, may have been either more or less than that aggregate amount. If it was more, we think that the defendant is entitled to redeem on paying the aggregate amount (with interest as hereinafter mentioned) and no more ; because it was not her fault that she was not made a party to the mortgage suit and she has not received the excess. If, on the other hand, it was less, we think the defendant is entitled to redeem on paying the amount paid by the plaintiff as purchase-money on the 30th November 1867 (with interest as hereafter mentioned). The defend- ant having the alternative of pitying either of the amounts referred to, must also pay interest at the rate of 6 per cent. per annum for three years preceding the date of the decree of the Lower Court upon the capital sum so to be paid un- til the date of payment. The defendant will be allowed six months within which she must pay these sums, and the decree will be, that unless she pays the smaller of the capital sums before indicated, together with interest thereon as before mentioned, within the said six months, she will be foreclosed, and the plaintiff will be entitled to a decree for khas possession. If, on the other hand, she makes the payment directed within the six months, then, the plaintiff, upon such payment, must convey to the defendant all the Jtotton Bose ' EIGHTS OF TRANSFEREE. 147 interests of the plaintiff in the property/' (Kasaimunnessa LECTUEE v. NU Rotton Bose, I. L. R, VIII Gale., 83). But ordinarily IV - an account ought to be directed which must be taken in the presence of all persons interested in the equity of re- demption. In the case of Okhil Singh v. Dooli Ckand, (V Calc. L. Rep., 243), the Court said : " The plaintiffs have, by their purchase, acquired a first charge for the first mort- gagee's lien on the laud ; but the mortgaged property con- sisted of many separately defined portions, though there was no distribution of the debt, and these have been sep- arately sold. How far each purchaser can charge the par- ticular portion of the property in which he has acquired an interest can only be determined by distributing the debt; but for this purpose the proper parties are not before the Court." If it were otherwise there might be such a result as this : five properties are mortgaged in the lump for rupees 5,000, and, subsequently, mukurrari grants are made to five different persons. The mortgagee sues the mortgagor alone, gets a decree and order for sale, andj the properties are lotted separately ; Nos. 1 to 3 sell for Rs 2,000 each, and the sale stops : the mukurroridars of Nos. 4 and 5 would be free of any charge, though they deliberately took sub- ject to an undefined charge. Mukurroris 1 and 2 would be subject to a charge of Rs. 2,000, and 3 to one of only Rs. 1,000, taking them to be sold in this order. Thus, it appears that until all parties concerned are brought into Court, nothing can be done (Okhil Sing v. Duli Ohand, V Calc. L. Rep., 243). In the case of Neela Canto Banerjee v. Shooresh Chunder NeeiaCanto Mullick, (I. L. R, XII Cal., 414), the High Court having i?f v> allowed the defendant, who had purchased only a portion Chunder of the mortgaged property, to redeem the plaintiff, who was Mulllck " also the mortgagee, on payment only of the price paid by him at the execution sale without directing any accounts at all ; the Privy Council observed that it was quite a new thing to allow the purchaser of a single fragment of the equity of redemption without bringing the other purchasers before the court to have an account as between himself and the mortgagee alone, so that the mortgagee might be paid off piecemeal. Such a law, their Lordships observed, would result in great injustice to the mortgagee. It would put him to a separate suit against each purchaser of a frag- ment of the equity of redemption though purchasing without his consent; and he would have separate suits 148 LAW OF MORTGAGE. LECTURE against each of them, and suits in whu-h no one of the IV - parties would be bound by anything which took place in a suit against another. Different proportions of value might be struck in the different suits, and the utmost confusion and embarrassment would be created. But so far from contemplating accounts between all the parties concerned, the High Court did not direct any account at all ; not even the ordinary account on which a redemp- tion decree must be founded. They went at once to say, of their own discretion, what should be the price paid for this mortgaged property. (Neela Canto Banerjee v. Sooresh Chunder Mullick, I. L. K., XII Calc., 423) (i). Mortgagee In describing the interest which is transferred to a *ro 8 ert e purchaser under a sale by a mortgagee, I said that he obtains discharged what the mortgagee and the parties interested in the equity of his own Q f redemption who are on the record could jointly convey ; but it is pointed out in a recent case (Ram A'ath Dass v. Baloram Phookun, I. L. B,., VII Cal., 677), that it would be more correct to say that the mortgagee sells the property of the mortgagor discharged of his own lien. The Court after stating that the Full Bench Ruling in Syed Momtazood- deen's case (XXIII Suth. W. R, 186 )had laid down, first, that a mortgagee who obtains a decree for sale of the mortgaged property cannot sell that property, reserving his own rights over it, because such a proceeding would be inconsistent with the avowed object of the sale, and, secondly, that if the mort- gagee obtains only a simple money-decree, he is precisely in selling the property in the same position so far as his own interest is concerned as if he had obtained a decree for sale, goes on to say " but how can this ruling of the Full Bench assist the appellants' argument in this case ? It seems to us to be quite beside it. Indeed, the reason of the Full Bench seems rather opposed to the appellants' contention. Ramnathv. When the mortgagee puts up for sale the mortgagor's am - property and sells it, his lien passes with the property, because, having regard to the nature and object of the sale, the lien is inseparable from the property. But when the mortgagee professedly puts up the mort- gagor's property for sale, but, in fact, sells nothing, because (i) I ought to mention in passing that the above case is also an authori- ty for the proposition that a purchaser of the equity of redemption who alleges a paramount title and disclaims the right to redeem when the mortgagee seeks to enforce his lien and thus causes the dismissal of the suit, cannot afterwards set up a claim to redeem. RIGHTS OF TRANSFEREE. 149 mortgagor has no property to sell, why should the LECTURE mortgagor's lien pass to the purchaser ? The reason why IV ^ it passes in the other case is entirely absent in this; and I know of no provision of the law which enables ajudgment- creditor, under colour of selling his judgment-debtor's pro- perty, to sell his own. Besides which, it appears to me, that if the appellants' contention were correct, it would defeat the very object of the Full Bench, which was to prevent the mortgagee from selling the mortgaged property, reserving to himself his own lien. Suppose a case of this kind. A mortgages a property to B, and then sells his own interest to C, B sues A for the mortgage-debt, obtains a money-decree, and puts up A's right, title, and interest in the property for sale. At the same time, B also sues C, praying that the mortgaged property in C's hands may be sold to satisfy the mortgage-debt ; and he obtains a decree to that effect. The sale under the decree against A takes place first, and D becomes the purchaser. The property is then sold under the decree against C, and E becomes the purchaser. Under which sale does the mortgagee's lien pass ? If the contention of the appellants' pleader is correct, it passes by the first sale, and yet the consequence of this would be that E, under the second sale, would have bought the mortgagor's property, subject to the mortgagee's lien, which would then be vested in D. In other words, the mortgagee would thus have been enabled to do that which the Full Bench considered to be contraiy to justice, namely, to sell the mortgagor's interest for paj^ment of his mortgage-debt without giving the purchaser the benefit of his own lien." (Ramnath Dassv.BoloramPhookun,!. L. R., VII Cal., 681682.) It is somewhat remarkable that this very case is put in a hypothetical form by one of the learned Judges of the Allahabad High Court to show that the lien of the mortgagee does not pass to the purchaser under a money- Khubchand decree. In the case of Rhubchand v. Kallian Dass (I. L. v - Kaiha. R., I All., 240.) Mr. Justice Turner says : " the Calcutta High Court allowed that the fact that property is mort- gaged to one is no bar to the mortgage or sale of the equity or right of redemption to another. Let it be assumed that the mortgagor sells his interest absolutely, then, if the mortgagee sues on the personal undertaking only,he must sue 150 LAW OF MORTGAGE. LECTURE the original mortgagor, he cannot im plead the purchaser, IV - and if he obtains a decree, he can enforce it only against the property of the mortgagor who, ex hypothesi, has no interest left in the mortgaged property, and if, instead of selling the mortgaged property, he sells the property of the mortgagor, no interest in the collateral security can pass by such a sale to the purchaser (Khubchand v. Kallian Dass, I. L.R., IV All., 217.) Nature of You will observe that the security acquired by a mort- a simple gagee under a simple mortgage is the right to sell the e ' entire estate of the mortgagor as it existed at the date of the mortgage, free of any charges on the property subse- quently created by the mortgagor. The recent authorities have made no alteration in respect of the nature of the security to which the mortgagee becomes entitled under this form of mortgage, the rule laid down by the Court being a mere rule of procedure. The mortgagee has still the right to sell the entire estate of the mortgagor as it existed at the date of the mortgage, but he must take care to bring all puisne claimants before the Court. Under a decree for sale obtained in their absence, the mortgagee can only transfer to the purchaser the benefit of his own lien and such interest as may be possessed by the mortgagor at the time of the institution of the suit. Purchase A mortgagee may, with the permission of the Court, buy b a Te rt " ^ ie mor % a g e( i property in execution of his own decree ; but it has been thrown out in a recent case that where the mortgagee himself is the purchaser, he must prove that he paid a fair price for the property. In the case of Hart v. Tara Prosonno Mookerjee (I. L. R, XI Cal., 718) the Court said : " But it is clear that when a mortgagee has sold any portion of the mortgaged property under his decree, and has purchased it himself, he is bound, before he can pro- ceed further against the mortgagor, to prove that there is still a balance due to him, and that the property sold realized a fair amount, and this ought to be inquired into most care- fully ^ by the Court to which the application to share rate- ably is made. _ The mere fact that the property was pur- chased at auction is not alone sufficient to prove its value, where the mortgagee himself is the purchaser. It would manifestly be inequitable to allow a mortgagee to buy in the mortgaged property at auction for a surn far below its real value, and then to go on against other property of the mortgagor to the injury of other creditors." Similar PURCHASE BY MORTGAGE. 151 observations have been made in other cases ; but I am not LECTURE aware of any distinct authority for the position that a mort- gagee buying with the leave of the Court is in a different position from an unsecured creditor, while there are cases directly the other way (j). In the case of Mohon Manor v. Togoo Wooka (I. L. R., X Bom., 224,) the Court held Bombay that when a mortgagee brings to sale the mortgaged pro- case - perty, he sells the estate, as it stood at the date of his mort- gage, free from all subsequent incumbrances, and the fact that the plaintiff is himself the purchaser cannot affect the estate which passes by the sale (see also Damodor Dev Chnnd v. Mohadev Kelkar, I. L. R., VI Bom., 11). It is perhaps idle to expect that the authorities allowing Criticism. a puisne mortgagee to redeem in the absence of fraud, not- withstanding the opinion of the Allahabad High Court to the contrary, will bo reconsidered (k). I may, however, be permitted to observe that it is somewhat doubtful whether the Courts have not gone too far in their anxiety to protect the interests of puisne incumbrancers. It is true that no person ought to be affected by an order made in his ab- sence. But how is the puisne incumbrancer affected by the conversion of the estate into money ? He may have a right to the surplus proceeds, and if that is secured to him, it is difficult to discover how he can be possibly prejudiced by a decree for sale, (see Section 295, Proviso (c), clause (3) of the Civil Procedure Code.) In every system of law in which the pledgee possesses a right of sale, what he sells is the property pledged to him, and not merely an undefined interest in the pledge, and no claimants upon the property posterior to the first pledgee can interfere with this right. (See the observations of Markby, J., in Ha/ran Chunder Otiose v. Denobundhoo Bose, XXIII Suth. W. R., 193.) I do not deny that very different considerations would arise if the mortgagee asked not for a decree for sale, but one for foreclosure. A decree for foreclosure stands upon a very different footing from a decree for sale, and there is no real analogy between the two. Court (j) As to the effect of a decree-holder buying without the leave of the v,ourt,see Rooltni Bullov Uoy v. Brojo Nath Sircar, I. L. R., V Cal. 308 ; Javherbai v. Horibai, I. L. R., V Born., 575 ; Mahomed Gazcc Chomdhry v. Ram Loll Sen, I. L. R., X Cal., 757 ; MotJioora Dass v. Nathooni Lall Mahata, I. L. R., XI Cal., 731. (It) For the present state of the law, see sec. 85 of the Transfer of Property Act. 152 LAW OF MORTGAGE. LECTUBE There is, besides, another aspect of the question which also IV< deserves consideration. It is very seldom, indeed, that an LawoT estate sold under an execution realizes an adequate price ; execution, and the encouragement offered to speculative purchasers is one of the principal sources in this country of a good deal of litigation never very healthy, and frequently dishonest. It is not difficult to foresee that the result of the recent authorities will be to aggravate the evil, and that both mortgagor and mortgagee will suffer by the sale of rights which must remain to a great extent uncertain and un- defined. The mischief is guarded against in other systems of law by provisions which, while they secure to the cre- ditor his just rights, prevent a needless sacrifice of the pro- perty of the debtor. Indeed, in this respect the interest of the creditor ought to be identical with that of his debtor, as the object of both must be to secure the best possible price for the property. Under the law as it was formerly understood this could always be effected by a sale by the first pledgee, who it was thought could pass the property free of all subsequent incumbrances. In the case of a puisne incumbrancer the result was, no doubt, different, as a sale by him was subject to all prior mortgages. But I am by no means sure that even in this case it might not be more convenient to allow the creditor to sell the estate, the preferential right of the prior mortgagee to the pur- chase money being secured to him. I am afraid that the suggestion may be regarded as too sweeping, if not al- together wild and impracticable; and I am free to confess that it is one which I should not have ventured to make if I had not found similar provisions in the law of France Practice of and other countries, whose jurisprudence is moulded on *^ e R man ^ aw - Roughly speaking (for I do not pre- tend to give a detailed account) a sale under an exe- cution extinguishes all hypothecary rights or debts affect- ing the property, the right of the creditor being trans- ferred to the purchase-money. For this purpose the pro- ceeds of the sale are deposited in the Court, and the creditors of the mortgagor are cited to appear and assert their claims. A proceeding is then adopted by which the respective priorities of the creditors are ascertained, and the proceeds divided according to the result of the investi- gation. This proceeding is called the prwferentia and con- currence of creditors. Its object is to comprise the adju- dication and assertion of those claims which are prior LAW OF EXECUTION. 153 or preferred, as well as those which are concurrent. Each LECTUBB claim to be preferred or ranked concurrently is regularly brought to issue and debated ; and the Court, by its sen- tence, declares the order in which the parties are to rank on the proceeds. (Code de Proced. Civile, tit. 14; see also Barge's Foreign and Colonial Law, Vol. II, pp. 592-93 ; Vol. Ill, pp. 229-30.) This is a very simple and intelli- gible rule. It secures to the debtor a fair price for his property, and thus, as I have already explained, effectually protects the interests of the creditor. Trafficking in doubtful claims one of the least interesting phases of litigation in this country finds no encouragement in such a system, while the rights of the creditors are protected with a jealousy not less scrupulous than that which we find in systems with which we are more familiar (I), I have ventured to detain you with this slight sketch of the Continental system of execution, not because I think there is much likelihood of the introduction of the principle into our own law (m) ; but because I think the student ought to have some acquaintance with the leading features of a system of jurisprudence which obtains in a large part of the civilizecl world. A too exclusive attention to any one system is likely to induce a habit of mind, which I am afraid is to be found in other persons besides the learned conveyancer, mentioned by Mr. Justice Stephen, who thought that an attempt by the legislature to preserve contingent remainders without the intervention of trustees, was as absurd as an attempt to alter the laws of nature. The worthy conveyancer was only a type of a great many lawyers, whose number is perhaps larger than is generally supposed, and who believe not only in the necessity but also in the sacredness of every techni- cal rule, however unreasonable, which they find in the (Z) The Hoii'ble Mr. Evans in his speech on the motion to pass the Transfer of Property Act, said : " There being no machinery for bring- ing together into one suit the various iucumbrances on the property, endless confusion had been the result, and the decisions of the Courts upon the almost insoluble problems arising from this state of things, had been numerous and contradictory. The result was that the mortgaged property could not fetch anything like its value. The debtor was ruined, the honest and respectable money-lender discouraged, and a vast amount of gambling and speculative litigation fostered." (wt) An attempt, although slight and imperfect, has been made in this direction by the Legislature in section 295 of the Code of Civil Proce- dure and sections 57 and 96 of the Transfer of Property Act. I, how- ever doubt very much whether these provisions will be availed of largely in this country. 154 LAW OF MORTGAGE. LECTUliE IV. Rightpass- ing under sale. Relations of second to subse- quent mort- gagees. Whnt in- terest parses under sale. system in which they have been brought up, while any proposed improvement is sure to be denounced very much after the fashion long since held up to ridicule by the wittiest writer the English Church has given to the present century. To return: as the law at present stands, the right which passes under a sale by the mortgagee is the entire interest which the mortgagor and mortgagee could jointly sell. Where the subsequent transferees, if any, are parties, and the order for sale is made in their presence, the pur- chaser acquires a higher right which may be described as the entire interest which the mortgagee together with the mortgagor and his transferrees could jointly convey. In the case, however, of a second mortgagee, the sale would be suh- ject to the prior charges, (Doolal Chunder v. Goluck Monee, XXII Suth. W. R., 360) ; but if the first mortgagee is a party, as he ought to be, there is no reason why the property should not he sold free of all incumbrances, the first mort- gagee having a paramount claim on the proceeds of the sale. I must, however, admit that, in practice, this is seldom if ever done. I may mention that in England, in a suit for sale, if the prior mortgagee is a party, he must be re- deemed. (Spenee's Equity, Vol. II, p. 671). It is scarcely necessary to point out that the second mortgagee stands in the same relation to posterior mort- gagees that the first mortgagee does to him, and that he is, therefore, under the same obligation towards them as the first mortgagee is towards him. Thus, a purchaser under a sale by the second mortgagee, although he must, in any event, purchase, subject to the rights of the first mortgagee, acquires a very different estate accordingly as the posterior mortgagees are parties to the decree or not. If the order for sale is made in their presence, the pur- chaser acquires the estate absolutely as against them, but if it be otherwise, the purchase is made subject to their right to redeem. I said that a sale by the mortgagee under a decree against the mortgagor conveys to the purchaser the entire interest which he and the mortgagor could jointly sell. It is necessary to point out that this refers to the interest which they could jointly pass, not at the time when the property is sold, but at the time of the institution of the suit in which the decree under which the property is sold, was made. This is a necessary consequence of the doctrine RESTRAINT UPON ALIENATION. 155 of Us pendens, which I shall have occasion to discuss here- LECTURE after. I may also point out that the language of section 259 ^ of Act VIII of 1859, was perhaps, in strictness, inappli- cable to a sale by a mortgagee which takes place under a decree for sale, and not under an ordinary execution. The right, title, and interest of the judgment-debtor, of which the section spoke, were, however, understood in a somewhat wider sense than the right possessed by the debtor at the time of the sale. As I shall have occasion to explain presently, the provisions of Act VIII of 1859, like those of the present Code with regard to executions, were far from being clear as regards the rights of mortgagees. In connection with this subject I may mention that a Effect of question may arise, but which, so far as I am awai-e, has c *** at not been decided, as to the precise effect of a clause alienation against alienation contained in a deed of mortgage. Such in mo ^ t - clauses are frequently found in Indian mortgages. I have ga already explained that ordinarily a clause against aliena- tion does not prevent the alienee from acquiring a title to the property. The covenant does not affect the thing itself, although in some cases the covenantor may render himself liable to an action for a breach of his contract. It would, however, seem that in the civil law a clause against alienation by the mortgagor is allowed to bind the property itself, and a subsequent alienation is therefore void. In consequence of this doctrine, the mortgagee is not bound to recognise any alienee of the property mortgaged to him, if there be a clause against alienation in the mortgage. (Burge's Foreign and Colonial Law, Vol. Ill, p. 197.) It seems that in some of the earlier cases to be found in the books, the doctrine was carried by the Indian Courts further than equity or good conscience would seem to justify ; but it may be a question whether, in the presence of such a stipulation, a decree obtained by the mortgagee, and a sale thereunder, although made in the absence of persons who had acquired an interest in the property subsequently to the mortgage, would not pass an absolute title to the purchaser. (Gunga Gobindo Mondul v. Benemadhob Ghose, XI Suth. W. R., 548, cf. 549 ; III Ben. L. Rep., 172 ; Bhanumutty Chowdhrani v. Premchand Neogy, XXIII Suth. W. R., 96; XV Ben. L. Rep., 28.) In the absence of any distinct authority, I do not ven- ture to offer any opinion one way or the other. I simply call attention to the point as one which must not be taken 156 LAW OF MORTGAGE. LECTURE to be decided by the authorities as it does not seem to have IV. been distinctly raised in any case. In Khubchund v. KhMund Kallian Das (I. L. R., I All, 240) Mr. Justice_ Turner said : v. Kaiiian " It remains to be considered whether an auction-purchaser Das ' in execution of a money-decree can avail himself of a condition in the mortgage deed prohibiting alienation. I was a party to the decision of this Court in the case of Rajaram v. Benimadhab (N.-W. P. H. C. Rep., 1872, p. 81), in which it was held that the existence of such a condition enabled the auction-purchaser to resist the claim of a second incumbrancer. On fuller consideration I am not prepared to support that ruling. The condition is attached to the charge, and not to the personal obligation of the mortgagor; and if the first mortgagee, who can only enforce the charge by suit, elects to abstain from pursuing that reined} 7 ", and sues on the personal obligation only, I am of opinion that the auction-purchaser cannot plead the con- dition attached to the lien any more than he can plead the lien. I would reply that Khubchand having purchas- ed under a mere money-decree, the interest at the time of sale remaining in the judgment-debtor, stands in the place of the judgment-debtor in respect of the interest he ac- quired by the purchase, and that he cannot resist the claim of the plaintiff to obtain possession of the property." (Khubchand v. Kalian Das, I. L. R., I AIL, 248). Venkaua v. Again, in the case of Venkatta v. Kannum (I. L. R., V '' Hum> Mad., 184) the same learned Judge observes : " Where, by a condition of the mortgage-contract, he (i.e. the mort- gagor) engages to abstain from alienating the interest re- maining in him, there is again a conflict of opinion as to the effect of the condition in respect of mortgages of im- moveable property. In Radha Prasad Jusput v. Monohar Las (I. L. R., "VI Cal., 319) it is stated by the learned Chief Justice that such a covenant, i.e., an agreement restric- tive of alienation, creates only a personal liability as between the mortgagor and mortgagee. On the other hand, it was held in Chuni v. Thakur Dass (I. L. R., I All., 126) that such a condition is operative to the extent and for the purpose contemplated by the parties, and that a transfer of the interests of the mortgagor is voidable,' in so far as it is in defeasance of the rights of the mortgagee, and the decision accords with what is declared to be the general rule by Mr. Justice Macpherson. This decision may be reconciled if it be held that the condition RESTRAINT UPON ALIENATION. 157 binds a purchaser for value only when he lias notice of it, LECTURE and that in the one case the purchaser had, and in the other IV - he had not, such notice. " However this may be, and the point does not call for decision in the case before the Court, it is clear that even where such a condition has been imported into a mortgage, it does not absolutely debar the mortgagor from dealing with the interest remaining in him. Where the mortgagor has transferred, in whole or in part, such interest, the transferree acquires against the mortgagee similar rights to those possessed by the mortgagor, so far as they are necessary for the enjoyment and preservation of the inter- est transferred to him. If the mortgagee desires to fore- close the mortgagor or to bring the property to sale, a pur- chaser from the mortgagor or a second mortgagee is entitled to redeem the first mortgage and thus to protect his own interest in the property mortgaged. Hence it has been held that to render a decree for foreclosure on sale effectual, the mortgagee must make subsequent purchasers or incum- brancers parties to the suit, at least if he have notice of them or circumstances exist which should have put him on inquiry as to the claim by them of an interest in the mortgaged property (I. L. R., V Mad., 186, 187.) It is necessary to observe that at one time the Courts Breach of used to give full effect to a condition against alienation aglinsT' (see the cases cited by the Reporter in the note to Chunni alienation v. Thakoor Dass, I. L. R., I All, 126); but it is now settled iSJ- that a transfer b} r the mortgagor in breach of a condition tent, against alienation is valid, except in so far as it encroaches upon the right of the mortgagee to realise his security. But with this reservation, such a condition does not affect the property so as to prevent the acquisition of a valid title by the transferee of the equity of redemption. Cove- nants against alienation are often introduced in mortgage- deeds in this country, and I may add, are as often infringed by mortgagors. But such a covenant, although it may create a personal liability between the mortgagor and the mortgagee, does not render an alienation absolutely void, but voidable only in so far as it is in derogation of the rights of the mortgagee. In reality, therefore, a mort- gagee does not. by virtue of such a covenant, acquire any higher rights than he would acquire even if the condition was absent, except, perhaps, as regards the necessity of making puisne claimants parties. (Radha Prosad Misser v. 158 LAW OF MORTGAGE. LECTUBE Monohur Doss, I. L. R, VI Gal, 317; Chunni v. Tliakoor IV - Doss, I. L. R., I All., 126 ; All Hasan v. Dhirja, I. L. R., IV All., 518.) But although the purchaser acquires the property in the state in which it was mortgaged, it does not follow that a lease, for agricultural purposes for in- stance, made by the mortgagor in the usual course of man- agement, can be avoided by the mortgagee or a purchaser claiming under him. (Chunni v. Thakoor Dass, I. L. R., I All., 126.) In Banee Pershad v. Rith Bhunjan Singh, (X Suth. W. R., 325) in dealing with the contention that the plaintiff, as a purchaser under a mortgage-decree, took the property free from all alienations or incumbrances created subsequently to the mortgage, the Court said : " We appre- hend that this proposition is not maintainable in the full sense of the words in which it is framed, if the term incuin- brance is meant to include such temporary arrangements by lease or farm as the owner might find to be expedient or con- venient. The mortgagor was restrained from alienating the property which he had pledged; but he was not divested of, or restricted in, the management of the property, and as long as nothing took place which impaired the value or imped- ed the operation of the mortgagee's lien, we think that the mortgagor in creating a temporary lease acted within his powers, and that the purchaser has no legitimate cause of complaint." Eomanlaw In the civil law, however, as I said, a covenant by the oint. 6 mortgagor, that he will not transfer the property pledged by him was valid. " A stipulation by the mortgagor that he will not alienate, will prevent the alienee from acquir- ing a title to it. Generally, a contract not to alienate a particular thing affects not the thing itself, but merely the person contracting, so as to subject him to an action for a breach of his contract. The stipulation added to the contract can have no greater efficacy than the contract or principal to which it was accessory. It is not so with the contract against alienation by the mortgagor, for the mort- gage gives a right in the property, and this contract, follow- ing the nature of its principal, affects the property, and therefore, renders the alienation of it void." (Burge's Foreign and Colonial Law, Vol. Ill, p. 197.) Lispen- I have already pointed out that the right to possession dens. vested in the mortgagor or in a transferee of the equity of redemption passes under the first sale, and that, quite independently of the question whether the decree under SALES BY MORTGAGEES. 159 which the property was sold was obtained by a puisne LECTUKE mortgagee, or even by an ordinary unsecured creditor IV - (Ajoodh-i/a Pershad v. Musamat Maracha Kooer, XXV Suth. W. R., 224). This rule, however, as you have just heard, is subject to one very important qualification based upon the doctrine of Us pendeus. If the property is sold after an action has been commenced by the mortgagee to enforce his security, and, d fortiori, if the sale takes place after a decree has been obtained for the sale of the mortgaged premises, the purchaser will acquire no rights whatever as against the mortgagee or a person claiming by virtue of a sale at the instance of the mortgagee. It must, however, be borne in mind that the doctrine of Us pendens has no application to a case in which the proceedings are taken only for the purpose of enforcing the personal liability of the mortgagor, or, in other words, where the mortgagee seeks to obtain only a money-decree. (Bir Ckunder Manikya v. Mohomed Afsarooddin, I. L. R., X Cal., 299 the head-note of which is inaccurate, the mortgagee not having obtained a mortgage-decree as stated by the reporter, but only a decree for money.) The provisions of the Civil Procedure Code relating to Provisions sales by mortgagees are, however, very defective; and it may, therefore, be sometimes necessary for the mortgagee not- Code. withstanding that he has obtained a decree for sale to bring an action against a purchaser of the mortgaged property, who may have bought the equity of redemption after the institution of his suit by the mortgagee. (See the observations of Oldfield, J., in Jagat Narain v. Jagrup, I. L. R., V AIL, 452 ; Pahar Singh v. Jai Chand, N.-W. P., S. D. A. Rep. 1864, Vol. I, 543; Mangloo v. Roghoo Nath Dass, N.-\V. P., S. D. A. Rep., 1866, 72 ; Gaja'dhar Pershad v. Daibee Pershad, Agra H. C. Rep., 1869, 29). It seems, however, that where the first sale takes place at the instance of a puisne incumbrancer who is ^, a 'j?J not a party to the decree obtained by a prior mortgagee, the latter will be bound to bring a fresh suit against the purchaser to enforce his mortgage, as neither the puisne incumbrancer nor the purchaser to whom his lien has been transferred will be bound by the decree. (Jagat- narain v. Jagrup, I. L. R., V All., 452.) In the case of Janki Dass v. Budri Nath (I. L. R., II Jnnki All., 698), it was held that if there are two simultaneous sales in execution of two different mortgage-decrees, the 1(30 LAW OF MORTGAGE. LECTURE auction-purchaser under the decree upon the older lien will IV - acquire the property in preference to the other purchaser. Ri"M~of But whether a prior mortgagee is or is not bound to prior mort- bring a regular suit for the re-sale of the property, there gagee to j g no thing to prevent him from doing so. In the case safe of pro- of Jagat Narain v. Dhundky (I. L. R., V All., 566), perty. w here the property having been sold by a second mort- gagee it was argued that the first mortgagee not having enforced satisfaction of his decree in accordance with the provisions of sections 285, and 295, of the Civil Procedure Code by the machinery of the execution department, could not bring a fresh action to obtain a re-sale of the property, the Court said : " The first para- graph of section 295, and clauses (a) and (6) have refe- Jagat^ rence only to sales in execution of simple money-decrees, p'httndhy' an d to the mode in which sale-proceeds are to be rate- ably distributed among simple money-decree-holders. The provisions contained in clauses (a) and (6) declare the incompetence of a mortgagee or incumbrancer, as such, to share in any surplus proceeds, arising when property is sold to his mortgage or charge. But the alternative is afforded him of consenting to the property being sold free of his mortgage and charge, in which case the Court may give him the same right against the sale-proceeds as he had against the property sold. In the case before us, the decree, in execution of which the one-anna share of Mouza Sheosara was sold, was not a simple money-decree, and, therefore, in our opinion, those portions of section 295 to which we have adverted are inapplicable. It re- mains to be seen whether clause (c) supports the conten- tion of the appellants. That no doubt has reference to a sale in execution enforcing a charge ; but it will be noticed at once that, in distributing the sale-proceeds, the discharge of subsequent and not prior incumbrances is alone taken into account." Mortgagee I will now deal with certain questions which, although to* proceed properly belonging to the domain of procedure, also fall against within the province of this lecture. We saw that a mort- p e ge ' gagee, by obtaining a personal decree against the mortgagor, does not forfeit his lien upon the land. He must, however, enforce his decree by execution and is not competent to maintain a second suit against his mortgagor for the purpose of obtaining a decree for sale. (Syed Imam Momtazuddin Mohamed v. Raj Coomar Dass, XXIII Suth. W R, 186.) RIGHTS OF MORTGAGEE. 161 But, ns pointed out in Junmajoy Mullick v. Das Moni Das, LECTURE a plaintiff who obtains a money-decree against his mortgagor, IV - is not precluded from enforcing his lien by means of a second suit against the mortgaged property in the hands of a pur- chaser to whom the property may have been afterwards sold. (Junmajoy Mullick v. Das Moni Dasi, I. L. R, VII Cal., 714; IX CaL, 33). "These two Full Bench cases, therefore, establish that there is a difference in the procedure applicable between the case where the pro- perty is still in the hands of the mortgagor, and the case where it has passed to a purchaser, the lien being enforci- ble in the one case by execution, in the other by suit." (Rally Nath Bondopadhya v. Kunja Behary Shaha, per Wilson, J. (I. L. R., IX Cal., 655.) But suppose the mort- gagee obtains a personal decree and allows it to be barred by limitation, can he bring a fresh suit against an alienee of the mortgagor who has purchased the property subse- quently to the decree ? This very point arose in the case of Kali Nath Bondopadhya v. Kunja Behary Shaha (I. L. R., IX Cal., 651), and was answered in the negative, on the ground that it would be contrary to ordinary prin- ciples to hold that the mortgagee acquires a greater right by reason of the mortgagor's alienation, or, that the purchaser takes subject to a greater burden than the debtor himself. If the mortgagee allows his decree against the debtor to be barred by limitation, he loses all right to proceed by execution against the property in the hands of the debtor, and has no better right to proceed by suit against the pro- perty in the hands of the purchaser. (I. L. R., IX Cal., 651.) I do not, however, think that the learned Judges meant to lay down any general rule, or, to deny to the mort- gagee the right to abandon proceedings under his money- decree, and to proceed upon his lien against a transferee of the equity of redemption, provided, of course, his right to bring such an action is not barred by the Statute of Limi- tations. Although cases in which the transfer is made after the right to execute the money-decree is barred may, per- haps, be governed by a different rule. (Chunnilal v. Ba- naspat, I. L. R., IX AIL, 23.) Another question also relat- ing to procedure has given rise to a conflict of opinion, it being somewhat doubtful whether a mortgagee who omits to prefer the portion of his claim which would charge the mortgaged property or who, having preferred it, accepts a mere money-decree, is entitled to bring a subsequent suit R. B. G. ; M. 11 162 LAW OF MORTGAGE. LECTURE against a transferee for the purpose of enforcing his security IV - on the land. Under Act VII E of 1859, such suits were fre- quently brought; but a doubt has been raised by the language of section 43 of the present Code of Civil Procedure which corresponds to section 43 of Act X of 1877, as amended by Act XII of 1870. (Goomani v. Ram Podarat Lall, I. L. R., II All., 838, where the Court held that a mort- gagee who had obtained a personal decree against the mortgagor, could not afterwards bring a suit against a per- son who had bought the property before he brought his first suit for the purpose of enforcing his security. But see Bahraichi v. Surju I. L. R., IV All., 257 ; Umrao v. Beharo, I. L. R., Ill AIL, 297 ; Junmajoy Mullick v. Das Money Dasee, I. L. R, VIII Gal., 700; Raj- kishore Shaha v. Bhadoo Norha, I. L. R., VII Cal., 781). It is scarc.ely necessary to point out that if a decree for sale becomes infructuous, either in whole or in part, by reason of want of jurisdiction in the Court directing the sale, the mortgagee is not precluded from maintaining a second suit for the purpose of availing himself of his security. (Gris Chunder Mookerjee v. Ramessuree, XXII Suth. W. R., 308 ; see also Bungsee Singh v. Soodist Lall, I. L. R., VII Cal., 739.) Relative Difficulties have not unfrequently arisen owing to badly- drawn pleadings ; and suits for possession have been some- times brought by persons who were only entitled either to foreclose or to redeem. In some cases the Court has refused to determine the relative rights of the parties under different decrees for sale, on the ground that in a suit for possession the question is not which mortgage is prior, but which sale is prior ; and as the first sale would undoubtedly carry with it the right of possession if it was vested in the mortgagor, the Court refused to determine the relative rights of the parties on their mortgages in an action of ejectment. (Na- nack Chand v. Teluck Dye Koer, I. L. R., V Cal., 265 ; Dirgopal Lai v. Bolakee, I. L. R., V Cal., 269; Venkatanor Shammal v. Raniah, 1. L. R., II Mad., 108 ; Radhaprosad Misser v. MonohurDoss, I.L. R., VI Cal., 317.) But, a more liberal rule has been acted upon in other cases, and our Courts have, in several instances, allowed suits for possession to be converted into suits for foreclosure or redemption. (Massimunnessa Bibi v. Nilratan Bose, I. L. R., VIII Cal., 79 ; Chnndra Nath Mullick v. Nilakanta Banerjee, I. L. R., VIII Cal., 690 reversed on appeal, but on other RIGHTS OF MORTGAGOR AND MORTGAGEE. 163 points Rup Chand Dugdusa v. Davlatrav, I. L. R., VI LECTUBK Bom., 495; Shivram v. Genii, I. L. R., VI Bom., 515; San- kana v. Virupakshapa, I. L. R., VII Bom , 146. Didlabh- duss v. Lakshmandas I. L. R., X Bom., 88 ; Venkata v. Kannam, I. L. R., V Mad., 184.) In England the practice of a Court of Equity is not Practice of to make a decree for redemption on a bill which does cJurt!" 7 not pray for redemption. It is not sufficient that, taking the bill and answer together the suit appears to be in substance a suit for redemption. If, for instance, the plaintiff by his bill impeaches the validity of the mort- gage-security but fails to establish his case, no decree can be made in the suit except one of dismissal, without prejudice, however, to the plaintiffs right to bring a suit with the formal object of redeeming the mortgage. (BrougJiten v. Binks, VI Ves. 573 ; Martinez v. Cooper II, Russ 108 ; Gordon v. Horsfall, 5 Moon., P. C. 393 ; Inman v. Waring, 3 DeG & Sm., 729 ; Johnson v. Fesenmere, XXV Beav., 88 ; and Greaver Mining Co. v. Willy ms, 35 Beav., 353.) It is, however, not quite clear whether a Court of Appeal will set aside a decree for redemption simply on the ground that the plaintiff does not ask for redemption in his bill (But see the dictum of Lord Eldon in Martinez v. Cooper, II Russ., 198). Circumstances may, however, occur which would justify E x c e p- a departure from the somewhat strict and technical rule tioaicases. enforced by the English Courts of Equity. It will be found that the rule is confined only to those cases in which, while, on the one hand, the plaintiff impeaches the mortgage-security, the defendant, on the other, admits his character of mortgagee, and claims no higher right. It will not apply to cases in which the mortgagee claims an absolute title. In the National Bank of Australasia v. United Hand-in-hand and Band-of-hope Co. ( IV L. R., P. C., 391), where the plaintiff sought to recover possession of the mortgaged premises as if they were unincumbered and the defendant resisted the action, not as mortgagee in possession, but as absolute owner, and the issues disclosed by the pleadings, which were somewhat loose and informal, were not merely mortgage or no mortgage, but also whether the defendant had ceased to be mortgagee and become the absolute owner, the suit was regarded in the nature of an equitable ejectment in which each party claimed an absolute interest in the property for the profits of which 164) LAW OF MORTGAGE. LECTURE the bill sought an account. The Supreme Court of IV< Victoria took an intermediate view of the rights of the parties, and, being of opinion that the original relation, of mortgagor and mortgagee, which existed between the parties, had not been determined, directed an account of what remained due as in an ordinary redemption-suit. It was contended in appeal that the Court was not justified in making a decree for redemption, and the rule followed by Courts of Equity in England was relied upon in support of the objection. The contention was, however, overruled by their Lordships of the Privy Council. "It plainly appears," say their Lordships in giving judgment, " that the issues raised between the Company and the Bank were not merely mortgage or no mortgage, but, further, by means of its acts subsequent to the impeached mortgage, the Bank had ceased to be mortgagees and had become absolute owners." The Court was bound to try all those issues. The dismissal of the suit might have been taken to affirm the title set up by the Bank generally, or would, at least, have left its claim to more than a mere mortgage-title, subject to redemption, open to future litigation. Again, if the Company, as the Court observed, failed to establish its right to have the mortgages set aside, but succeeded on all the other issues, the result was only to modify the right prayed for by the bill, and it was obviously necessary to direct the accounts auxi- liary to that modification in order to ascertain whether, as alleged by the bill, the Bank's advances on the footing of the mortgagees had been more than satisfied by their receipts, or whether there was still any balance due to them in respect of those advances. Their Lordships are, therefore, of opinion that the rule invoked does not apply to such a case as the present, and conceive that they are in some measure supported in that opinion by the cases of Montgomery v. Calland (XIV, Sim., 79), and the Incorporated Society v. Richards, (I. D. and War. 158)." What happened in the above case, happens almost in every case in this country, each party claiming to be the absolute owner, and in such cases our Courts ought to follow the rule laid down by their Lordships. ucfn^o'f ^- return - Questions of some nicety occasionally arise mortgaged where the mortgaged premises have been converted in- conerted to monev -. Where money, for instance, is paid in as compensation for purchase of land under the compulsory CONVERSION. 165 powers given by the Land Acquisition Act, the purchaser LECTURE takes the property discharged of all incumbrances, and the rights of the mortgagee are transferred to the compensa- tion-money. A similar result follows, in this country, a intomoney. statutory sale for land-revenue and also, in certain cases, where the mortgaged property is a leasehold estate, a sale by the landlord for arrears of rent. (Kali Kanto Chowdhry v. Romoni Kanto Bkattacharji, III Suth, W. R, 227.) It has been held that in such cases the purchase-money or the surplus-proceeds should be regarded as money or personal estate, for, although impressed with the charge to which the land was subject, it cannot be said that the money is real estate : it is only to be considered as real estate. And, although it may properly be regarded in that light for the purpose of the question as to who has the best right to it, still it is, in fact, money and not immoveable pro- perty (n). A somewhat difficult question arose in the case of Ram Ram Kant Kant Chowdhry v. Brindabun Chunder Das (XVI Suth. W. R., 246). In that case the mortgagee lent his money upon the security of certain landed property. The debt was payable by instalments, and, on one of them becoming due, the mortgagee brought an action for it and sold a portion of the property under mortgage. The judgment-debt having been discharged, there remained a surplus in the hands of the Court. Some other judgment-creditors having applied for the payment to them of the surplus proceeds, the application was resisted by the mortgagee on the ground that, by virtue of his mortgage, he possessed a lieu () It is this fact which determines the jurisdiction of the Court under section 16 of the Civil Procedure Code. -(Venltata v. Krishnasamy, I. L. R., VI Mad., 344.) It seems to be, however, very doubtful whether the money will be regarded as personal property for the purposes of the Limitation Act, although it was assumed by the Madras High Court that the conversion of the land into money had the effect of shortening the ordinary period of limitation. (See In re Stewart's Trusts, XXII L. J., N. S., 369.) I may mention that the Madras case also shows that if a portion of the mortgaged premises has been coverted into money, a mortgagee will not be precluded from following the purchase-money by section 43 of the Civil Procedure Code, if at the time of his bringing his action on the mortgage, he was ignorant of the con- version of the land into money. (Cf. Krlsto Dass Kundoo v. Ram Kanto Roy Chon-dhry, I. L. R., VI Cal., 142.) The last case also lays down as a settled principle that the money, which is substituted for the mortgaged land, becomes subject- to the lien to which the land which it represents was subject. (Cf. Heera Lall Chon-dhry v. Janoki Nath Mookerjee, XVI Suth. W. R., 222.) This rule, however, does not apply where the con- version is occasioned by some default on the part of the mortgagee. 166 LAW OF MORTGAGE. LECTURE on the balance of the purchase-money for the unpaid in- IV- stalments. In the meantime, the plaintiff obtained a decree for a further instalment, and the question which the Court was called upon to determine was whether the mortgagee had or had not a preferential claim on the surplus proceeds. In giving judgment for the mortgagee, the Court observed : " The money was lent upon security of certain immoveable property and waa to be repaid by instalments. It might well have been that the property pledged should be of such a nature as to be incapable of division ; and that the plaintiff, on one of such instalments becoming due, would have to sell the entire property. Could it be said that he would, by bringing the entire mortgaged property to sale for the recovery of one instalment, lose all lien over the surplus proceeds ? Assuredly, we think, not. It seems then to make no difference that in this case the property was capable of being divided. The question as to what portion of the property should be sold for the instalment immediately due, would be rather a question to be considered as between the mortgagor and mortgagee by the Court executing the decree, and is not a question which arises in the present suit." (Ram, Kant Chowdhry v. Brindabun Chunder Dnss, XVI Suth. W. R,, 246). It may be mentioned in addition to the above reasons that the mortgagee could not well have brought a suit in the first instance, either for recovery of the money which had not then fallen due, or, for a declaration that the property was subject to a lien for the whole of the money secured by the bond, and, to have denied him a preferential claim on the surplus proceeds would have been to cut down his security contrary to the intention of the parties. (Cf. Umra v. Behari, I. L. R., Ill AIL, 297 ; cf. Greenough v. Littler, 14 Ch. D., 93 ; Nives v. Nives, id., 649. In connection with the law of procedure, I may mention Joint mort- ,, , ,, .... , ' ,- J gage by two that, where there is a joint mortgage by two or more m C r" r e mor ko a g ors > the mortgagee ought to bring his action gagors." against all the mortgagors jointly, as he might otherwise be in danger of losing the benefit of his security as against those who have not been joined in the suit. (Rai Lutchmeput Sing v. Land Mortgage Bank of India, I. L. R., XIV Cal., 469, note ; Nuthoo Loll Chowdhry v. Shoivki Lai, XVIII Suth. W. R., 458; X Ben. L. Rep., 200; Ponnappa Pillai v. Pappurayyangar, I. L. R., IV Mad., 1 ; Gurusami Chetti v. Samurti Chinna Manner Chetti FORECLOSURE. 167 I. L. R., V Mad., 37 ; Ckockkalinga Mudali v. Sulbanaya LECTUBE Mudali, I. L. R., VMad., 133; Hemendro Coomar Mullidc v. Rajendro Lai Moonshi, I. L. R., Ill Cal., 353; Kendall v. Hamilton, IV L. R., App. Ca., 504.) It seems to me, however, that the rule of the English law, English upon which the foregoing judgments were based, is a highly ^" ' artificial one, and cannot safely be extended to cases arising iu the mofussil Courts. The Madras High Court has in its later decisions refased to follow the rule, and I trust that when the question again arises in the Calcutta High Court, the point will be reconsidered. (See the observa- tions of Markby, J., and of Muttaswamy Iyer, J., on the point. Cf. Ramakrishna v. Namasivaya, I. L. R., VII Mad., 295 ; Umamahasivara, v. Singaperumal, I. L. R., V1TI Mad., 376; Sita Nath Koer v. Land Mortgage Bank of India, I. L. R., IX Cal., 888; Nobin Chundra Roy v. Magon Tara Dassya, I. L. R., X Cal., 924.) It is worthy of notice that even in England the learned Judges who took part in the decision in Kendall v. Hamilton in the House of Lords were not unanimous, and it is, to say the least, extremely doubtful whether the decision would have been the same if the principle had not been sanctioned by the authority of a series of judgments extending over half a century. The question as to the right of one or more of several Ri s h * i of persons to whom a mortgage has been made, to bring a suit several to enforce the security, without joining their fellow-mort- mortgagees gagees is also, attended with some difficulty. The practice to of our Courts is to allow such an action to be maintained if the other mortgagees are unwilling to join in the suit even though no case of fraud or collusion is made out ; but the co-mortgagees ought in every such case to be made defen- dants, and the suit must be one to enforce the security as a whole ; one of several co-mortgagees not being com- petent to maintain an action in respect only of his own interest in the joint mortgage. But the position of the plaintiff in such a suit has not been clearly defined. It has been asked, for instance : Whether the plaintiff as domi- nus lites may not forego a portion of the claim ? Whether the institution of one suit would prevent any of the other mortgagees from bringing their actions ? What would be the effect of the plaintiff dropping proceedings in the action ? It is, perhaps, not easy to answer these questions satisfac- torily, but to deny a co-mortgagee the right to maintain an 168 LAW OF MORTGAGE. LECTUBE action on the security in any case without joining the IV - other mortgagees, would open a wide dpor to fraud and collusion. Suit for The inconveniences of allowing one of several joint mort- foreciosure g a g ees to bring an action of foreclosure were forcibly pointed out by Mr. Justice Fry in Luke v. South Kensington Hotel Company (VII Ch. D., 789). In delivering judgment the learned Judge said : " I must consider, in the first pjace, whether the action can be maintained as a foreclosure- action, that is to say, whether, when a mortgage has been made to three persons jointly, one of those three can for- close the mortgage, making the other two defendants to the action. It is admitted that no precedent can be produced for such a proceeding, and it appears to me that the incon- veniences of it are manifold and manifest. In the first place, it would follow that you might have as many actions pending as there were mortgagees. Take the case, with which we are very familiar, of a mortgage for a large sum of money made to half a dozen persons as trustees for an Insurance Company, the name of the Company not appear- ing on the face of the deed. You might have six fore- closure actions, one brought by each of the mortgagees, against the mortgagor, naming the other five as defendants on the record. Then, there are further questions which would arise at the hearing. In a foreclosure-action you may have foreclosure or sale. How is the question which it is to be, to be determined ? Would the plaintiff be domi- nus lites for this purpose, so that he could dictate to the other mortgagees what relief was to be had, or must there be a struggle between the co-mortgagees as to what the nature of the relief to be had, should be ? It appears to me that the inconveniences of such a course are very manifest. But, then, it is said that where there are several co-mort- gagees one of them might have a bad reason for not desir- ing to foreclose, or, might have no reason at all. He may be content to leave things as they are, and decline to join the foreclosure-action. Such questions undoubtedl}' have often arisen, and, in all probablity, will often arise again, and they may have to be determined in some way. But, I am of opinion that they must be determined in a sepa- rate and independent proceeding, and that the mortgagor- is not to be harassed by conflicts and controversies be- tween his mortgagees ; but that the question whether an action for foreclosure shall or shall not be brought, is not JOINT MORTOAaES. 1C9 to be determined in the action for foreclosure itself. To LECTURE mix up the question, whether an action ought to be brought, with that action itself, seems to me inconvenient to the last degree ; and upon that ground I come to the conclusion that the plaintiff cannot maintain this action as a foreclo- sure-action. " A different rule, however, was laid down by the Court of Appeal and it was held that one of several mortga- gees* can maintain an action to foreclose the mortgage, making the others co-defendants if they are unwilling to be joined as co-plaintiffs, or if they have done some act pre- cluding them from being plaintiffs. (Luke v. South Kensing- ton Hotel Company, XI Ch. D., 121). The learned Judges, by whom the appeal was heard, were of opinion, that, on gene- ral principles, as well as according to the practice in Equity, such a suit was maintainable, as the plaintiff could not otherwise by any possibility obtain the relief to which he was entitled. With regard to the argument that several actions of foreclosure might be brought upon the same security, the learned Judges observed that there would be no difficulty in dealing with the case if it occurred, as the Court would stop all the actions with the exception of the first. It must, however, be remembered that in the case to which I have just referred, the co-mortgagees did not refuse to fore- close, although they were not willing to be joined as plain- tiffs ; and, the question as to whether one of several mort- gagees can foreclose a mortgage without the consent or against the wish of the others, is, therefore, left undetermin- ed, the Court observing that they would deal with that case when it actually arose. It is, however, not at all difficult to foresee how the question will be answered by the Court. Whatever doubt there may be as to the right of one of Right of a several mortgagees to foreclose the mortgage when the others ^ a int>m t rt ' are unwilling to do so, there can be no doubt of his com- su e petency to enforce the security, where, from the nature of things, it is absolutely impossible for all the mortgagees to join as plaintiffs, as in the case mentioned by Lord Justice James, in which there were three mortgagees hold- ing a joint-mortgage, two of whom became mortgagees, on their separate account, of the second and the third mortgagees of the equity of redemption. In this case, you will observe, it was absolutely impossible for the three to join as plaintiffs, because they were both mortgagees and mortgagors. The difficulty was avoided by one mortgagee ]70 LAW OF MORTGAGE. LECTURE filing his bill, making the others interested in the equity IV - of redemption defendants. The same practice is followed in this country in cases in which, and they are not of unfrequent occurrence, the equity of redemption becomes vested, either in whole or in part, in one of several mortgagees. I shall, however, discuss the question more fully in a future lecture. (As to .where a suit by one mortgagee alone may lie, see Ram Ruttun v. Umed Hossain, N.-W. P., 1853, 91 ; see also the dictum of Wilson, J. in Callynatk v. Koonjo Beliary, I. L. R., IX Cal., 651.) Mortgagee It Was thought at one time that, even in the absence of ^ceed a direction in the decree to that effect, a creditor, whose against any debt was secured by a mortgage, was bound to proceed, in property. ^ Q g rs (. i ns fc a nce, against the property mortgaged to him, and that he could only proceed against other properties for the deficiency, should there be any. (Brolimoye Debea v. .Baikant Chunder Gangulee, V Suth. W. R., Mis., 52). It is, however, now settled that in the absence of an ex- press direction to that effect in the decree, a mortgagee is under no such, obligation, and that he is at liberty to proceed against any property belonging to his debtor in the same manner as an unsecured creditor. (Luclimi Dai Soori v. Asman Singh, I. L. R., II Gal, 213 ; Purmessari Dassee v. Nobin Chunder Tarun, XXV Suth. W. R., 305 ; Fukir Bux v. Chuttordharee Chowdhry, XII Ben. L. Rep., 513, note ; XIV Suth. W. R., 209 ; Kalee Pershad Singh Nundee v. Raye Kishoree Dossee, XIX Suth. W. R., 381 ; Radha Kant Roy v. Mirza Sudaput Mahomed Khan, XXI Suth. W. R., SG, and Hart v. Tara Prosunna Mukerjee, I. L. R., XI Cal., 718 Rajkishore Shaha v. Bhadoo Noshoo, I. L. R., VII Cal., 78.) But this privilege cannot, for ob- vious reasons, be claimed by a mortgagee who is restricted by his decree only to proceedings against the land on which the debt is secured. (Solano v. Moran, IV Cal. L. Rep., 11 ; Sudan v Ramchandra, I. L. R., XI Bom., 537.) This may happen either because there was no covenant to p'y, or because it could not be enforced by reason of the operation of the Statute of Limitations, or because the suit was not brought to enforce the cove- nant. Limitation It must not, however, be supposed that a mortgagee * 8 a ^ wa y s at liberty to proceed either against the" pro- , or against the person of the mortgagor. There are RIGHTS OF MORTGAGEE. 171 undoubtedly cases in which such a proceeding might operate LECTURE to the serious injury of the mortgagor, and the Court exe- cuting the decree has undoubtedly a discretion to take bound to such precaution as would prevent any injury of that kind, proceed (Luchmi Dye Soori v. Asman Sing and others, I. L. R. II Cal., 213.) Thus, in one case the Court compelled the decreeholder to proceed against the mortgaged property where such property had been sold in execution at an under- value by reason of the mortgage, and purchased by the mortgagee's brother, the learned Judges observing that they were not precluded from applying equitable principles to questions arising in proceedings relating to the execution of decrees. (Ali Muhammad v. Turab Ali, I. L. R., IV All., 497.) So, again, in the case of Gulab Sing v. Peminan (I. L. R., V AIL, 342), the Court held that to allow a purchaser of the equity of redemption to take an assignment of a mortgage-decree, and then to levy execution upon property outside the mortgage, would be to enable the purchaser to pay himself twice over to the injury of the mortgagor. The mischiefs which would arise from permitting the mortgagee in all cases to proceed at his option, either against the property pledged to him or against other properties be- longing to the mortgagor, are very clearly pointed out in the case of Kali Dass Ohose v. Lalmohun Ghose (XVI Suth. W. R, 306). In this case the mortgagee attempted to share in the surplus proceeds after having publicly notified his lien at the time of the execution-sale. In disallowing the claim the Court observed: "It appears to us that the decree-holder should be made to abide by his election. He interfered at the auction-sale and notified publicly that he retained his lien over the property. The consequence was that the estate, instead of being sold free of incumbrance (and it is not contended that there were any other liens upon it) was sold subject to a debt of nearly Rs. 15,000. And it can hardly be supposed that such a burthen did not consi- derably reduce the price bid. There is nothing on the record to show what effect Kalidas's notification had on the result of the sale ; but it could hardly have been other than disadvantageous. And then, besides, if Kalidas be now allowed to give up his mortgage-lien and reimburse himself from the sale proceeds, what is the position of the auction-purchaser ? He bought the rights and inter- ests of the judgment-debtor the equity of redemption 172 LAW OF MORTGAGE. LEOTUBE but if there be no mortgage on the estate, as there would IV - not be if the creditior gave up his lien, there is no equity of redemption left; and, again, if there be no mort- gage, the property is unincuinbered. So, it would seem that the auction- purchaser has either bought nothing, or else, instead of the equity of redemption, has bought the entire proprietory right in the estate, a right that was never put up to sale at all ; and so with the debtor. If the mortgage falls, which would seem to be the case if the creditor were allowed to satisfy his decree from the sale- proceeds, how is he to get back his land ? Must he bring a suit to compel the creditor-mortgagee to re-assign the mortgaged interest ? It seems to us, that if the decree- holder gets what he asks, the debtor will, after having paid the entire amount of the bond, be in a very consi- derable difficulty, and tlie auction-purchaser in a most anomalous and improper position. Cnsesonthe The case of Mirza Fatteh Ali v. Gregory (VI Suth. W. point. R ^ Mis., 13) is very much in point and supports the view we have taken above." (Of. Byjonath v. Doochun, XXIV Suth. W. R., 83; Bank of Bengal v. Nundolal, XII Ben. L. Rep., 309.) Indeed, it does not require much argument to show that it would be extremely unjust to allow the mortgagee of a property, which is sold subject to his mortgage, to obtain the surplus-proceeds in satisfaction of his de- cree, as the practical effect of allowing the mortgagee to satisfy his decree out of the surplus-proceeds would enable a purchaser, who purchases and pays for only the mort- gagor's interest in the property, to hold it released from the mortgagee's lien. (Mirza Fatteh Ali v. Gregory, VI Suth. W. R., Mis., 13.) Madras In Kuppaiya Chetti v. Thasamathasi Chetti (IV Mad., Case. H. C. Rep., 49,) the Court refused to allow the mortgagee to obtain the discharge of the mortgage-debt due to him, out of the proceeds realised on the sale of the mortgaged property, in preference to an unsecured creditor at whose instance the sale took place, although it appears that the property had been first attached by the mortgagee, which circumstance would, ordinarily, as the law then stood, have given a prefer- ential claim to the creditor. I may mention that the sale in this case was not made with express notice, that the right title and interest of the execution-debtor was only that of a mortgagor; but the Court, notwithstanding, refused RIGHTS OF yORTMGEE. 173 to allow tho claim of the mortgagee. The Court observed: LECTUBE "All that has been sold in execution of the second IV - defendant's decree, because all that could legally be sold, is the right, title, and interest of the first defendant, the execution-debtor, and his proprietory right at the time was subject to the plaintiffs mortgage. If then, the mortgage was a valid charge on the property before the attachment, it is unaffected by the sale, and the pur- chase-money cannot be treated as more than the value of the mortgagor's right of redemption. We are, therefore, clearly of opinion, that the plaintiff's claim is of no avail against the right of the second defendant to be paid the full amount of his judgment-debt, and on this ground the decree of the lower Appellate Court in favour of the second defendant must be upheld." Indeed, whenever a mortgagee sedulously avoids proceeding against the mortgaged property and endeavours to satisfy his decree out of other proper- ties, it may be safely presumed that he is seeking to gain an undue advantage over his mortgagor. The foregoing considerations do not, however, appear to Section 271 have been presented to the Court in some reported cases of where the contention on behalf of the mortgagor appears to have been rested solely on section 271 of Act VIII of 1859, or rather, on the proviso contained in that section corres- ponding to the enactment contained in section 295 of the present Code of Civil Procedure, but which, as we shall pre- sently see, has no real bearing on cases in which the contest is, not between a mortgagee and an unsecured execution- creditor, but between the mortgagee and his debtor. In Fakeer Buksh v. Chutter DJtari Chowdhry (XIV Suth. W. R, 209) the dispute being one between the mortgagor and the mortgagee as regards the right of the latter to discharge his mortgage-debt out of certain surplus proceeds which stood to the credit of the mortgagor, the learned Judges were of opinion that it was competent to the mort- gagee to waive his right as such, and to come in as an ordinary execution-creditor. Indeed, the Court went much further, observing : " It was competent for the present appellant to waive his right as a mortgagee, and to bring his suit for the recovery of the money due to him upon the bond. He did bring that suit, and got a decree for the money ? It is true that the decree says that the execu- tion shall be had against the property which was pledged, and afterwards against the person. Nevertheless, it is a 174 LAW OF MORTGAGE. LECTURE decree for the money which was due upon the bond ; and IV - we think it was competent for him to say : ' I am content to rest upon the decree which I have obtained, and waive the right which I have as mortgagee and, resting upon that decree, I now seek to have a share in the surplus proceeds of sale under section 271.' We think he is enti- tled to do that." Mortgagee The proposition that a mortgagee by taking a mortgage his^i^t's. 6 does not place himself in a worse position than an unse- cured creditor, and may, therefore, waive his rights as mortgagee, however plausible, would, I think it must be allowed, unless carefully fenced in by considerable reserva- tions, open a wide door to fraud, of which mortgagees would not, perhaps, be slow to avail themselves and of which a fair illustration is to be found in the case of Pormesharry Dassi v. Nobinckunder Taron (XXIV Suth. W. R., 305). It appears from the report of the case that an unsecured creditor and a mortgagee having both attached the property which was pledged to the latter, it was put up for sale at the instance of the unse- cured creditor, whose debt was paid out of the proceeds and the balance remained in Court at the credit of the judg- ment-debtor. The mortgagee then put in an application stating that he did not wish the property to be sold in ac- cordance with his previous application and asked that his debt might be satisfied out of the money in the hands of the court. It is impossible to avoid a strong suspicion that this application was due to some secret understanding with the execution-purchaser, and was made to benefit him at the expense of the mortgagor ; but the Court not with- standing allowed the application on the authority of Fakeer Bulcsh v. Chutter Dhari Chowdhry (XIV Suth. W. R., 209.) As I have already pointed out, the argument in both the cases was based solely on section 271 of the Civil Procedure Code and the Court was not called upon to consider the equities which arose in favour of the mortgagor. The observation in Fakir Bux's Case (XIV Suth. W. R., 209 ) that the mortgagee was not bound to pro- ceed in the first instance against the property comprised in his mortgage, although the decree should say that execu- tion should be had against the mortgaged property first, and afterwards against the person, would also seem to be open to criticism and cannot safely be regarded as a precedent. There seems to be ample authority for the position that RIGHTS OF MORTGAGEE. 175 where a decree is so worded as to compel the mortgagee LECTUBE to proceed, in the first instance, against the property pledged to him, he is bound to obey the direction contained in the decree, and is not at liberty to evade it by waiving his rights as mortgagee and coming in as an ordinary execu- tion-creditor. (Luchmi Dye Koori v. AsmanSing, I. L. R., II Gal, 213 ; Kvisto Klshore Dutt v. Hup Lall Dass, I. L. R, VIII Gal., 687.) Before dismissing this subject, I will only mention that every Court has a right to prevent any abuse of its process, and that it has a discretion in executing a decree to take such precaution as might be necessary against any wanton injury to the debtor. It is true that there is no express provision on the subject in the Code of Civil Procedure ; but the action of the Court in restraining the mortgagee when a proper case is made out from proceeding in an oppressive manner cannot, I presume, be fairly regarded as in any way trenching upon the province of the Legis- lature. Again, the right of a mortgagee to enforcehis decree against Right of any part of the property pledgedto him for the wholeof the mort g a ffee IT 11 j i -ill -j to proceed mortgage-debt, may also be controlled by equitable considera- against any tions arising out of transactions subsequent to the decree. Pi 11 " 1 f the Thus, for instance, if two villages are mortgaged as security p for a debt, and the mortgagee acquires the right of redemp- tion in one of them, he will not be permitted to levy exe- cution for the whole of the mortgage-debt on the other village. I shall explain in a future lecture the principle on which, in the event of the mortgagee purchasing a por- tion of the property comprised in his mortgage, the mort- gage-debt is distributed over the different parcels. What I now wish to point out is, that the court of execution is competent to determine the proportions in which the mortgage debt should be apportioned, and that, ordinarily, it is not necessary to bring a regular suit for the purpose of enforcing any equity which may arise between the parties. (Luchmi Narain Puri v. Bikram Singh, IV Cal. Luchm, L. Rep., 294.) In this case it appears that one of two Bikl ' am - villages, upon a mortgage of which the decree-holder had obtained a decree with an order for sale, having been attach- ed in execution of another decree was sold, subject to the first decree and purchased by the decree-holder himself who then sought to execute his decree by the sale of the first village claiming to charge the entire debt upon it. It mi v. 176 LAW OF MORTGAGE. LECTURE was contended on the other hand by the mortgagor that the IV - village which had been bought by the mortgagee should be first resold, and that the other village should be sold only in the event of there being a balance unrealised by the sale of the first village. The Court was of opinion that both parties were equally wrong in their contentions. The mort- gagee was clearly bound to give credit for the share of the debt assignable to the village, which had been bought by him, while the purchaser on his part was not entitled to demand a resale. The Court accordingly directed that an account should be taken of the relative values of the mort- gaged properties and the debt distributed in accordance with such valuation ; the mortgagee being at liberty to proceed to execute his decree for the sum chargeable upon the second village by the sale of that village. Nitfer v. Tn another case, however, reported in the same volume of Baikanto. fa Q Calcutta Law Reports, a different course was adopted. It appears that a decree had been obtained upon a mortgage against two judgment-debtors who were the joint owners of a certain village. Before execution had been taken out by the mortgagee, the share of one of the judgment-debtors in the village was sold subject, however, to the mortgage. The purchaser, in order to protect the share bought by him, took an assignment of the mortgage-decree and proceeded to execute it against the remaining share. He was met by an objection on the part of the judgment-debtor that the transaction which had taken place between him and the mortgagee, amounted to a satisfaction of the decree, and, by the further objection that the effect of the transac- tion was to place him in the position of a judgment-debtor who had purchased the decree and that the decree was, therefore, incapable of execution. But the Court thought, that the result of the purchase was not to make the assignee a judgment-debtor oraquasi-judgment-debtor, but only to put him in the place of the original mortgagor. All that he had done was to purchase the decree in order to protect the property which he had bought from being sold under the mortgage-decree. But as transferee of the decree, lie was entitled to execute the decree against the defendant personally, and also, in the event of his making default, in pa} 7 ing the amount to go against the remainder of the property mentioned in the decree. " It may be," the court observed, " if the decretal money has to be realised by the sale of the last mentioned property, an equity may MONEY-DECREE. 177 arise as between the appellant and defendants to have the LKCTUKE decretal money distributed over the whole of the property ^-_ mentioned in the decree, and to have the share of the mehal bought by the appellant at the Government sale, contribute its proportionate part of the decretal money. But if such an equity exists, I think it must be asserted in an independent suit. At all events, the existence of such an equity, supposing it to exist, is no bar to appellant now proceeding against (sic) to execute the decree." (Nafer Chunder Mundcd v. Baikanto Nath Roy, IV Cal. L. Rep., 156.) The case, therefore which I may mention, in passing, was heard ex partec&n scarcely be regarded as distinct authority for the proposition that an assignee of a mortgage- decree having an interest in a portion of the mortgaged premises, is entitled to proceed for the whole amount of the debt against the remainder. But it is undoubtedly authority for the position that such assignment has not the effect of satisfying the decree, and this is so, not because, as is some- times thought, a decree upon a mortgage is not a decree for money, but because the assignee was never personally lia- ble for the debt, and this seems to be the real ground of the decisions on the point. (Lalla Bhagun v. Holloway, I. L. R., XL Cal., 393 ; Yalcoob Ali v. Uamdulal, XIII Cal. L. Rep. 272). In this connection I may mention that a decree upon a Decree simple mortgage is regarded for many purposes as a u p on a decree for money ; and it is none the less a decree for mortgage mone^y, even though other relief is given by the decree, a decree (Hart v. Tara Prosunno Mookerjee, 1. L. R., XI Cal., 7l8, for money ' and the cases cited therein.) But some of the provisions of the Civil Procedure Code regulating the mode of execu- tion of decrees for money, are obviously inapplicable to a decree upon a mortgage which directs the sale of the pled- ged property in pursuance of a contract specifically affect- ing such property. ( Womda Khanuin v. Ramroop Koer, I. L. R., Ill Cal., 335 ; Bhagwan Prasad v. Shea Sahay, I. L. R., II All., 856 ; Bhagvan v. Hati Bhai, I. L.R., IV Bom., 25 ; Binda Prasad v. Madho Prasad, I. L. R., II All., 129; Hardeo v. Hukam, I. L. R., II All., 320; Bachu v. Madad Ali, I. L. R., II All., 649. Cf. Shdnkarapa v. Danapa, I. L. R., V Bom., 604; where the words "attach- ment or sale by any process of any civil court in Bom- bay " (Act V. of 1862) were held to prevent attachment R. B. G., M. 12 178 LAW OF MORTGAGE. LECTUBE and sale under simple money-decrees, and not a sale in IV - satisfaction of a mortgage-decree (o). ft- T77 I may here mention, that in one case the Court restrained i i (* /* i Court to the mortgagee by its decree from entorcing his mortgage nortcMgefi against any property, comprised in the mortgage for the in case of whole of the mortgage-debt. There was in that case a very collusion. s t rou g suspicion of collusion between the mortgagor and the mortgagee for the purpose of throwing the whole bur- den of the mortgage-debt on a portion of the pledged property which had passed under an execution-sale against the mortgagor into the hands of a third person. The Court by its decree directed an apportionment of the mortgage- debt between the different properties and enjoined the mortgagee from taking out execution against the property, which had passed out of the mortgagor's possession, except for the amount which should be apportioned to such pro- perty without satisfying the court that he had made every possible effort to execute the remainder of his decree against the other properties (Ramdhon Dhur v. Mohesh Ghunder Chcnvdhry, I. L. R., IX Cal., 46). The case is an apt illustration of the anxiety of our courts to pre- vent fraudulent or oppressive conduct on the part of a mortgagee ; but it can scarcely be regarded as a pre- cedent. Before dismissing the question of fraud, I must mention that a mortgagee who causes the property pledged to him to be sold in execution, cannot afterwards set up his mort- gage against that property unless he shows that the pur- chaser bought with notice of his claim ; and it seems that the mere fact that, at some time or other, the mortgagee of thecfvH i n f rme d the Court by which the property was sold of his Procedure mortgage, is not evidence that the purchaser bought with Code, notice. (Dullab Sircar v. Krishna Koomar Bukshi, 3 Ben. L. Rep., 407 ; XII Suth. W. R., 303 ; Doole Chand v. Mussammat Omda Begum, XXIV Suth. W. R., 263 ; Tuka Ram Bia Athmaram v. Ram Chunder, I. L. R., I Bom., 314 ; Nursiny Narain v. Roghoobur, I. L. R., X Cal., 609.) Section 287 of the present Civil Procedure Code expressly requires that every incumbrance to which the property is (0) No attachment is necessary in the case of a mortgage-decree ; the direction in the decree itself is sufficient authority for the sale (Daya- chand v. Hemchand, I. L. R.. IV Bom., 515 ; Venltata v. Ramiah, I. L. R., 1 1 Mad., 108; DiJ 'holts v. Peters, I. L. R., XIV Cal., 631; see also Rule No. 349 of 1887, unreported, by MITTEB and BEVEULEY, J J. PROVISIONS OF THE PROCEDURE CODE. 179 liable, shall be inserted in the sale-proclamation, and where LECTURE the mortgagee has the carriage of the proceedings, it would Iv - be manifestly inequitable to allow him to enforce a mort- gage not inserted in the proclamation against a purchaser; but the mortgagee is not bound to go out of his way, if the property is about to be sold by a third person, to inform the Court of his mortgage on pain of being afterwards unable to enforce his claim. The subject, however, belongs to the lar- ger question of estoppel by conduct ; and to discuss the ques- tion adequately would carry me much beyond the limits of the present lecture. I shall, however recur to it when I come to treat of the extinction together with the priority of mortgages. (See Lecture XII.) I will now call your attention to section 295 of the Section 295 Civil Procedure Code, a not very favourable specimen of proce legislative workmanship. That section sa} 7 s : Code. " Whenever assets are realised, by sale or otherwise, in execution of a decree, and more persons than one have, prior to the realisation, applied to the Court by which such assets are held, for execution of decrees for money against the same judgment-debtor, and have not obtained satisfaction thereof, the assets, after deducting the costs of the realisation, shall be divided rateably among all such persons : " Provided as follows : " (a) When any property is sold subject to a mortgage or charge, the mortgagee or incumbrancer shall not, as such, be entitled to share in any surplus arising from such sale ; " (6) When any property is liable to be sold in execution of a decree, is subject to a mortgage or charge, the Court may, with the assent of the mortgagee or incumbrancer, order that the property be sold free from the mortgage or charge, giving to the mortgagee or incumbrancer the same right against the proceeds of the sale as he had against the property sold : " (c) When immoveable property is sold in execution of a decree ordering its sale for the discharge of an incum- brance thereon, the proceeds of sale shall be applied " First, in defraying the expenses of the sale ; "Secondly, in discharging the interest and principal money due on the incumbrance ; "Thirdly, in discharging the interest and principal monies due on subsequent iucumbrances (if any) ; and 180 LAW OF MORTGAGE. LECTUBE "Fourthly, rateably among the holders of decrees for W' money against the judgment-debtor, who have, prior to the sale of the said property, applied to the Court which made the decree ordering such sale for execution of such decrees, and have not obtained satisfaction thereof. " If all or any of such assets be paid to a person not entitled to receive the same, any person so entitled may sue such person to compel him to refund the assets. " Nothing in this section affects any right of the Govern- ment." How con- Now, the first observation which I wish to make on strued. ^-^ sec tj on is that the proviso being annexed to a sec- tion which gives certain rights to execution-creditors must be taken to refer to a mortgagee who is also an execution-creditor. Its language also clearly points to a case in which there are assets and there are rival judg- ment-creditors among whom they have to be distributed. The section has, therefore, as, I have already had occasion to point out, no application to a case in which the mortga- gee is the only creditor who seeks to be paid out of any surplus proceeds which may be in the hands of the Court as money payable to the mortgagor. (Purmessuree Dossee v. Nobinchunder Taiwan, XXIV Suth. W. R., 305.) It does not, however, follow, as we have already seen, that the court may not, apart from the provisions of the Civil Pro- cedure Code, restrain the mortgagee from proceeding against such assets, representing, as we must assume that they do, the value only of the equity of redemption. But the section positively prevents the mortgagee from obtaining a rateable distribution with the unsecured creditors if the property is sold subject to his mortgage. A question may, however, arise whether in a contest between a mort- gagee and unsecured creditors, where the money in the hands of the Court is not sufficient to pay all the credi- tors in full, the mortgagee may not waive his rights under his mortgage after the sale has taken place, and insist upon sharing in the purchase-money as an ordinary credi- tor. You will observe that in such cases considerations arise somewhat analogous to, but of a slightly different nature from, those which would arise if the contest was solely confined between the debtor and the mortgagee. The law seems to be anxious to guard against a wanton sacrifice of the rights of the unsecured creditors, and, on a principle based on natural equity which I shall explain at REMEDIES FOR MORTGAGOR. 181 some length in a future lecture, the mortgagee is not LECTUBE permitted to share in the purchase-money which we must IV - not forget, is paid only for a partial interest in the estate, that is, the equity of redemption. The mortgagee possesses in his mortgage ample security for the realisation of the debt due to him and his rights are not in any way pre- judiced by a refusal to give him a share of the proceeds; while very grave injustice might be done, both to the other creditors and the mortgagor, if the unsecured credi- tors could be disappointed by the action of the mortgagee. It seems to me that the section has been enacted for the protection of the unsecured creditors, and the doctrine of waiver, therefore, would not apply. It is true, there are certain expressions in the judgment of the court in Fakir Bux v. Chutter Dhari (XIV Suth. W. R, 209) which may seem to support a contrary view. But I venture to think, notwithstanding the very high authority of the learned judge by whom the judgment was deli veved, that the d/ictum cannot be supported as laying down an inflexible rule. It may be said that neither the disappointed creditors- Remedies nor the mortgagor would be wholly without a remedy, in gag rt " case a portion of the purchase-money was paid away to the mortgagee as they would be entitled to the benefit of the lien to the extent to which it might be reduced by the conduct of the mortgagee, and that the conflicting, equities between the parties might be worked out in an action properly brought for the purpose. But such a proceeding, besides being wholly unknown in the mofussil, would only lead to a perfect waste of litigation which, how- ever, may be easily avoided without trenching upon the domain of the Legislature. I am also not insensible to the force of the argument founded on the well known maxim expressio unius est exclusio alterius ; but I cannot persuade myself that the Legislature intended to take away all discretion from the court as to the mode in which its decrees should be enforced (p). The question as to what is meant by "sold subject Sale of to a mortgage " has again given rise to considerable P r P ertv (p) I confess that the introduction of the words "as such" in pro- viso (a) to section 295 which were absent from the former Civil Pro- cedure Code are likely to create some embarrassment, and the probabi- lity is very great, indeed, that the addition of these words is due to the judgment of the Calcutta High Court in Fakir Sux v. C'mtterdhari Chowdhrij (XIV Suth. W. R., 209), to which I have had already occa- sion to refer. 182 LAW OF MORTGAGE. LECTURE discussion. In the case of Fakir Bux v. Ckutterdharee IV - Chowdhry (XIV W. R., 209-10), the Court observed: subject to "We think that section 271, Act VIII of 1859, or rather mortgage, the proviso in that section, is intended to apply to a case where the property is actually sold subject to a mort- gage, and where the transaction is such that the purchaser is buying the property subject to the mortgage, where he is, in fact, only buying the equity of redemption which remains in the judgment-debtor; and it does not apply to a case where there is merely the right by law in the mortgagee to enforce his mortgage against the purchaser. This appears to have been the view taken by this Court in a decision reported in VI Suth. W. R,, Mis. Rul., 13. Section 271 There the Court says : ' It is not equitable that the of 1859. purchaser who purchased and paid for only the mort- gagor's interest in this property, should hold it released from Gregory's lien.' Now, here it does not appear that the sale to the purchaser was in fact subject to the mortgage. By ' in fact ' we mean that it was not so subject by the contract of sale, and there was merely a legal right existing which might be capable of being enforced. It seems that a petition which was presented by the present appellant was not taken notice of, and neither in the proclamation of sale, nor in any of the sale proceedings, is mention made of the existence of any mortgage. Nor is there anything to show that only a limited right of the judgment-debtor was to be sold. Therefore, upon that construction of section 271, we should say that the proviso does not apply to the present case "(out L' f -L j.- if i i ii i. "otice not notice or any subsisting mortgage. Ir, indeed, the contest available, was one between the mortgagee and a third person who had induced an honest purchaser to lay out money in tho bond fide belief, that he was purchasing the property free of all incumbrances, a narrower construction might be supported on the ground that it tended to prevent acircuity of action, for, the consequence of refusing the mortgagee to share in the distribution, would be to throw him upon the mortgaged property, with the further consequence that the purchaser would have a right to compel the unsecured creditor to refund a portion of the purchase-money equal to the amount of the mortgage-debt. The principle is well illustrated by the judgment of the Privy Council in the Douglat case of Douglas v. The Collector of Benares, in which the elector of defendant, with full notice of the plaintiff's mortgage, Benares. having sold certain property as unincumbered, the plaintiff brought an action against the defendant, claiming to be entitled to the sale-proceeds by virtue of his mortgage, Their Lordships held that the plaintiff had a clear equity against the proceeds in the hands of the defendant and this, upon the most obvious principles of moral justice, re- cognised and acted on as safe grounds of decision by the Court of Chancery in England. With reference to the argument that the defendant only sold the interest of the debtor and did not guarantee the title, their Lordships say : " This may be very true, but it has no bearing upon the present case. Here the Government officer, having notice of an incumbrance, which is only an equitable charge on the property, suppresses all mention of it in the advertisement of sale and conveys away the estate to the purchasers as unincumbered, and receives the full value as if it were free from mortgage. Can there be a clearer equity to call for repayment ? or could there be a grosser injustice than to sue the purchasers if, indeed, against them any case could be established, which is very doubtful ?" (Douglas v. The Collector of Benares, V Moore's Ind. App., 296). 184 LAW OF MORTGAGE. LECTURE It is instructive to notice that a similar principle is IV - recognised in systems founded on Roman law. Thus, it is Roman law stated by Mr. Burge in his Foreign and Colonial Law : ' It on the has been already observed that the price obtained by the debtor from the sale of the mortgaged property is not subrogated for the property sold, and, therefore, is not sub- ject to the mortgage. The action in rem could, there- fore, according to the strictness of the law, be instituted only against the last possessor of the property, if it had passed through mawy hands. It was, however, decided by the Supreme Court of Holland on principles of equity, and to avoid circuitous litigation and its consequent expense, that the creditor could resort to the first possessor to re-, cover the price, if it were made to appear that the fourth possessor could sustain an action for the eviction against the third, the third against the second, and the second against the first." (Barge's Foreign and Colonial Law, Vol. Ill, pp. 224-25.) Section 295 Another difficulty which was felt in construing the cor- cedure Pr " responding section of the Civil Procedure Code of 1859, is Code how also likely to arise on the language of section 295 of the pre- construed. seu ^ Code of Civil Procedure, which makes no exception in favour of a mortgagee when the property pledged to him is sold by the Court under a decree for sale. According to the strict wording of the section, a mortgagee would be in no better position than an unsecured creditor, the assets being liable to be rateably distributed among all the execution- creditors whether mortgagees or not. It cannot, however, be denied that when the property is sold at the instance of the mortgagee, his claim should be preferred, and yet the language of the section would seem to leave no dis- cretion to the court of execution in the matter. The rule, however, is one merely of procedure, and cannot alter or limit the rights which a person may have acquired by contract, independently of the rules em- bodied in the Code of Civil Procedure. (Raj Chundra Shaha v. Bur Molmn Roy, XXII Suth. W. R, 98; Harsoon A rra Begum v. Jawadoonnissa Satooda Khan- dan, I. L. R., IV Gal., 29 ). It seems to me that the whole Chapter on Execution in the Civil Procedure Code relates to sales in execution of decrees for money, and not to sales under mortgage-decrees. The same defect was noticed in the old Code, but has not yet been rectified by the Legislature. PROVISIONS OF THE PROCEDURE CODE. 185 A question of some nicety upon the construction of LECTURE section 295 of the Civil Procedure Code arose in the case of Siva Ram v. Soohrah Manya (I. L. R., IX Mad., 57). Madras It appears that certain land was mortgaged to the defend- case smt to secure the repayment of a loan of Rs. 2,000 and ' ie p01 ' interest. The mortgagee was to be let into possession, it being stipulated in the deed that the interest on the debt should be paid out of the profits and the balance paid to the mortgagors. By a subsequent agreement, however, it was arranged, that the mortgagors should remain in possession and pay an annual rent, equal to the interest payable to the mortgagee. The mortgagee obtained a decree for Rs. 2,000, .and arrears of rents and costs, and for the sale of the land in satisfaction of the amount decreed. The land was sold for Rs. 2,855. A puisne mortgagee applied to the Court for payment to him of Rs. 500 out of this sum, alleging that the first mortgagee was entitled only to Rs. 2,000, and Rs. 280 costs, but not to arrears of rent in preference to his claim as second mortgagee. It was contended on be- half of the first mortgagee that he was entitled to treat the arrears of rent as interest; but this contention was over- ruled. The Court said : "The appellant, as second incum- brancer, is clearly entitled to the surplus proceeds after discharging the principal and any interest which may be due on the respondent's incumbrance. The question between them, therefore, resolves itself into this : Can the sum claimed by the respondent as rent, and paid to him under the decree for rent, be regarded as interest due on his incumbrance ? It appears to us that it cannot ; and indeed both the lower courts have treated it as rent and not as interest. By letting the mortgaged properties to the mortgagors under the stipulation that they should pay rent in lieu of interest, the respondent elected to con- vert the interest into rent. No doubt such a course has its advantages ; but he is not entitled to those advantages, and also to the advantage of treating the sum conditioned to be paid as if it were interest. He sued for it as rent, and not as interest; and under the terms of the decree, directing the sale of the property, the sum now in question was awarded to him as rent. There is no foundation for the contention that the arrears of rent are a charge on the land as against an incumbrance (I. L. R., IX Mad., 60) (r). (?) The judgment, however, is scarcely consistent with the decision of Jessel, M. 11 , in Islieneood. Exp. (XXII., Ch. D., 38i), in which it waa 186 LAW OF MORTGAGE. LECTURE I have already said that a sale by an unsecured creditor IV - passes only the equity of redemption. There may, how- Madhmu- ever, be cases in which the purchaser would acquire a higher dan \. MU- \-\cr\\i. Th us, for instance, in the case of Mudhusudan kundMi. Sing v Mukundloll SaJwo (XXIII Suth. W. R., 373), where execution was taken out by one of the creditors against an estate which was subject to a mortgage in favour of another creditor, who also had placed an attachment on the property, and the property was subsequently sold at the instance of the first creditor, but without any mention of the mortgage, it was held by the Court that what passed to the pur- chaser under the sale was not the bare equity of redemption, but the pro pert} 7 itself, free of the mortgage held by the other creditor; and the case of Nadir Hussen v. Baboo Pearoo (XIX Suth. W. R., 255), lays down still more broadly that when an estate is sold pending an attachment by the mort- gagee, the lien is transferred from the property to the purchase-money, and the purchaser acquires the property discharged from the lien. (See also Raj Chundra Shaha v. Horimohun Roy, XXII Suth. W. R., 98; but see Janaki Bullav Sen v. Jahoruddin Mohamad A boo A li Sohor Chow- dury, I. L. R., X Cal., 567; Stowell v. Ajudheya Nath, I. L. R., VI All., 255.) The rule laid down in Mudhusudan Sing's Case is likely to prevent, in some measure, the evils which attend most sales in execution in this country, it being by no means an uncommon thing for the same property to be sold successively four or five times, first, perhaps, by an un- secured creditor, and then by the mortgage-creditors of the debtor ; the third mortgagee probably coming in first, then the second mortgagee, the first mortgagee closing the scene; and this, although execution had been actually taken out and the property attached by the different creditors, before it was sold at the instance of the unsecured creditor. Right of I will conclude the present lecture with a few gene- ra j observations on the security to which the mort- g a gee becomes entitled under an ordinary simple mort- gage. Now, it is necessary to bear in mind that a simple mortgage creates a real right, and that the defence of purchase for value without notice is not, therefore, appli- cable to a suit by a mortgagee to enforce his security. held that notwithstanding the insertion of an attornment clause in a mortgage-deed, the real relation between the parties is not that of land- lord and tenant, but mortgagee aud mortgagor. Cf . Venltata v. Kesliciba, I. L. R., II. Mad , 187. RIGHTS OF SIMPLE MORTGAGEE. 187 If I sell my property to you to-day, and sell it again to a LECTURE third person to-morrow, it cannot be denied that the second IV - purchaser, although he should buy without any notice of the sale to you, will have no defence to an action of eject- ment brought by you. But the case would be different if I only agreed to sell, and did not actually convey the pro- perty to you ; you would then acquire a right riot in rein but only in personam. But equity holds the conscience of a purchaser with notice bound by the agreement, thus engrafting an exception on the rule that a mere right in personam is not enforcible against third persons ; but equity stops there, and does not extend the exception against a purchaser for value without notice. The doctrine of the Court of Chancery, instead of derogating in any way from the rights of a person who claims under a conveyance, and not under a contract, rather invests a person, in cer- tain cases, whose title depends entirely upon a contract, with the same rights as if he had obtained an actual conveyance ; but it does so only as against a purchaser with notice. Thus, for instance, if some solemnity, which is deemed by the com- mon law to be essential to the validity of a conveyance, is omitted, the document will be unavailable as a conveyance ; but equity would treat it as an agreement which it would enforce, not only against the person who entered into the transaction, but also against a volunteer or a purchaser with notice. (See Austin's Jurisprudence, Yol I, 377.) I have already endeavoured to explain the origin of this doctrine, and will here only add that, as a general rule, the defence is not allowed when the right sought to be enforced is a legal right, and not one which is recognised only by equity. (Snell's Equity, pp. 23 30). It does not fall within the province of these lectures to explain the doctrine at length, and if I recur to it, it is only because its somewhat indiscriminate applica- tion in this country has attracted to it a cloud of prejudice much of which, when kept within reasonable limits, the doctrine certainly does not deserve. The real truth seems to be, that the doctrine is in some measure a "survival," and points to times when a conveyance was a transaction which could never take place secretly, while a mere agreement was not attended with any such publicity. In these days, when the title to real property passes by mere writing, or even by word of mouth, a conveyance may be attended with as little publicity as an agreement to transfer at a future time, and it is this feeling, apparently, which has 188 LAW OF MORTGAGE. LECTURE sometimes led to the extension of the doctrine to real rights IV. Security available against purchaser for value without notice. In all enlightened systems of jurisprudence, however, the somewhat cumbrous formalities which our forefathers in- sisted upon as a protection against fraudulent practices, are gradually giving way to a system of registration of assurances. The question whether a security is available against a purchaser from the mortgagor without notice of it, was raised in the Calcutta High Court in the case of Maharajah Moheshur Bux Singh Bahadoor v. Bhikha Chowdhry, (V Suth. W. R., 63) and was answered in the affirmative. Sir Barnes Peacock, in giving the judgment of the Full Bench, observed : " As to the second ground which has been raised for our opinion, namely, that the purchaser under the bill of sale was a bond fide purchaser without notice, and, there- fore, entitled to priority, if the bond was really and bond fide executed before the date of the defendant's purchase, it would prlmd facie be entitled to priority, and the defendant could not, according to the decision in the case of Vardon Seth Sam v. Luckpatliy Royjee Lallah (Marshall's Reports, p. 461), succeed without proof that he was a bond fide pur- chaser for value without notice. But, even if the defendant were to satisfy the Court upon that point, he would not, in my opinion, be entitled to priority, unless the plaintiff was bound to give notice of his bond. If he was not bound to register it in order to retain priority over subsequent pur- chasers for value, I do not see what notice he could give, or was bound to give. The mere charge upon an estate does not give a right to the possession of title-deeds ; and even if it would, the plaintiff in the present case had a charge, not upon the entire estate, but only on one or two villages, which would not give him a right to the posses- sion of the title-deeds to the whole estate. " But if the defendant should prove that he was a bond fide purchaser for value, he would throw the onus on the plaintiff of proving that he actually advanced the money as alleged in the bond creating the charge, and that the bond was executed before the defendant's purchase." See also Golla Chinna v. Kali Appiah, IV Mad. H. C. Rep. 434 ; tiadagopa v. Ruthna, IV Mad. H. C. Rep., 457) (s). () It seems that in the systems which are founded on the civil law, a purchase in good faith and for a valuable consideration, is no defence to a suit by a mortgagee to enforce his security. If the property comprised in a special mortgage were transferred to a purchaser for a valuable LIMITATION. ] 89 Mr. Justice Campbell, who was of a different opinion, LECTURE pointed to the " frightful consequences which may result IV< if it be established as law that a lien on real property, with- out either publication or possession, will suffice to defeat the most cautious purchaser." " I should fear," adds the learned Judge, "that in this country the result would be an entire insecurity of title ; that it would be impossible for any man by any amount of caution to buy real property with any confidence or any security that secret lien-holders may not start up with documents (or, possibly, even assert- ing verbal engagements) proved, as proof here goes, and which he cannot disprove, and may defeat or harass him." (V Suth. W. R., 67.) It is impossible to deny that there is a good deal of truth in these observations. In countries where the Roman doctrine of hypothecation obtains, the evil is guarded against by the device of public hypothec books, and the same purpose is served by the new system of registration which has been introduced into this country since the pass- ing of Act XV I of 1864. The fact that hypothecation confers a right in rem seems Period also to have been overlooked in some of the earlier cases wit . hin on the Statue of Limitations, in which it was held that a security mortgagee was bound to enforce his security within the mustbe time prescribed for suits for breaches of contracts. (Seetul e " Singh v. Baboo Sooraj Bux, VI. Suth. W. R., 818, since over- ruled. See Sanuar Hossein v. Shazada Golam Mohamed, IX Suth. W. R., 170.) In the last case it was held that a suit to enforce a security, is a suit to recover an interest in immoveable property within the meaning of clause 12 of the first section of Act XIV of 1859. It must not, how- ever, be understood that the like extended period was allowed to the mortgagee to sue on the covenant which had to be enforced within the same period as any other con- tract. (Munnoo Loll v. Pigue, X Suth. W. R., 379 ; Pearee Mohun Bose v.Gobind Chunder Auddy, X Suth. W. R., 56.) Act IX of 1871 in Article 132, Schedule ii,. expressly provid- ed for suits " for money charged upon immoveable property and the period of limitation was twelve years from the time when the money became due. It was, however, long consideration bond fide, even although he had no notice of the existence of this mortgage, it still remained liable to the mortgage (Surge's Foreign and Colonial Law. Vol. III., p. 200). But not so in the case of a general mortgage. (Cf. Ramsidh v. Balgovind, I. L. R., IX All., 158.) 190 LAW OF MORTGAGE. LECTURE doubtful whether, as under the old law, the remedy on 1V - the covenant must not still be sought within the period prescribed for contracts. The doubt was at length set at rest by the decision of the Judicial Committee of the Privy Council in the case of Ramdin v. Kalka Pershad (L. R., XII I. A, 12 ; I. L. R., VII AIL, 502). Act IX of 1871 has been replaced by Act XV of 1877, and the phraseology of the Article somewhat altered ; and it has been held that the language of the present Act leaves no room for doubt that the longer period is not applicable to an action on the co- venant (t). (Miller v. Rungo Nath Moulick, I. L. R., XII Cal, 389 ; Sheshayya v. Annamma, I. L. R., X Mad., 100.) I may, however, mention that a different view has been taken of a similar section in the English Statute. In Button v. Button (XXII Ch. D., 511) it was held that the limitation of twelve years imposed by the Eeal Property Limitation Act of 1874, section 8, on actions and suits for the recovery of money charged on land applies to the personal remedy on the covenant in a mortgage-deed as well as to the remedy against the land. It is true that in that case it was argued that an action on the covenant could be brought after a suit against the laud was barred, but I do not think that that ought to make any difference. The Court said that they could not read the words "sum of money secured by any mortgage," not as meaning a sum which is secured, but a sum of money so far as it is secured. That would be construing the language of the Act in a non-literal sense, there being no reason whatever why the Court should not keep to the plain words of the Statute. I must confess that the Court in coming to this conclusion, gave some reasons which would not apply to the Indian Limitation Act, but at the same time they had to face a difficulty created by the preamble of the English Act which is altogether absent from our Statute. (Compare XXII Ch. D., p. 579 ; see Khemji Bhagvandas v. Rama, I. L. R., X Bom., 519.) The difficulties which have been felt in England as to the period for which arrears of interest are recoverable to- gether with the distinction between suits for redemption by the mortgagor and actions or suits by the mortgagee, have not arisen in India, where it has been held that the period of limitation applicable to the principal is also () See, further, on the subject of limitation generally, App., Statutes tit., Limitation. JURISDICTION. 191 applicable to arrears of interest. (Gunput v. Adarji, LECTURE I. L. R., Til. Bom., 312 ; Davani v. Ratna, VI Mad., 417 ; IV - Baldeo v. Gokul, I. L R., I. AIL, 603.) A fresh difficulty has, however, been created by the provi- sions of section 147 of the present Act, the language of the Statute making it extremely difficult to say whether a suit for sale by a simple mortgagee comes under the sixty or twelve years' rule (it). (Aliba v. Nanu, I. L. R., IX Mad., 218 ; Khemji Bhagvandas v. Mama, I. L. R., X Bom., 519 ; Shib Lai v. Ganga Prasad, I. L. R., VI All., 551 ; see also Girwar Singh v. Thakur Narain, I. L. R., XIV Gal., 730 (F. B.) ; cf. Govind v. Kalnak, I. L. R., X Bom., 592 ; distinguish Ramsidh v. Balgovind, I. L. R., IX All., 158.) It follows from what I have said as to the nature of the Court in right created by a simple mortgage, that a suit to enforce a ^ 1 " r c t h a mortgage on land must, like any other suit for land, be must sue. brought in the Court within whose jurisdiction the land is situated, although the remedy on the covenant may have to be sought in a different forum. There is indeed a case at IX Bom. H. C. Rep., 12, ( Tenlcoba v. Rambhaji,) in which a different view is taken ; but, I presume, it cannot be supported. It is one of the cardinal principles of law that the forum sitce is the only one in which all rights concerning land must be tried; and this principle has been adopted by the Legislature in our Civil Procedure Code. It is true that the English Courts sometimes indirectly deal with rights in foreign land by affecting to act in personam. Thus the English Court of Chancery assumes jurisdiction to make a decree for foreclosure of lands outside the country, on the ground that a foreclosure-decree is only a decree in personam, depriving the mortgagor of his personal right to redeem. But this jurisdiction, which rests upon a somewhat doubtful basis, has been disclaimed by our Courts in which a decree, whether for sale or for fore- closure, has been almost uniformly regarded as a decree in rem, and, therefore, incapable of being made in any Court other than that within whose local limits the land is situat- ed. (Bebee Jaun v.Mirza Mahomed Hadse, I Ind. Jur.,N. S., 40 ; Chetti Gaundan v. Sundaram Pillai, II Mad. H. C. Rep., 51 ; Guneswar Lass v. Mahabar Singh, I. L. R., I Cal., (?/) As to what constitutes a simple mortgage, see notes to sec. 58 of the Transfer of Property Act. 192 LAW OF MORTGAGE. , LECTURE 163 ; Sree Matty Lall Money Dassee v. Jadu Natli Shaw, I IV - Ind. Jur., N. S., 319; In the Matter of S. J. Leslie v. The Land Mortgage Bank of India, Ld., VIII Sutli. W. R., 269 ; IX Ben. L. Rep., 171 ; Mussamut Amidi v. Debi Prosad, XVII Suth. W. R., 287 ; Begum Mahomed Khalil v. Mua- sumut Sona Koer, XXIII Suth. W. R., 123 ; Bui Deo Doss v. Mussumut Mul Koer, II All. H. C. Rep., 19. Compare Syed Nadir Hossain v. Pearoo Tafildarinee, XIV Ben. L. Rep., 425, note; XIX Suth. W. R., 255 ; Raghunath Doss v. Kakan Mai, I. L. R., Ill All., 568. Compare Sarup Chunder Guha v. Amirun Niess Khatoon, I. L. R., VIII Cal., 703. Private International Jurisprudence by J. A. Foote 120 137. See also as to the proper forum in which to recover a debt made a charge on foreign territory, Doss v. Secretary of State for India, L. R. XIX Eq. 507535). Conflicting As the law was understood before the Full Bench Ruling )U8< in Haran Chandra Ghose's Case (XXIII Suth. W. R, 187), it was of the utmost importance to the plaintiff to bring his suit in the proper Court, as no other Court than that within whose jurisdiction the land was situated could make a decree for a sale of the mortgaged property ; and this declara- tion was as a rule sought by the mortgagee, although tho mortgagor had not in any way parted with his interest in the property, either by a sale or a second mortgage. It is true that, according to the recent authorities, a mere money- decree is, as between the parties, as good as a decree for sale ; but the mortgagee would certainly act prudently in expressly asking for the usual decree for sale, which, as I have already explained, can only be made by the Court within whose local limits the land is situated. Question of Besides questions of territorial jurisdiction, as it is called, jurisdic-" V questions of pecuniary jurisdiction also sometimes arise tion. in suits to enforce a mortgage-security. The general rule, no doubt, on the subject is that the value of the subject- matter in dispute determines the forum in which the action should be brought. In an action by a mortgagee upon his security, the value of the subject-matter must depend on two considerations, the amount of the debt, and the value of the property which the mortgagee seeks to make avail- able for the satisfaction of the debt. If the value of the mortgaged property exceeds the amount of the mortgage- debt, the value of the subject-matter in dispute must be the amount of the mortgage-debt, for the subject of the suit is not the property itself, but the right to make it available PECUNIARY JURISDICTION. 193 for the satisfaction of the mortgage. But where the value LECTUEB of the property is less than the amount of the charge, the IV - subject-matter is the right to make the property available so far as it will suffice, and, as it cannot suffice to satisfy more than a sum proportionate to its value, the value of the sub- ject-matter of the suit must be determined by the value of the property. (Krishnama v. Srinivasa, I. L. R., IV Mad., 339 ; JanJd Dass v. Budri Nath, I. L, R., II All., 698.) Of course, the last observation only applies where the proceed- ings are merely in rem. For other instances of the difficul- ties inseparable from the system of regulating jurisdiction by value, see Mana Vikrama, Zamorin of Calicut v. Soorya Narayana Bhatta, I. L. R, V Mad., 284 ; Marakar v. Munhorali, I. L. R., VI Mad., 140 ; Amanat Begam v. Bhajan Lai, I. L. R., VIII All., 438. ; Rup Chand v. Bal- vunt, I. L. R., XI Bom., 591. R. B. G., M. 13 LECTURE V. Mortgage by conditional sale Differences in form between conditional sale and English mortgages Differences between mortgages by conditional sale and sales with clause for re-purchase Question of intention Cove- nant by the mortgagor upon which he might be sued by the mortgagee True rule of construction No personal liability of the mortgagor Nature of the Dristi-bundhuk and Gahen Lahen Rights of the mort- gagee Personal liability of mortgagor not to be presumed in the absence of express covenant Construction of the Sudder Dewany Adalut Implied warranty of title by mortgagor Remedy for breach of warran- ty Leading case on the point Measure of damages in England Remedy for defective title of mortgagor Remedy when security is in- sufficient Remedy of mortgagee when pledge is accidentally destroyed Principle upon which damages should be assessed Right of mortgagee to prevent waste when security is insufficient Failure to pay by appointed time Regulation XVII of 1806 Process of foreclosure in Bengal Stipulated period Shoroshee Bala Dabee's Case Forfeiture for breach of any conditfon Application to follow demand for pay- ment The mortgage must be foreclosed as a whole Case of joint mortgagors Court to which application must be made Duty of court on receiving application Meaning of " Legal representatives " Notice Purchaser of part of property and attachment creditor, both legal repre- sentatives Notice to be served on whom Case of intestacy Case of more than one mortgagor Who are not entitled to notice Provisions of the Regulation mandatory and not merely directory Distinction between mandatory and directory enactments View of the Allahabad High Court What the notice ought to contain Proceedings under the Regulation merely ministerial Regular suit Forbes v. Amerunessa Title of the mortgagee Right to recover rents Nature of the restrictions imposed by the Regulation Denonatb Gangooly's Case Process of foreclosure elsewhere than in Bengal, moulded on the practice of the English Court of Chancery Whether a mortgagee can pursue his reme- dies concurrently Right of mortgagee to possession immediately on default, how far qualified in Bengal by Regulation XVII of 106 Limita- tion Act XIV of 1859 Cause of action what Possession of the mortgagor when permissive Mortgagee's cause of action before fore- closure Rights of mortgagor transferred to third party Trespasser holding adversely to both mortgagor and mortgagee Acts IX of 1871 and XV of 1877. Mortgage A mortgage by conditional sale is, as its name denotes, tionaTsaie. a conditional conveyance of land as a security for the repayment of a loan " with a stipulation that if the money borrowed be not paid, with or without interest, by a cer- tain day, the sale shall become absolute." It resembles very closely in form an English mortgage, both of them belong- ing to that class of securities in which the property pledg- ed is liable to pass from the debtor to the creditor on MORTGAGE BY CONDITIONAL SALE. 195 default of payment. They are, therefore, generally treated LECTURE as analogous. (Khelut Chunder Ghose v. Tarachurn Koon- doo, VI Suth. W. R., 269; Shorosheebala v. Nundolal, XIII Suth. W. R., 364; V Ben. L. Rep., 389; Manly v. Patterson, I. L. R., VII Cal., 394 ; (a) Shurnomoyee v. Srinath Das, I. L. R., XII Cal., 614.) There is, however, one important distinction between the two. In an English mortgage, the mortgagor gives a covenant for the payment of the debt, and, even if no such covenant is given, a debt is created by implication. But, in a mortgage by conditional sale in this country, the mortgagor does not make himself personally liable for the payment of the mort- gage-money (6). There is, again, some difference in the form of the instruments. In an English mortgage the owner- ship is wholly transferred to the creditor, liable, however, to be divested by the repayment of the loan on the appointed day. The English mortgagor says to his creditor, " I sell my property to you, but if I repay the debt by a certain day, the conveyance shall be void or ( as is now generally the case) you shall re-convey the property to me." In the Indian mortgage, on the other hand, the creditor acquires only a qualified ownership, which, however, by the terms of the agreement ripens into absolute proprietorship imme- diately on the default of the mortgagor. In the English mortgage, therefore, the mortgagee, by the terms of the agreement, has the right to enter upon possession of the property mortgaged to him, immediately upon the execution of the deed ; but the mortgagee under a conditional sale has, generally speaking, no such right. The possession of (a) In this case, the plaintiff prayed for foreclosure or sale, and, in the event of the proceeds being insufficient, for a personal decree against the defendant for the amount of the deficiency ; but the Court refused to grant the latter part of the prayer, on the ground that the suit was in the nature of a foreclosure suit. I may mention that the mortgage- deed did not contain a covenant to pay, but this was apparently regard- ed as immaterial, as the mortgage was in the ordinary English form. It was contended by the mortgagor that as no proceedings had been taken under Regulation XVII of 1806, the mortgagee was not entitled to foreclose; but the Court, without expressing any opinion on the poinb, ordered a sale instead of a foreclosure, unless the money was paid within one year from the date of the original decree, by analogy to the provisions of Regulation XVII of 1806. There can be very little doubt, however, that if an English mortgagee wishes to foreclose a mortgage in the mufussal, he must take proceedings under the Regu- lation. (See the cases cited above.) (J) A conditional sale in this country is analogous to an English mortgage by trustees under a power, where there is no cestigue trust to enter into the usual covenants. 196 LAW OF MORTGAGE. LECTURE the mortgagor is, therefore, generally protected in an v - English mortgage by a covenant for quiet enjoyment till default, a covenant which, as a rule, would be wholly superfluous in an Indian mortgage, for the simple reason that with us only a qualified ownership passes to the mortgagee, which before default does not carry with it the right to the possession of the property. English A practice, however, obtains in this country, which also ' age ' seems to have prevailed in England in former times, by which the debtor executes a deed purporting on the face of it to be an absolute conveyance, the creditor, on the other hand, engaging to re-convey the property to the debtor on repayment of the loan. In such cases the conditional sale differs but very little in form from an English mortgage. The practice, however, is open to very serious objection, and in gradually dying out. Redeem- In the case of Rajah Heera Singh (N.-W. P., Vol. VIII, mortgage ' P' 564), where there was an absolute sale together with an agreement by the purchaser to re-convey the property, if the purchase-money, together with interest, were paid by a certain day, it was contended that the transaction between the parties was not a mortgage, but only " a redeemable sale," and, therefore, not subject to the rules relating to mortgages. The Court, however, held that a redeemable sale was identical with a mortgage, and that the vendor in a redeemable sale had an equity of redemption which must be foreclosed in the same way as in the case of an ordinary mortgage. (See also Arman Pandey v. Norrotun Kumvar, III Macnaghten's Sel. Rep., 78. Of. Oholam Russool v. Fufjo, IV and V Agra H. C. Rep., 129 ; Imdad v. Mannu, I. L. R., Ill All., 509.) Difference There can be no doubt that the case was correctly decided ; between but the proposition about " redeemable sales " is stated in mortgage { i > , , > -r, and re- terms winch are somewhat unnecessarily broad. It is true ^ ia * ^ e "ghts f tne mortgagor may not be defeated under colour of a redeemable sale ; but care must be taken to dis- tinguish a mortgage from a bond fide sale with a clause for re-purchase. The two things resemble one another closely in form, but differ widely in their incidents. If there is a bond fide sale with a condition for re-purchase, the power must be exercised strictly in compliance with the terms of the condition, while in the case of a mort- gage, a failure to fulfil the strict terms of the agreement is not immediately followed by a forfeiture of the property. SALE WITH CLAUSIfi FOR RE-PUHCHASE. 197 The reason for this distinction is, that in the case of a LECTURE bond fide sale with an option to the vendor to re-purchase v - within a given time, there is no equity whatever to relieve against the sale, the rights of the purchaser being entitled to protection equally with those of the vendor; while in the case of a mortgage the transaction is regarded only as a security, and the mortgagee is sufficient!}" compensated by receiving interest in default of payment at the appoint- ed time. The distinction is illustrated in several English cases, in which Courts of Equity, notwithstanding the jealousy with which such transactions are viewed, have refused to relieve the vendor from the consequences of his own default, and it has been acted upon by our own Courts in more than one reported case. (Rajah Lakshmi Chelliah Garu v. Rajah Sri Krishna, VII Mad. H. C. Rep., 6 ; Ven- kappa Chettiv. Akku, VII Mad. H. C. Rep., 219. Compare William v. Owen, 5 Myl and Cr., 303; Ensworth v. Griffith, 5 Bro. P. C.,184). Verner v. Wenstanley, 2 Sell, and Lef. 393 ; Goodman v. Grierson, 2 B. & B., 279.) It is important to observe that the expression conditional Mortgage sale is in itself somewhat misleading, although it is tk)uaisai l e" frequently used in Indian Courts to denote a mortgage by kutkobala or bye-bil-ivufa. It is only a somewhat loose and inaccurate way of expressing the contract known by the term mortgage in the English law. (Alu Prasad v. Sukhan, I. L. R, III. All., 614.) The distinction between a mortgage and a conditional Question of sale properly so called, is, however, sometimes very nice, in'aii^sucii and it is not always easy to determine the class to which cases. a particular transaction belongs. The question is, was the transaction a bond fide sale with a contract for re-purchase, or was it a mortgage under the form of a sale ? In this, as in every other case, the intention of the parties must be looked to, and that intention may be shown by the deed itself, by other instruments, or even by oral evidence. (Alderson v. White, 2 DeG. and J., 97 ; see also Nallana Gaundan v. Palani Gaundan, II Mad. H. C. Rep., 422.) The real nature of the transaction must be carefully looked into; the mere form of the instrument not being con- clusive, and a deed will not necessarily be regarded as creat- ing a mortgage, although it may be described as such on the face of the document. Thus, where a deed, which on the face of it was described as a mortgage, stated that the grantee was already in possession under a previous 198 LAW OF MORTGAGE. LECTTJBE mortgage by the grantor, and was, under the second deed, v< to receive the profits in liquidation of interest so far as they would go, and that the grantor was not to be liable to repay the principal money or such balance of interest (if any) as might accrue upon it, unless he adopted a son, and, unless that event happened, was to enjoy the property conveyed in right of purchase for the sum (principal and interest) due to him, it was held that the deed was a sale liable to be converted into a mortgage, and not a mortgage liable to be converted into a sale. (Subhabhat BinBahanbhat v. Vasuderbhat Bin Subhabhat, I. L. R., II Bom., 113.) Covennnt The Court distinguished the case from Howard v. Harris sue. ^j Vern, 190) on the ground that in the latter there was a covenant by the mortgagor upon which he might have been sued by the mortgagee. But there was no such absolute cove- nant in the case before the Court, as no debt whatever would have been due from the grantor until he adopted a son, and, the grantee, excepting in that event, would not have the usual Bnpuji v. remedies of a mortgagee. A similar construction was put Sena. on ano fc ner deed in Bapuji v. Sena Bharaji (I. L. R., II. Bom., 231). It appears from the report that the grantor in that case executed to the grantee a document reciting a mortgage by the former to the latter of certain lands for Us. 125, on which Rs. 200 were then due from the grantor to the grantee, and containing an agreement that the grantee should pay Rs. 75 to another creditor of the grantor, and purporting, in consideration of Rs. 275 so made up, abso- lutely to sell and convey the mortgaged lands to the grantee; and the grantee executed to the grantor a document of the same date, reciting the sale of the mortgaged lands by the grantor to the grantee for the consideration of Rs. 275, and covenanting that the grantee should re-convey to the grantor the lands (the subject of the grant), if the grantor should repay to the grantee the sum of Rs. 275 within a certain period, and providing that in case of default in such pay- ment within such period, the covenant for re-conveyance should become null. It was held that the transaction was a sale, and not a mortgage, and that consequently the grantor had no right to redeem the lands after the expiration of the period so fixed for the payment of Rs. 275 by the grantor to the grantee, there being no evidence or allegation that, at the date of the exe- cution of the two documents, Rs. 275 were an insufficient PERSONAL LIABILITY OF MORTGAGOR. 199 consideration for the sale of the lands, nor any stipula- LECTURE tion that the grantee should account for the rents and profits received by him, or that the grantor should pay interest on the Rs. 275, nor anything to show that the grantor remained in possession after the execution of the two documents, or that subsequently to that time any advances were made by the grantee to the grantor on the security of thelands, nor anything in either documentwhich pointed to a right on the part of the grantee to recover from the grantor the sum of Rs. 275 or any part of it before, at or after the period named for the repurchase. (Bapuji Apaji v. Sena Bharaji Marvadi, I. L. R., II Bom., 231.) I must tell you that the test sometimes applied by Personal English Judges, viz., the existence or absence of a power |jf e m' to recover the sum named as the price for the re-pur- gagor. chase, cannot safely be applied in India, because, as you will presently see, there is, in general, no personal liability incurred by the mortgagor in a mortgage by conditional sale. There are, however, other circumstances which may furnish a key to the real character of the transaction. If, for instance, the conveyance is not fol- lowed by possession, or if there is a covenant for the payment of interest, the transaction will be regarded as a mortgage, while, if the purchaser is let into posses- sion as owner with no power to recover interest upon the purchase-money paid by him, the instrument will probably be regarded as an absolute sale with an option to the vendor to re-purchase. It is, no doubt, possible to suggest a case in which the creditor might agree to take the rents and profits in lieu of interest, the real nature of the transaction being disguised under the appearance of a sale with a clause for repurchase ; but even in such cases the adequacy or inadequacy of the sum mentioned in the instrument as the purchase-money would perhaps throw some light on the transaction. " The intention of the parties, as collected from the tenor of the deed, shows whether the Bye-bil-wufa be a sale with the reserve of an option of retractation within a limited time, or a mort- gage for the security of money lent. A stipulation for a short period must be considered to mark that a sale was in the contemplation of the parties ; a long term denotes a mortgage, or security for a loan, and such mortgages, in the form of conditional sales, are very common." (Busunt Ali v. Ramkomar, I Macnaghten's Sel. Rep., 77, note. 200 LAW OF MORTGAGE. LECTURE Compare Lakshmi Chelia v. Srikriahna, VII Mad. H. C. V- Rep., 6, and Venkata v. Akku, VII Mad. H. C. Rep., 219, with Nallana Ganadan v. Palani, II Mad. H. C. Rep., 420 ; Gurusamy v. Swamiudha, II Mad. H. C. Rep., 450 ; Ramsaran v. Amrita, .1. L. R., Ill All., 369, and Chida- mbara v. Manikya, I Mad. H. C. Rep., 63 ; see also Sital Persaud v. Lachmi, I. L. R., X Cal., 30 ; Bhajan v. Musli- tak, I. L. R., V All., 324; Bhup Kuar v. Muhammadi ; I. L. R., VI All., 37. Compare Badriprashad v. Dowlut, I. L. R., Ill All., 706, where a document was construed as an agreement to sell and not a mortgage. See also Juseem- uddeen v. Hwrosunderri, XIX Suth. W. R., 274, where the document was construed as creating a redeemable lease.) True rule The true rule seems to be that wherever a transaction, ^ n ^ s inception, is intended as a security for money, whether this intention appears from the deed itself or from any other source, it isal ways considered asa mortgage, and there- fore redeemable, although there may be an express agree- ment that it shall not be redeemable, or that, if redeemable at all, the right of redemption shall be confined to a particular time or to a particular description of persons. ( Goodman v. Grierson 2. B. and B., 279. ) The criteria by which it may be determined whetlier a conveyance was intended as an absolute sale with a condi- tion for repurchase, or, as a mere security, are thus formulat- ed by Mr. Butler : " If the money paid by the grantee was not a fair price for the absolute purchase of the estate conveyed to him ; if he was not let into the immediate possession of the estate ; if, instead of receiving the rents for his own benefit, he accounted for them to the grantor, and only retained the amount.of the interest; or, if the expense of preparing the deed of conveyance was borne by the grantor, each of these circumstances has been considered by the Courts as tending to prove that the conveyance was intended to be merely pignorititious." (Note No. 96, by Mr. Butler to his edition of Coke upon Littleton, 205 a., cited in Bapuji Apaji v. Senabharajt Marvadi, I. L. R., II Bom., 231.) The enumeration, however, I must warn you, is by no means exhaustive. I would only add that in doubtful cases the Court leans strongly to the construction most favourable to the person claiming the right to redeem, (Longet v. Scawen, 1 Ves. Sen., 402) (c). (c) As to the distinction between mortgages and mere lease?, see Lecture VII. There are also some cases which, BO to speak, lie 011 the RIGHTS OF THE MORTGAGEE. 201 The contract of mortgage by conditional sale is a form LECTUBK of security known under various names throughout the v - country. The Dristibundhuk of Madras is in its nature Dr ^' essentially the same with our own conditional sale, the dhuk. debtor agreeing with his creditor to put him in posses- sion, on default, of the property pledged to him, as abso- lute owner. The Gahen Lahen of Bombay is also analo- gous to our conditional sale, and I propose to treat of these varieties of mortgages in the present lecture, as they all belong to that group of securities in which the ownership of the pledge is liable to be transferred from the debtor to his creditor. I intend, in the first place, to call your attention to the Rights of rights acquired by the mortgagee under a conditional sale, gt?re olt ~ although the mutual rights and duties of mortgagor and mortgagee are necessarily so interwoven with one another that I cannot discuss the rights of the mortgagee with- out in some measure touching upon those of the mort- gagor. Now, the first observation which I think it necessary No person - to make is, that in a conditional sale in Bengal, and per- "f '^ ** haps also in other parts of the country, the mortgagor mortgagor, does not ordinarily incur any personal liability. The cre- ditor can only look to the land pledged to him for the satisfaction of his debt. If the debtor makes default, he may, it is true, foreclose the equity of redemption and become the absolute owner of the estate ; but he cannot enforce payment from the debtor personally. If, therefore, the property is worth less than the amount due to him, he must suffer the loss, as a decree for foreclosure is the only remedy to which he is entitled. This was laid down in a very early " construction " by the Sudder Dewany Adalut of Calcutta, and the view of the law there taken, has not, so far as I am aware, been since question- ed. The "construction " says : "If the mortgage be of the nature of a conditional sale and the money be not repaid, border-land between simple mortgages and mortgages by conditional sale; for an instance, see Gfooknldus v. Jfriparam, (XIII Ben. L. Rep., 205, P. C.,) where a covenant that if the mortgagor fails to pay, he shall cause settlement to be made with the mortgagee, was construed not as a mortgage by conditional sale, but as a simple mortgage. I may add that the Privy Council also held iu this case that the rule that a Bye-bil-wufa does not become absolute upon breach of the condition as to payment without proceedings for foreclosure, obtains in the Central Provinces of India. 202 LAW OP MORTGAGE. LECTURE V. Personal liability not to be presumed without express covenant. the lender, unless good and sufficient cause be shown, can only sue for possession of the property pledged, and has not the election of suing for the money or to be put in possession of the property as he may deem most advantageous to his own interest." (Construction, 898, 5th September 1834; see also VII Macnaghten's Sel. Rep., 92. As to the circumstances under which an action for debt may be brought, see Khedoololl v. Rutton, V Macnaghten's Sel. Rep., 10 ; Bhugwan v. Govind, I. L. R., IX Cal., 234.) (d). The language of the ' construction ' is not perhaps very precise, and it would seem that the proposition that the mortgagee must ordinarily look to the land is somewhat broadly laid down. The question, I presume, must depend (rf) In the last mentioned case the mortgagee was allowed to recover the costs of certain abortive foreclosure proceedings. (Cf. Rasmoney v. lllahee, S. D. A. 1854, p. 573.) It is important to observe that a mort- gagee is entitled, according to the English law, not only to the costs incurred by him in perfecting his title or protecting it, but he may also recover any costs bond fide incurred by him for the purpose of realizing his security. Thus, if a sale by the mortgagee under his power becomes abortive otherwise than owing to the negligence or misconduct of the mortgagee, he will be entitled to add the costs of such sale to his secu- rity. (Farrer v. Lacy Hartland and Co., 25. Ch. D., 636.) I may here mention that the peculiar nature of the law which is administered by the English Court of Chancery is well illustrated by the case of ex-parte Fuinga in re Sneyd (25 Ch. D., 338), in which the Court held that an action of debt could not be maintained by the mortgagee against the mortgagor for costs and expenses properly incurred by the mortgagee in relation to the mortgaged property. " No doubt," observed Lord Justice Cotton, " if the debtor in his character of mortgagor, claimed to redeem the mortgage, the Court would not grant him that which originally was an indulgence a departure from the strict tenor of his legal right without imposing upon him the condition of paying the mortgagee not only the debt which he had contracted to pay by his covenant, but any expenses which had been properly incurred by the mortgagee in his position as such. But this is an entirely different thing from saying that an action of debt could be maintained by the mortgagee against the mortgagor for those expenses. It is said that the mortgagee's right in a redemption action, is founded on an implied contract by the mortgagor to pay these costs ; but I am of opinion there is no such contract, but as a condition of redemption that a Court of Equity imposes on the mortgagor the terms of paying all costs properly incurred by the mortgagee for the purpose of protecting the estate or himself as mortgagee." (25 Ch. D., 352.) It is however doubtful how far this distinction, which is based upon the peculiar nature of equitable jurisdiction in England, will be recognised by the Courts of this country. The mortgagor is not suffered to redeem except on payment of all costs incurred in protecting the estate, because he is liable as upon a quasi-contract to repay such moneys to the mortgagee ; but in that case there is no reason why the mortgagee should not be allowed to main- tain an action for such costs. You must, therefore, either refuse to allow such costs, whether the action is one for redemption or not, or you must allow the mortgagee the right to bring an action for them. DEFINITION OF CONDITIONAL SALE. 203 upon the particular language of the instrument, and all LECTUBE that can be affirmed as a proposition of law is, that personal V. liability shall not be presumed in the absence of an express covenant. Thus qualified, the proposition would not seem to be open to any reasonable objection. Possibly this is all that was meant to be laid down in the construction, although the language used might have been somewhat more precise. I have in my own experience found very distinct covenants for repayment in Bengali mortgages by condi- tional sale, and it would not, I conceive, be just to say to the mortgagees in such cases, " You must not sue upon the covenant, but must proceed to foreclose the equity of re- demption." I find that Mr. Justice Macpherson in his treatise on construc- Mortgages defines a conditional sale as a mortgage ; in tio " f n>e which " the borrower, not making himself personally liable ^.wany for repayment of the loan, covenants that, on default of Adaiat. payment of principal and interest on a certain date, the land pledged shall pass to the mortgagee." (Macpherson's Mortgage, p. 15.) This definition, or rather description, of a conditional sale, is apparently taken from the judgment of the Court in a very early case in the Sudder Dewany Adaiat, and is, I should have thought but for the approval it has received both legislative and judicial, not altogether free from objection. In making the foregoing observations, I must not be understood as expressing an opinion that the mortgagee will be permitted in this country to pursue all his remedies concurrently, or that he may not be put to his election. The case of Mohanund Chatterjee v. Govind Nath Roy (VII Macnaghten's Sel. Rep., 110) is a direct authority that a mortgagee having elected to foreclose will not be suffered to sue the mortgagor personally for the debt secured by the mortgagee. The question, whether or not there is an implied implied warranty of title in a mortgage by conditional sale, ^i" by ty f is perhaps not wholly free from doubt. In the case of an mortgagor, out-and-out sale of immoveable property, there are con- flicting dicta, if not decisions, and the same uncertainty extends to the case of a mortgage. The weight of authority however, so far as mortgages are concerned, seems to be in favour of the existence of an implied warranty. (Dwarka Dass v. Rutton Singh, II Agra H. C. Rep., 119.) The ques- tion, however, is not of much practical importance, as there 201 LAW OF MORTGAGE. LECTURE are few mortgages in which some expressions may not v> be found sufficient to constitute an express warranty of title (6). Remedy for The question next arises what is the remedy of warranty, the mortgagee if the title of the mortgagor turns out to be defective. This is pointed out by Mr. Justice Markby in delivering the judgment of the Court in Syud Sayet AH v. Syud Mohamed Jowad All (VII Suth., W. R, 197.) In that case the title of the mortgagor having proved defective, the mortgagee brought a suit, in which, after stating the re- sult of a certain action between the mortgagor and a third person, in which such third person was declared to be the owner of the property which had been mortgaged to the plaintiff, the plaint proceeded to state : " Hence, the right of Sayet Ali ceased to exist, and he held no longer any lien on the property sold. That, for this reason, your peti- tioner has become entitled to recover the consideration- money with interest accrued thereon." Sayet AJiv. The plaint was filed on the 20th February 1864 before ^ Q time fixed for the repayment of the loan had expired. The defendant in his answer insisted that the suit was premature, as it was substantially a suit for the money which had been advanced, and which had not become due when the plaint was filed. Mr. Justice Markby, in over- ruling the objection, points out the real nature of the suit. The learned Judge observes : " With regard to the de- fence that the action is premature, because the time for repayment of the loan has not elapsed, we think that it is not well founded. The defendant has misunderstood the cause of action ; it is not brought to enforce repayment of the loan, but it is an action for damages for breach of contract. A warranty of title amounts to a contract by the seller that, in consideration of the buyer purchasing the property and paying the consideration money, he (the seller) will make good to the buyer any loss which the buyer ma}^ incur by reason of the seller not having a good title to the property. This is an absolute contract from the moment it has been entered into, and the buyer can sue upon it at once, if he can show that the seller has not a good title in accordance with his undertaking, and that he has sustained loss in consequence." Further on, the learn- ed Judge observes : "It is perhaps desirable to point out (e) The matter has now been set at rest, but not completely, by the Transfer of Property Act. REMEDY OF MORTGAGEE. 205 that though, as above stated, the buyer may at once bring LECTURE an action on a warranty of title, if he can show a v - breach of that warranty, it does not follow, as a matter of course, that he is entitled to recover back as damages the whole of the consideration money. Nor do we nssent to an argument which has been put forward on the part of the plaintiff, and has received some countenance from the Principal Sudder Ameen, that, on its being ascertain- ed that the seller had no title, the conditional sale was (to use the expression of the judgment below) nullified" (/ ). We thus find that the mortgagee has a right to bring an Measure of action for damages if the title of the mortgagor is found damages ia to be bad. The remedy of the mortgagee is not quite En s |niul - so clear when the pledge is destroyed by what is called an act of God, or suffers deterioration so as to become insuffi- cient for the security of the creditor ; although in one case where a mortgagee was deprived by diluvion of the pos- session of lands over which he held an usufructuary lease, before he had repaid himself the amount advanced by him, it was suggested that the mortgagee had a right, unless the terms of the lease were very special, to call upon the lessor to pay him the balance of the loan which remained unpaid. (Sheo Golam Singh v. Roy Dinkar Dyal, XXI Suth. W E,., 226.) We have already seen that the Hindu law in such cases permitted the creditor either to demand another pledge or to sue the debtor immediately for the debt secured by the pledge. A similar right is given by the French Code Napoleon, and the principle may well be adopted by our own Courts as founded in justice and equity, and open to no reasonable objection (g). While upon the subject, I may venture t<> suggest that a Remedyfor similar rule may, perhaps, be applied with advantage to fij!^} 76 cases in which the mortgagor's title is found to be defect- mortgagor, ive. It is perfectly true that the creditor would be suffi- ciently protected by permitting him to sue for damages for the breach of the warranty, but I think there would be (/) Compare Radha Chnrn v. Parbntty Churn (XXV Stith. W. E., 51), where a prior mortgage had been suppressed ; Pitambur v. Ram Saraii (XXV Suth. W. R., 7), where the mortgagee was deprived by the wrong- ful acts of the mortgagor of a portion of the mortgaged land ; and Smvaba v. Abaji (I. L. R., XI Bom., 475), where the mortgagee was evict- ed, and the security came to an end by the default of the mortgagor. See .also Lecture VII. (g) It has now been adopted by the Legislature, see Sec. 68 of the Transfer of Property Act. 206 LA.W OF MORTGAGE. LECTURE very great difficulty in assessing the damages. As pointed v - out by the Court in Sayet AH v. Mohamed Jowad AH (VII Suth. W. R., 196), it does not follow that the mortgagee is entitled to recover as damages the whole of the "consi- deration money." For the purpose of this inquiry, I shall assume, as the Court apparently did in the case to which I have referred, that this would be one of those cases in which the mortgagor would be personally liable ; for, other- wise, there can be no doubt that the mortgagee would be at least entitled to recover as damages the whole of the money lent by him. The question then arises what, assuming that the mortgagor is liable to be sued upon his covenant, is to be the measure of damages for the breach of the warranty. Now, the principle on which the damages ought to be assessed would seem to depend upon the difference to the creditor in the risk incurred by him under the altered cir- cumstances ; and this difference ought to be the measure of the damage suffered by the creditor. Now, the difference in the risk is, I apprehend, capable of a money-valuation in this way. What would be the rate of interest which the creditor would demand if the money were advanced on the personal security of the debtor? And the difference between this hypothetical rate and the rate at which the money was actually lent, would represent the loss to the creditor, not indeed with mathematical certainty, but with that substantial accuracy which alone is attainable in such cases. It is, however, evident that the principle cannot be worked out satisfactorily in practice. The Court can, at the best, only make a rough estimate of the loss sustained by the creditor. There can, therefore, be no serious objec- tion to the extension to such cases of the rule that where by reason of an accident the mortgagee loses the benefit of the security, the mortgagor is bound either to repay the debt, or to give another pledge. The debtor surely cannot complain with reason of being obliged to repay, before the appointed time, money which would, in all probability, have been never lent to him but for his offer of a security which has turned out to be worthless ; while the creditor would be only too glad to call in his money (h). (A) It would seem that in England where a mortgage is made with covenant for title, the measure of damages in case of breach of the cove- nant is the original debt. (Per Patteson, J., in 4 Q. B., 3y5. cited in Mayue on Damages, p. 197. See also Lecture VII.) EQUITY OF REDEMPTION. 207 In the foregoing observations, I have confined myself LECTTJBK to the rights acquired by the mortgagee immediately on v - the execution of the mortgage, and before any default has been committed by the mortgagor. In connection with ISi this subject I may mention that, although the mortgagor security is is treated as the owner of the land before foreclosure, the insufficient - mortgagee has the right, where the security is insufficient, to ask the Court to interfere to prevent waste by the mortgagor (King v. Smith, 2 Hare, 239). I have not, in- deed, been able to find any Indian case directly bearing upon the point ; but the rule is founded in good sense, and there can be no possible objection to its application in this country. I shall now proceed to discuss the rights of the mort- Failure to gagee after default made by the mortgagor to repay the debt by the appointed time. If we were to look only to time, the terms of the contract between the debtor and his credit- or, the ownership passes absolutely to the creditor imme- diately on default of payment ; and this would seem to have been actually the case in this country before the legislature interfered and engrafted on, what I may call, the common law of India, the rule borrowed from the practice of the English Court of Chancery, by which the mortgagee is per- mitted to redeem within a reasonable time, after he has forfeited his right to do so by the strict terms of his agree- ment. The preamble of Regulation XVII of 1806, which was Regulation passed for the Presidency of Bengal, points out the neces- ^g 1 of sity of " an equitable provision " for allowing a redemp- tion within a reasonable and limited period, as the only means of guarding against improvident and injurious trans- fers of landed property by the forfeiture of mortgages accompanied with a conditional sale. In the other pro- vinces, the legislature does not seem to have thought it necessary to interfere ; but the same result has been accom- plished by what is called, not perhaps very felicitously, judicial legislation. I propose in the first place to call your attention to the stipulated provisions of the Bengal Regulation, by which the mort- period, gagee was prevented for the first time from insisting upon a strict enforcement of the terms of his contract with the mort- gagor. The mortgagee, in order that he may become the absolute owner of the property pledged to him, must proceed to foreclose the right of redemption, and the pro- cedure which he has to adopt is pointed out by the eighth 208 LAW OF MORTGAGE. LECTURE section of the Regulation, which says : " Whenever the Vt receiver or holder of a deed of mortgage and conditional sale, such as is described in the preamble and preceding sections of this Regulation, may be desirous of foreclosing the mortgage, and rendering the sale conclusive on the expiration of the stipulated period, or at any time subse- quent before the sum lent is repaid, he shall (after demand- ing payment from the borrower or his representative) apply for that purpose by a written petition, to be presented by himself or by one of the authorized vakils of the Court to the Judges of the zillah or city in which the mortgaged land or other property may be situated. The Judge, on receiving such written application, shall cause the mortga- gor or his legal representative to be furnished, as soon as possible, with a copy of it, and shall at the same time notify to him by a purwana under his seal and official signature, that, if he shall not redeem the property mortgag- ed in the manner provided for by the foregoing section within one year from the date of the notification, the mortgage will be finally foreclosed, and the conditional sale will become conclusive." Leading The preceding section declares the mortgagor entitled to this 8 oint rec ^ eem on payment of the principal sum with the interest due thereon. Now, the language of this section has given rise to a good deal of discussion ; and I cannot do better than call your attention to some of the questions which have arisen upon it from time to time. In the case of Shoroshee Bala Dabee v. Nund Lall Sein (XIII Suth. W. R., 364 ; V Ben. L. Rep., 389) a somewhat nice question arose as to the meaning of the words " stipulated period " which occur in the eighth section of the Regulation. The facts in that case were shortly these : On the 4th of September 1863, Shoroshee Bala Dabee and her son Hemendro Nath Mookerjee executed a mortgage of certain landed property at Chittagong to one Gobind Chunder Sein. The deed was in the English form, and by it the property was conveyed to Gobind Chunder absolutely, subject to the proviso that in the event of the mortgagor's paying Gobind Chunder the principal sum of Rs. 54,437-10-4 on the 4th September 1868, and in the meantime paying interest on that sum at 10 per cent, per annum half-yearly, (i. e., on the 4th March and 4th September), with annual rests in the case of default of such payment, then and in such case Gobind would re-convey. STIPULATED PERIOD. 209 The mortgagors failed to pay the whole of the interest LECTURE which became due under the terms of the mortgage, and on the 4th December 1866, Gobi ml Chunder applied by Shoro9h written petition to the Judge of Chittagong.for a foreclosure Baia of the mortgage pursuant to the provisions in that behalf Dabee ' 3 of section 8 of Regulation XVII of 1806. Thereupon, the prescribed notification seems to have been made to the mortgagors by the Judge. .Upon the footing of this petition and notification, Nund Lall Sein, the son of Gobind Chunder, on the 15th April 1868 (his father having meanwhile died), instituted a suit for the establishment and confirmation of absolute purchase and to obtain possession of the mortgaged pro- perty accordingly. It is obvious from this statement of the facts of the case that the application to foreclose, as well as the suit based upon it, were instituted before the period fixed for the repayment of the loan secured by the mortgage had elapsed. It was contended for the plaintiff that the suit was not premature, as according to the terms of the deed, the defendants had lost their right to ask for a reconvey- ance ; and the Regulation was never intended to give a right to the mortgagor other than a right to redeem within a certain time, after he has lost all right to the property under the strict terms of the contract, and that the stipulat- ed time within the meaning of the Regulation had, there- fore, arrived as soon as there was a breach by the debtor. The contention, however, was overruled, and the Court in giving judgment observed : " If the Zillah Court was at liberty, and had the machinery to deal with this matter precisely upon the principles which govern the English Court of Chancery, the facts of the case are possibly such as would give the plaintiff a right of suit even before the expiration of the time agreed upon for repayment of the principal debt. For, whenever that has occurred by reason of which the mortgagor has lost his right under the deed to call for a reconveyance of the property, and he can only get back the mortgaged premises by virtue of the right of redemption which the Court of Equity still pre- serves to him, then also that Court allows the mortgagee to come in and insist that the mortgagor shall elect between the exercising of this right of redemption and being foreclosed. But we think that this mortgage- transaction, notwithstand- ing that it wears a completely English aspect, falls within B. B. G., M. 14 210 LA.W OF MORTGAGE. LECTURE the operation of Regulation XVII of 1806. It is in all v> respects parallel with the mortgage common in this country, which is effected by means of a bill of absolute sale, toge- ther with a contemporaneous ekrar for reconveyance ; and mortgages of this sort have always been treated as being subject to the Regulation. The words ' conditional sale ' as explained by the preamble, are broad enough to cover them, and there is no doubt that they are especially within the mischief against which the enactment was directed, This being so, the mortgagee can only obtain a foreclosure by following the procedure which is laid down by section 8 of the abovementioned Regulation. And although there is some ambiguity in the words of that section relative to the time when the mortgagee may first prefer his petition for foreclosure, this is cleared up by reference to the pre- vious section. The last clause of the 7th section runs thus : " The whole of the provisions contained in section 2, Regulation I of 1798, and section 12, Regulation XXXIY of 1803, as applied therein to the stipulated period of redemption, are declared to be equally applicable to the extended period of one year granted for an equitable right of redemption by this Regulation." " This makes it evident that the year of grace, commenc- ing as it does with the notification which follows on the mortgagee's application for foreclosure, is intended by the Legislature to be additional to the period which is stipu- lated for redemption in the mortgage-contract ; and, there- fore, it follows that the application itself cannot be made before the expiration of that ' stipulated period.' " Now the stipulated period of redemption, referred to by the Legislature in this Regulation, appears to us to be the whole period prescribed by the mortgage-contract for the performance of the conditions, upon the fulfilment of which the mortgagor is to be entitled to a reconveyance. We do not think that it in any case means less than this, or depends upon whether the mortgagor duly performs all those conditions or not. We see no reason for suppos- ing that the Legislature by those words spoke, not of the period of redemption originally specified in the contract (as the words themselves certainly imply) ; but merely of the shorter period during which the mortgagor by perform- ance of the conditions may have preserved his strict right to redeem under the contract. " From the very object of the Regulation it is obvious STIPULATED PEFUOD. 211 that the framers of it had expressly in view the case of LECTURE a mortgagor who fails to perform the conditions necessary v - to give him the contract-right to redeem, and if they thought of the ' stipulated period ' as a period terminating in the first default of the mortgagor, they would surely have used some apter expression than this to convey their meaning. " According, then, to our view, in the case before us the ' stipulated period ' did not expire until the 4th September 1868, and consequently both the presenting of the petition for foreclosure and the filing of this plaint occurred before the mortgagee had any right to take a single step towards foreclosing the mortgagor's equity of redemption. All the proceedings in this matter are, therefore, inoperative ; the suit is without legal foundation and must be dismissed." (Compare Imdad v. Munnu, I. L. R., Ill All., 509, and Buldeen v. Golab Koer, Agra H. C. Rep. (F. B.) 102. I shall presently ask you to contrast the case of Shoro- Forfeiture shee Bala with another case in which also a question arose f " r breach as to the meaning of the words " stipulated time." But ai before I do so, I wish just to make one observation. The Regulation seems to provide only for that class of mort- gages in Bengal in which a forfeiture takes place by reason of the " money advanced not being repaid within a stated period," and although it is perfectly true that a forfeiture for breach of any other condition is equally within the mischief of the Act, the statute does not in terms embrace such cases. According to the law as administered in the English Court of Chancery, and which is followed in those parts of the country in which Regulation XVII of 1806 is not in force, it seems that the mortgagee is entitled to sue at any time after default in payment of interest, where his right to do so is not qualified by a covenant not to call in the money during a certain period. (As to cases unaffected by the Regulations, see Spences' Equity, Vol. II, p. 675, and Prosaddas Dutt v. Ramdhone Mullick, I Ind. Jur., 1886, p. 255.) As the law, however, stands at present in this Presi- dency, the mortgagee cannot call upon the mortgagor to elect between exercising his right of redemption and being foreclosed at any time before the period fixed for the repay- ment of the loan secured by the mortgage, whatever may be the nature of the covenants contained in the deed. 212 LAW OF MORTGAGE. LECTURE The case of Omachurn Choivdhry v. Behary Lall MooJcer- Y - jee (XXI Suth. W. K, 274), however, shows that the object ~ of the mortgagee may be indirectly accomplished by the chw-n v. fixing of an early date for the repayment of the money, Behary followed by a covenant that the money shall not be called _ ' in for a certain term if the interest is paid regularly, and the other covenants in the deed are observed by the mortgagor. The distinction may seem to be somewhat refined, but it seems to be the only way in which the rights of the parties can be reconciled with the provisions of the Bengal Regulation. In the case of Omachurn Chowdhry v. Behary Lall Mookerjee, the question arose upon a mortgage - deed in the English form by which the 3rd of January 1866 was fixed as the date for the repayment ofsilne loan. rights under the statute of limitations. It is necessary that the student should have some knowledge of the pre- vious state of the law on the subject a knowledge which will not, I think, be wholly useless even to the practitioner. I shall, therefore, in the first place, discuss the question with reference to Act XIV of 1859, and then with reference to the Acts which have succeeded it in the statute book. Act xxiv Now the provision of Act XIV of 1859, applicable to mort- of 1859. gages generally, was that laid down in clause 12 of the first section of the Act, which said : " To suits for the recovery of immoveable property, or of any interest in immoveable property, to which no other provision of this Act applies the period of twelve years from the time the cause of action arose." Cause of The words " cause of action " were nowhere defined * n ^ ie -^k' kut as Pi n ted out by Mr. Justice Markby in Denonath Gangooly v. Nursing Pershad Dass, it is clear that two things are necessary to constitute a cause of action ; a right to possession, and an adverse with- holding of that right. " If the plaintiff had not a right to immediate possession, or if having a right to possession, the defendants were holding with the plain- tiffs permission, and acknowledging his right, no suit could be brought in the one case, because the right to possession had not accrued ; and in the other, because it had not been disturbed or denied." (Per Markby, J., in delivering judgment in Dinonath Gangooly v. Nursingh Pershad Dass, XXII Suth. W. R, 90.) Now we have already seen that a right of entry may, in some cases, accrue imme- diately to the mortgagee on the default of themortgagor,but still no cause of action would arise if the mortgagor conti- nued in occupation acknowledging the title of the mort- gagee, and, as is not unfrequently the case, paying the interest on the principal sum to the mortgagee, who from various causes might be reluctant to assume posses- sion of the pledge. In such a case as this, it could not be seriously contended, that by allowing the mortgagor to re- tain possession for a period of twelve years, the mortgagee lost his right to the security. " It would be confounding adverse occupations with those which have not the sem- blance even of such a character, and would establish a bar arising from simple occupation and not from the laches of the demandant or others before him." (Per Lord POSSESSION OF THE MORTGAGOR. 229 Kingsdown, VII Moore Ind. App., 353.) Similarly it was LECTUBK held that payment and acceptance of interest were evidence v - of the continuance of the relation created by the mortgage, - and until the mortgagor advanced any rights adverse to the' mortgagee his possession could only be regarded as permis- sive. (Manlcee v. Naunko, XIV Ben. L. Rep., 314.) A difficulty, however, arose in those cases in which the Pomsioi mortgagor neither paid any interest nor did anything else of the to indicate that he acknowledged the right of the mortga- * gee. In such cases it used to be presumed, in the ab- sence of any evidence to the contrary, that the possession of the mortgagor was only permissive, and could not, there- fore, be urged as a bar to an action by the mortgagee. If, however, the mortgagor retained possession under such circumstances as would rebut the presumption of a per- missive occupation, the mortgagee could not succeed. " A default may be made by the mortgagors, which may give the mortgagee a right to sue or to enter into possession (if he chooses to assert such right), but which may, notwith- standing, have no effect whatsoever in altering the nature of the mortgage title. So long as the mortgagor in posses- sion, or those who claim under him, assert merely a title to redeem, and advance no other title inconsistent with it, such possession must, primd facie at least, be treated as perfectly reconcileable with, and not adverse to, the title of the mort- gagee and the continuation of the lien on the property pledg- ed." (Buldeen v. Golab Koonwar, Agra Full Bench, 108.) It was thought at one time that no cause of action Mort- could accrue to the mortgagee before foreclosure, and as there was no limit as to the time within which an applica- action b- tion for foreclosure might be made under the Regulation, forefore- the curious result followed that a mortgagee might, if he ' chose to do so, enforce his security at any distance of time, and no safe title could possibly be acquired against a mort- gagee in this country. The doctrine rested on the supposi- tion, which I have shown to be erroneous, that no right of entry could accrue to the mortgagee till foreclosure. But if the deed was altogether silent as to the right to possession, or as sometimes happens, expressly said that possession should be taken only after foreclosure, the period would run only from the expiration of the year of grace. (See Modun Mohun Chowdhry v. Ashad Alii Beporee, I. L. R., X Calc., C8, and the cases there cited.) I shall next consider the case in which the rights of the 230 LAW OF MORTGAGE. LECTURE mortgagor had been transferred to a third person. Now, if v - such third person purchased with notice of the mortgage, Eights of the same presumption would be made as to the character mortgagor o f his possession as if the mortgagor himself had been in toThir" 61 occupation. But if the purchase was made without any party- such notice, there could be no pretence for treating the possession of the purchaser as permissive, or as that of a person holding in privity of the mortgagor. In the case of Anund Moye Dassee v. Dhunindro Chunder Mookerjee (XIV Moore Ind. App., Ill), the Privy Council observed : " Their Lordships think that the title of a judgment-creditor, or a purchaser under a judgment decree, cannot be put on the same footing as the title of a mort- gagor or of a person claiming under a voluntary alienation from the mortgagor. They are of opinion that the posses- sion of a purchaser under such circumstances is really not the possession of a person holding in privity of the mort- gagor, or holding so as to be an acknowledgment of the continuance of the title of the mortgagee. The possession which the purchaser supposed he acquired was a posses- sion as owner. He thought he was acquiring the absolute title to the property, and that he was in possession as absolute owner." But this rule was not held applicable in a case in which there was no apparent change of ownership, and the mortgagor continued in ostensible possession, not- withstanding the sale of his rights. (Manly v. Patterson, I. L. K, VII Gale., 394). hoMu? Sser -^ h ave n k considered the case of a trespasser holding adversely adversely both to the mortgagor and mortgagee. Ifthetres- morra passer entered into possession after default, there could andmort- be no difficulty whatever, as that would be a much strong- gagee. er case than that of a purchaser without notice of the mortgage. A more difficult question arose, and the diffi- culty has not since been removed, when the occupation commenced before default, and the mortgagor took no steps for the purpose of vindicating his rights. There does not seem to be any method in this country by which the mort- gagee may interrupt the prescription, and it would seem to be a hardship upon him to hold that the time would begin to run before he could bring any action to enforce his rights. The authorities are not very clear on the point. In a case reported in the Weekly Reporter for 1864, Mr. Justice Jackson observed : " The question to be decided is, when did plaintiff's cause of action arise ? They have alleged PROCEDURE. 231 that the date of expiry of their year of grace is the date LECTURE from which the cause of action should be calculated. This v - may be the rule in those cases where the mortgagor re- mains in peaceable and undisturbed possession of the estate mortgaged. But the rule no longer stands good when the mortgagor is dispossessed, and his title disputed, and another person obtains possession of the estate. The posses- sion of this new holder becomes a possession adverse to both the plaintiffs mortgagor and to the plaintiff, the mortgagee. If the mortgagee submits to this possession for more than twelve years, he loses his right to contest the title of the new holder. His cause of action against the new holder arose on the date on whicli the latter obtained such adverse possession of the mortgaged estate. Circum- stances may occur which will defer the mortgagee's cause of action. If the mortgagor, for instance, contests the title of the new holder, and a litigation ensues between them, the mortgagee is not bound to take action upon his mort- gage until that litigation is decided. But if the mortgagor's title is rejected, and his possession is disturbed by an adverse one, the mortgagee's cause of action against tlie new holder commences from the date on which the latter obtains possession on his title adverse to the mortgagor, which has been confirmed by the Courts. This is the law on the subject which has been laid down in the Privy Council." (Mamcoomar v. Prosunno, Suth. W. R., 1864, p. 375 ; Cf. Vittobhav. Gangaram, XII Bom. H. C. Rep., 180; Amu v. Rama, I. L. R., II Mad., 226.) We have seen how the mortgagee may protect himself in those systems of law in which he is allowed to bring an action with the object of interrupting the prescription, but such a proceeding is wholly unknown in this country. I may mention that section 6 of Act XIV of 1859 con- tained a special enactment with regard to suits on mort- gages in Courts established by Royal Charter. " In suits in the Courts established by Royal Charter by a mortgagee to recover from the mortgagor the possession of the immove- able property mortgaged, the cause of action shall be deemed to have arisen from the latest date at which any portion of principal money or interest was paid on account of such mortgage debt." It might perhaps be plausibly argued upon the language Section 6 of of this section, that in cases to which it did not apply, the ^ C 5 1 9 XI mortgagee's right of action would not be kept alive by the 232 LAW OF MORTGAGE. LECTURE payment of any portion of the principal money or interest. This, however, does not necessarily follow. The object of the Legislature was probably only to put mortgages in the English form, when sued upon in the Supreme Court, on the same footing as English mortgages. If this be a correct view, it would seem that, under Act XIV of 1859, English mortgages were placed in a less favourable position as re- garded limitation than Mofussil mortgages, for, in the latter case, as we have already seen, the causs of action did not necessarily arise with the last payment of any portion of the principal or interest. Act ix of Act XIV of 1859 was replaced by Act IX of 1871, which 1871 ' contained a distinct provision for suits for possession of immoveable property by mortgagees. The period allowed under the new law was the same as that under the old statute, but it ran not from the accrual of the cause of action, but from the time when the mortgagee first became entitled to possession. It was thought at one time that the old doctrine of adverse and permissive occupation had been abolished by the new Act, and that the mortgagee must sue within twelve years of the date fixed for the repa} T - ment of the loan. In the case of Loll Mohun Gungo- padhga v. Prosuno Chunder Banerjee (XXIV Suth. W. R, 433) the Court observed : " The question raised in the earlier cases as to the accruing of the cause of action does not arise here, the legislature having in Article 135, Act IX of 1871, substituted for that occurrence a specific time, viz., the time when the mortgagee was first entitled to pos- session. This was confessedly the 29th Cheyt 1260." In this view of the case, the nature of the defendant's possession, whether adverse or permissive, is immaterial. The mortgagee having his time expressly limited by the Act was bound to guard himself, and if he did not do so, and allowed the time to pass, he loses his remedy. Brahmo- But a somewhat different view has been taken in sub- 8 y c e a s?. as " sequent cases. In Ghinaram v. Ram (I. L. R., VI Calc., 566, note) where the mortgage contained an express clause of entry on default of payment, the Court held that as the suit was brought within twelve years from the date on which the foreclosure proceedings became absolute, the plaintiff was not barred under Article 145 of Act IX of 1871, as the plaintiff was suing not, as mortgagee but as owner, the Court observing that the fact of the mortgagee's taking foreclosure proceedings changed PROCEDURE. 233 his interest as mortgagee to that of absolute owner, and LKCTUBK this judgment was followed in the case of Brahmomoye v - Dassi v. JDinnobundhoo Ghose (I. L. R., VI Calc., 564). It appears that in both the above cases proceedings were taken by the mortgagee within twelve years from the date of default, and it was not therefore necessary for the Court to consider the question whether Article 135 had the effect of obliging the mortgagee to take proceedings within a particular period to foreclose his mortgage. It would, however, seem that the provisions of the Limitation Act are not applicable to foreclosure proceedings taken under Regulation XVII of 1806, such proceedings not being suits within the meaning of the statute of Limitations and there being no special provision in the Act regarding such proceedings, Article 179 being applicable only to appli- cations ejusdem generis with those mentioned in the Act. It is, perhaps, doubtful whether the distinction upon which the Court proceeded in the above cases was present to the mind of the Legislature. However that may be, it would seem to be supported by the judgment of the Court of Appeal in Pugh v. Heath, (7 App 235). (See also Wrixon v. Vize, 3 D. & W., 117 ; Harlock v. Ashberry (19 Ch. D., 539. Cf. Purmanond v. Jamabai, I. L. R., X Bom., 49 ; Shurnomoyee v. Srinath Das, I. L. R., XII Calc., 614). In Muddun Mohan v. Ashad (I. L. R., X Calc., 68,) it was pointed out that where there is no express stipulation for possession on default, the mortgagee would be entitled to a right of action only after foreclosure, and a distinc- tion was made between mortgages containing an express stipulation for possession and those in which there is no such covenant, but it is doubtful how far this distinction rests upon sound principle. A somewhat difficult question arose under Act IX of 1871 in cases unaffected by the Bengal Regulation where the English procedure was followed. The Articles which dealt with mortgages were 132, 1 35 and 149, the last Article relating to mortgages put in suit in Courts established by Royal Charters. A suit for foreclosure, it was said, could not correctly be described as a suit for possession by a mortgagee, although no doubt it may lead to possession ; while to describe it as a suit for money charged upon land would also not be a very accurate description. The introduction again of Article 147 in the present Act would lead to the inference that 234 LAW OF MORTGAGE. LECTURE suits for foreclosure had not been provided for in the earlier v - Acts, but these difficulties were got over in the same way in which they were met in England where it was held, although not without some conflict of opinion, that a suit for foreclosure fairly came as well under section 40 of Stat. 3 and 4, William IV, Ch. 27 corresponding to Article 132 as under section 24 of the same Act, which corresponded to Articles 135 and 149 of Act IX of 1871. (See Dearman v. Wyche, 9 Sim., 570; Duvigier v. Lee., 2 Hare, 326 ; Wrixon v. Vize, 5 Ir. Eq., R. 173 ; Ganpat v. Adarji, 1. L. R., Ill Born., 312.) Act XV of These difficulties have been removed to a certain extent 1877. by- the new Act, but other difficulties are likely to arise in dealing with suits by mortgagees after foreclosure under Re- gulation XVII of 1806. Article 147 of the present Act would seem to point to cases in which the English procedure is followed, and probably in Bengal a suit by the mortgagee after foreclosure for possession would be regarded as com- ing either under Art. 144 or Art. 135. (Sharnomoye v. Srinath Das, I. L. R., XII Gale., 614.) (o) Article 146 is (0) The present as well as the past state of the law is thus summa- rised by Pigot, J., in Shurnomoyee v. Srinath Das (I. L. E.,XIICalc., 614; cf. 619-620): 'From these decisions (Khelat Chunder v. Tara- churn, VI Suth. W. R., 270 ; S, C. on appeal XIV Moore. Ind. App. 150 ; Dinonath v. Nursing Prosad, XIV Ben. L. Rep., 87 ; Manltee Koer v. Munnoo, XIV Ben. L. Rep., 315) it would appear that under Act XIV of 1859, a mortgagee was ordinarily bound to bring his suit within twelve years from the date of default, and was barred unless it could be shown (or might properly be inferred), that the mortgagor or the person in possession held by permission of the mortgagee after the date of default. In Act IX of 1871, Art. 135, it was declared that a suit instituted by a mortgagee for possession of immoveable property mortgaged must be brought within twelve years from the time when the mortgagee was first entitled to possession. And in the case of Lai Mohan Gango- padhya v. Prosunno Chunder Banerjee, (XXIV Suth. W. R., 315), it was decided that whether the possession of the mortgagor was permissive or adverse was immaterial, and that the mortgagee having failed to bring his suit within twelve years from the date of default, lost his remedy. This seems to have been the received opinion with one exception, namely, the exception referred to in Ghonaram Dobey, v. Ram MonoratJi Ram Dobey (VII C. L. R., 580.) and in Burmamoyee Dasi v. Denobwndhoo Ghose (I. L. R., VI Calc., 564 ; VII C. L. R., 583,) in which it was held that if the mortgagee could complete the foreclosure proceedings in a Dis- trict Court within twelve years from the date of default, he then became absolute owner of the property, and the foreclosure proceedings gave him a new period of limitation. A distinction between the decision in this case and the other cases already referred has been pointed out in Modun Mohuii Chowdry v. Askad Ali Bcpari (I. L. R,, X Calc., 68 ; XIII C. L. R., 53). After the repeal of Act IX of 1871, the present law, Act XV of 1877, was enacted. In it a new clause ia inserted, namely, clause 147, by PROCEDURE. 235 the correlative of Article 135, the one applying to Courts LECTUBE established by Royal Charters and the other to Courts not v - established by such charters. Notwithstanding, however, the improvements in the present Act, the omission in the third column of Article 14-6 has not been supplied. It contains a defective statement, but there can be very little doubt that it would apply to cases in which neither prin- cipal nor interest has been paid, the period of limitation in such case running from the date of default. An alteration has also been made by the present Act in Article 135 of Act IX of 1871 intended to meet those cases in which the parties agree to go on upon the footing of the mortgage after the mortgage term has expired. There is another slight altera- tion. The receipt by a mortgagee in possession of the pro- duce of the land is, under section 20, to be deemed a payment for the purpose of that section, but it is somewhat doubtful whether this provision is qualified by the proviso contained in the section. Under Act IX of 1871 it was held that where the mortgagor continued in possession under a dis- tinct agreement as tenant, the rent paid by him could not be regarded as a payment to save limitation. (Ummer v. Abdul, I. L. R., II Mad., 165). The Act has also supplied another omission. An acknowledgment by one of several mortgagees does not aftect the others. The difficulties which o o which a suit by a mortgagee for foreclosure or sale can be brought within sixty years from the time when the money secured by the mort- gage becomes due. But as we have already said, no suit for foreclosure could ever be brought in the mofussil. This was prohibited by the nature of the agreement, and by the terms to which we shall refer later on of Regulation XVII of 1806. Under the contract a mortgagee was originally the absolute owner from the date of default. But by Regu- lation XVII of 1806 it was a condition precedent to his becoming an absolute owner, that foreclosure proceedings should be taken in the District Judge's Office. When this has been done, a mortgagee having become absolute owner by virtue of the contract sues, not for foreclosure but for possession as owner of the property. It appears, therefore, impossible to hold that cl. 147 of the Limitation Act would apply to any mortgage by condi- tional sale executed between Hindus, and in respect of properties situated in the mofussil. If that be so, the law of limitation for a con- ditional sale would be that given in cl. 135, corresponding to cl. 132 of Act IX of 1871, namely, twelve years from the time when the mort- gagor's right to possession determined on the date of default, namely, February 1866, and the suit for possession would be barred on the 17th February 1878. Does it make any difference, under Act IX of 1871, what the possession was? The suit is barred against the mort- gagor himself or any body else. See Lai MoJiun Gangopadhya v. Pro- fmnno Chunder Banerjce (XXIV Suth. W. R., 433) and Modnn MoTinn Chowdry v. Ashad All Bepari (I. L. R., X Gale., 68 ; XIII C. L. R., 53.)" 236 LAW OF MORTGAGE. LECTUKE have been felt in England in respect of arrears of interest V. and the distinction between a suit for redemption and a suit for foreclosure or an action on the covenant are not likely to arise in India. There is no provision in the Limi- tation Act corresponding to section 42 of Stat. 3 and 4, William IV, Ch. 27, and, as we have already seen, notwith- standing Arjbicle 63 of the Limitation Act, if the interest is a charge upon land, the same period of limitation is applicable to the recovery of the interest as to the recovery of the principal. (Baldeo v. Gokal, I. L. R., I All., 603 ; Ganpat v. Adarji, I. L. R., Ill Bom., 312 ; Davani v. Ratna, I. L. R., VI Mad., 417. For the previous state of the law, see Vithal v. Daud, VI Bom. H. G. Rep., 90, A. C. J.) (j>~) See further on the subject of limitation, Appendix 2, tit. Statutes. LECTURE VI. Equity of redemption Origin of expression Position of mortgagor before foreclosure Right, to redeem Bengal Regulation XVII of 1806 Recognized by Courts of Justices in other Provinces Opinion of the Privy Council Puttaveramier v. Vencatta Row Naiker " Once a mortgage always a mort- gage" Meaning of maxim Persons entitled to redeem Regulation XVII of 1806 Practice of English Courts of Chancery Mortgage security indivi- sible Effect of mortgagee's purchasing portion of mortgaged property Contribution Redemption under Bengal Regulations Deposit or tender What is a good deposit Rukea Begum v. Frannath Roy Chowdry Time with- in which deposit must be made Practice in Bombay and Madras Limitation Acknowledgment Effect of acknowledgment by one of several mortgagees Difference between English Statute and Indian Act. I NOW propose to call your attention to the position Position of of the mortgagor before the mortgage is finally foreclosed, mort 8 a s r - and the ownership of the pledge transferred from the debtor to the creditor. I have already pointed out that the mutual rights and obligations of the parties to a mortgage transaction are so closely interwoven with one another, that it is difficult to discuss the rights of the one apart from those of the other. There are, however, some points which will be more conveniently dealt with in the present lecture, and it is to these points that I wish to confine myself. The interest which resides in the mortgagor before fore- Equity of closure is known in this country by an expression borrow- redemption, ed from the English law an expression which is open, perhaps, to more serious objection than many others which we have borrowed from the same source. The interest of the mortgagor is known as the equity of redemption, or, as it is sometimes called, the right of redemption. Now even the expression " right of redemption " is not wholly unexceptionable. It suggests the idea, in common with the kindred expression " equity of redemption," that the interest of the mortgagor is a bare right : something essentially different from what we call ownership, which is supposed to be vested in some other person who, in this case, must necessarily be the mortgagee. It would, however, be more correct to say, that the ownership resides in the mortgagor notwithstanding the mortgage, the mortgagee 238 LAW OF MORTGAGE. LECTURE acquiring by the contract only the right to foreclose. If we, YI - however, examine the history of the English law of mort- Origin of g a g e > we sna ll find that the expression " equity of redemp- expression. tion " first made its appearance at a time when the mort- gagor was supposed to have parted with the estate, retain- ing only the right of redemption or repurchase a right, which being under the peculiar protection of equity, came to be known as the equity of redemption. The expression originally served to distinguish the interest of the mortgagor from the " estate " which was supposed to pass to the mortgagee. In time, however, this right came to be regarded as an estate by the Courts of Chancery possess- ing all the incidents of an equitable estate in land. The original expression, however, was retained to denote the interest which remained in the mortgagor, although the nature of that interest had been greatly modified by the action of the English Courts of Equity. The expression " equity of redemption " is, therefore, an expression pecu- liar to the English law, and although its introduction into India may be regretted, it would be idle to protest against it at this time of day. I do not wish to be hypercritical, and I have been induced to make the foregoing observa- tions, simply because I know of instances in which the whole discussion has been materially coloured by notions, which would scarcely have suggested themselves to any body if the argument had not been conducted in the tech- nical language of the English law (a.) () The observations of Lord Blackburn, in Jennings v. Jordan, on the doctrine of consolidation of securities, deserve very careful attention. ' Some of the rules acted on in the Courts of Equity, in the kindred sub- ject of taking securities on the same property, says the learned Judge, are founded upon this, that a mortgage, after the time specified for redemption had expired, was an absolute estate, which no doubt it was at law, and that the equity of redemption was only a personal equity to take away the legal estate from him in whom it was vested, which perhaps it originally was. It would seem that now after for a very long time equitable estates have been treated and dealt with as to all other intents estates, any rules founded on the antiquated law ought to be no longer applicable, and that Ccssante rationc cessare debet et lex ; but some rules apparently founded on this antiquated law have been so uniformly and long acted upon, that they must be treated as still binding." In the same case Lord Watson said : " The principles of equity as settled in the law of England are generally such as commend themselves at once, even to minds unfamiliar with that law ; but I must confess that in the present case I have been unable to apprehend or appreciate the equitable considerations upon which the doctrine of consolidation of mortgages, as now established, must be supposed to rest. The doctrine appears to me to have its root in equity. If A has separately mortgaged two estates BIGHT OF ALIENATION. 239 The position of the mortgagor in possession has given LECTUBB rise in England to a good deal of, not altogether profitable, VL discussion, which, however, cannot find any place in our Po ~^~ of law. The mortgagor does not part with the ownership mortgagor of the property by pledging it to his creditor by way of S^ "" conditional sale, and his position before foreclosure does not differ in any material feature from that of the mort- gagor in a simple mortgage. It has been sometimes said that the position of the mortgagor in possession is that of a trustee. He is not the absolute owner of the land, but holds it subject to the rights of the mortgagee. This proposition, however, must be received with consider- able reserve. It is true that the indeBnite power of dealing with a property which we call ownership is in some respects controlled by a mortgage, but it is certainly not an accurate use of language to say that the mortgagor becomes a trustee for the mortgagee. From what I have already said, it must be clear to you Right of that, as in the case of a simple mortgage, the mortgagor is a ' ienation ... . ..I ..i -1?, of mort- competent to alienate the property notwithstanding the gagee. mortgage, although he cannot, for obvious reasons, pass any greater interest than he himself possesses. The assignee must take subject to the rights of the mortgagee, who, in the event of a foreclosure, acquires the property free of all subsequent incumbrances. The mortgagor may either transfer the property absolutely, or create a second mortgage, subject, however, to the same limitation. It is hardly necessary to add that the interest of the mortgagor may be taken in execution, although any sale by the creditor must necessarily be subject to the charge created in favor of the mortgagee. In short, the mortgagor is competent to deal with the property in any way he likes, so that the rights of the mortgagee are not defeated or impaired. I may add that the mortgagor in possession is never liable to account for the rents and profits received by him. This is the law in England, and it also seems to be the law in this country. (The Malabar Company v.Dayaram, Bom. P. J., 1875, 191). The mortgagor, however, while in possession, must not do to B. it seems to be just and reasonable that a Court of Equity should decline to aid A in redeeming one of these estates, except upon condition of his paying to B the other mortgage debt, which might be insufficiently secured. But the equitable character of the considerations which have led to the growth and the development of the doctrine, as against pur- chasers of the mortgagor's equity of redemption, is by no means so appa- rent." (Jennings v. Jordan, 6 App. Cas. 698, of. p. 720-721.) 240 LAW OF MORTGAGE. LECTURE anything to impair the security of the mortgagee, and, as VJ - I have already said, there can be very little doubt that he will be restrained from committing wilful waste, if the security is insufficient, or likely to be so rendered by such acts. (See s, 66 of the Transfer of Property Act). The mortgagor may, again, be liable in damages, for the breach, for instance, of a covenant to repair the mortgaged premises contained in the mortgage deed for the protection of the mortgagee's security. (Sha Shivlal v. Sha JRamdas, Bom. P. J., 1880, 246). Regulation \Ve have already seen that, notwithstanding the mutual 1806. agreement of the parties, the ownership does not pass from the mortgagor to the mortgagee immediately on default of payment. The mortgagor, notwithstanding the default, continues to be the owner, or, to use the language of the English law, retains an equity of redemption which may be successfully asserted against the mortgagee. I told you in the last Lecture that this right was created for the first time in Bengal by Regulation XVII of 1806. No such provision was to be found in the statute law relating to the other Presidencies, but the doctrine of the English Court of Chancery, that the time stipulated in a mortgage is not of the essence of the contract, has been introduced into those provinces by the Courts of Justice as a rule founded Opinion of j n equity and good conscience." In the case of Putta- veramier v. Vencatta Row Naiker, however, the Lords of the Privy Council observed, that, in the absence of any known rule of law, a Court of Justice is not at liberty to qualify the rights and obligations of the parties as defined by their mutual contract. " What is known in the law of England as ' the equity of redemption ' depends on the doctrine established by Courts of Equity, that the time stipulated in the mortgage deed is not of the essence of the contract. Such a doctrine was unknown to the ancient law of India ; and if it could have been introduced by the decisions of the Courts of the East Indian Company, their Lordships can find no such course of decision." (Per Colvile, Sir James ; XIII Moore. Ind. App., 560 ; VII Ben. L. Rep., 136 ; XV Suth. W. R., P. G, 37). Their Lordships, however, concluded by observing, " It must not then be supposed that, in allowing this appeal, their Lordships design to dis- turb any rule of property established by judicial decisions so as to form part of the law of the forum, wherever such may prevail, or to affect any title founded thereon." Since this RIGHT OF ALIENATION. 241 judgment was delivered by the Privy Council, the question LECTURE again came before the High Courts of Bombay and Mad- VI - ras, but the learned Judges thought that a rule of property had been established in those provinces by judicial decisions which ought not to be disturbed, and which the Privy Coun- cil never designed to disturb. (Cf. Shankarbhai Oulabbhai v. Kossibhai Vithalbhai, IX Bom.H. C. Rep., 69; Lakshmi Chel- liah Garee v. Krisha Bhupati Devi, VII Mad. H. C. Rep., 6.) The question, however, was again brought up before the Privy Council in the case of Thumbusawmy Mooley v. Hos- rhumfm- sain Roihen (I. L. R., I Mad., 1), when their Lordships strong- "wy v. ly condemned the action of the Madras, as well as of the Houmit - Bombay, High Court, of the former since 1858 and of the latter since 1864-, as an unjustifiable encroachment on the province of the legislature. Their Lordships pointed out that, according to what may be called the common hiw of the country, the essential characteristic of a mortgage by con- ditional sale is that, on the breach of the condition of re- payment, the contract executes itself and the transaction is closed and becomes one of absolute sale without any further act of the parties or accountability between them (6). The Judicial Committee further observed that a contract of mortgage, unless modified by actual legislation or established practice, is enforceable according to its letter, and they ap- proved of the decision of the Calcutta High Court in the case of Surrefunnisa v. Shaik Enayet Hossein(V Suth.W. R., 88), that Regulation XVII of 1806 had no retrospective operation and could not affect a mortgage by conditional sale which had become absolute according to the strict agreement of the parties before the Regulation came into force. Their Lordships concluded their judgment in these words: "The state of the authorities being such as has been described, it may obviously become a question with this committee in future cases, whether they will follow the decision in the XIII Moore Ind. App., which appears to them based upon sound principles, or the new course of decision that has sprung up at Madras and Bombay which appears to them to have been inits origin radically unsound. On a state claim to redeem a mortgage and dispossess a mortgagee, who had, before 1858, acquired an absolute title, there would be (&) The judgment of Westropp, C. J., in Bapvji v. Sena (I. L. R, II Bean., 231) is an elaborate attempt to shew that the equity of redemp- tion was recognized by the ancient common law of the country. See also the cases cited in argument in Dowcett v. Wise (II Ind. Jur., 280). R. B. G., M. 16 242 LAW OF MORTGAGE. LECTURE VI. Remedy suggested. Madras cases on point. Right to redeem. strong reason for adopting the former course. In the case of a securitj'" executed since 1858, there would be strong reasons for recognizing and giving effect to the Madras authorities with reference to which the parties might be supposed to have contracted. Their Lordships abstain from expressing any opinion upon this question until the necessity for deter- mining it shall arise. "They deem it right, however, to ob- serve that this state of thelaw is eminently unsatisfactoiy and one which seems to call for the interposition of the Legislature. " An Act affirming the right of the mortgagor to redeem until foreclosure by a judicial proceeding, and giving to the mortgagee the means of obtaining such a foreclosure, with a reservation in favor of mortgagees whose titles, under the law as understood before 1858, had become absolute before a date to be fixed by the Act, would probably settle the law without injustice to any paity." The rule which has since been adopted in Madras, is to al- low the equity of redemption only with regard to mortgages entered into subsequent to the 3 T ear 1859, and to disallow it in other cases, although one of the learned Judges protested against this rule of construction on the ground that the course of decisions, with reference to which the parties are supposed to have contracted, could have produced ' but an infinitesimal effect upon the contracting public in the depths of the country.' (Ramasami Sastrigal v. Samiyappana- yakan, I. L. R., IV Mad., 179 ; Bapirazu v. Kamarazu, I. L. R., Ill Mad., 26 ; Thumbusawmy v. Hossain, I. L. R., I Mad., 1 ; Mavulali v. Gundu, I. L. R., VI Mad., 339 ; Mal- lik v. Mattik, I. L. R., VIII Mad, 185.) The Bombay High Court, however has refused to recognize any such distinc- tion and permits redemption in all cases, whether the mort- gage was created before or after 1864, although in mort- gages created before that year the Court acts in a more liberal spirit towards the mortgagee as regards allowances for repairs, improvements, &c. (Kanaylal v. Pyarabai, I. L. R., VII Bom., 139 ; cf. Smith v. Sampson, 7 Moore Privy Council, 205.) The recognition of the right to redeem was, no doubt, a strong measure at first, due to the influence of English law not always perhaps very correctly appreciated or followed. It seems that the Madras Court, under the impression that the clause of forfeiture was a penal clause, went so far at one time as not to allow a foreclosure in any case but only a decree for sale, but the practice has since been abandoned. LEGAL MAXIMS. 243 I may here mention that it has been held by the Allahabad LECTURE High Court, tliat in the case of a verbal mortgage by condi VI - tional sale, the estate becomes the absolute property of the mortgagee immediately on the default of the mortgagor. (Gobardhan Das v. Gokaldas, I. L. R., II All., 633). And this judgment would seem to be in strict accordance with the rulings of the Privy Council ; the case being unaffected by Regulation XVII of 1806, which applies only to mort- gages in writing ; parol mortgages being either inadvert- ently or otherwise left wholty unprovided for. We thus find that, in nearly all the provinces of this Maxims on country, the debtor retains a right to redeem, notwith- the P int ' standing the non-payment of the money on the appointed day. This right is very jealously guarded, and in England a large number of maxims have clustered round it. One of these is the well-known proposition " once a mortgage always a mortgage." This maxim requires some explana- tion, as the language in which it is expressed is likety to mislead the student. It means, it is true, that no agreement of the parties can control the right of redemption ; but then it has reference only to stipulations entered into at the time of the mortgage, and not to agree- ments entered into subsequently ; and, as I shall presently explain, there is good reason for this distinction. The right to redeem, I must tell you, is of the essence of the mortgage, and ma} r not be waived or varied even with the consent of the parties. Any agreement, therefore, at the time of the mortgage, by which the right of redemption is limited, either as to the persons entitled to redeem, or the period within which the right must be exercised, is wholly inopera- tive. Thus, for instance, if the mortgagor should agree that the right to redeem shall be confined to his life, his heirs after his death will, notwithstanding such agreement, be permit- ted to redeem. And, as we have already seen, an assignee of the equit}r of redemption will also be entitled to redeem, notwithstanding the existence of a covenant not to assign by the mortgagor. In fact, no limitation can be success- fully imposed on the mortgagor's equity of redemption, a right which the law will not suffer to be clogged or fettered even with the assent of the mortgagor (c). (c) It is scarcely necessary to state that the right of the mortgagor to redeem cannot be defeated by any unauthorized acts of the mort- gagee, for instance, an exchange or partition made by the latter without the consent of the mortgagor. (Mvzlnir Hosxeinv. Hur Pershad, XV Suth. W. R., 353 : cf. Oomrao v. Nizam, I Agra H. C. Rep., 224.) 244. LAW OF MORTGAGE. LECTURE VI. Allahabad case. lu Ramsorun Lai v. Amirta Kuar (I. L. R., Ill All., 369), a purchaser from the mortgagor was allowed to redeem, although the deed said that redemption was to be allowed "only if the mortgagor paid the money from his own pocket without transferring the property. Nor should the same be cancelled if the money was paid or deposited by transfer of the property sold." (Dukchore v. Hedayat, Agra H. C. Rep., F. B., 7 ; Mahomed v. Banee, I All. H. C. Rep., 135 ; Sheopal v. Deendyal, V All. H. C. Rep., 145 ; Ramroop v. Lalla Thakoor, XXIV Suth. W. R., 429.) Indeed, it is only in very exceptional cases that the Court would recognize the validity of any such reservation (for an in- stance, see the English case of Bonham v. Newcomb, 1 Vern., 232, where the conveyance was in tlie nature of a famil}?- set- tlement, 2 White & Tudor, L. C., 1189.) Of course, if the transaction amounts, not to a mere mortgage, but to a sale with a clause for re-purchase, the question would, as I have already explained, have to be decided on a different principle. The rule that the equity of redemption may not be clogged with a bye-agreement is also illustrated by the recent case of Mohammed Muse v. Gijibhoy (I. L. R., IX Bom., 524), where it was held that a condition in a mort- gage that if the mortgagor redeems the property, the mort- gage right should be extinguished, but that the property should for ever remain in the possession of the mortgagee on his paying a fixed rent is a condition which cannot be enforced in favour of the mortgagee. It is true such a condition does not absolutely exclude the right of re- demption; but it has the effect of fettering it with an onerous obligation, and cannot therefore be enforced as against the mortgagor. The same principle has been applied perhaps with doubtful propriety in some cases in which the mortgagor has been allowed to redeem with- out paying other debts due to the mortgagee where the language of the deed did not create a further charge, but only amounted to a covenant to pay all existing debts before payment of the mortgage-debt. (Rama v. Martand, I. L. R., IX Bom., 236, note. Of. Hari v. Balambhat, I. L. R., IX Bom., 233, where, however, the suit was brought by the as- signee of the equity of redemption and not by the original mortgagor (cZ). (But see Allu v. Roshan, I. L. R., IV AIL, 85.) (rf) I am not quite sure that such was not also the case in Rama v. Martand, although the language used by the Court is very general. See Yaslivant v. Vithola (I. L. R., XII Bom., 231 ; cf. p. 234). RIGHTS OF MORTGAGEE. 245 The mortgagee is never allowed to obtaiu any advantage LECTURE from his security beyond his principal, interest, and costs. VI - Thus, where the mortgage-deed contained a condition that if the principal were not repaid by a certain day, the mort- gage should ^ouly be redeemed by payment of a certain quantity of rice for each rupee of the mortgage-money, it was held that the condition was unreasonable and oppres- sive, and could not therefore be enforced by the mortgagee. (Mayilaraya v. Subba Roy, I Mad. H. C. Rep., 81 : cf . Asapal v. NunJcoo, III Agra H. C. Rep., 216.) The principle is well illustrated in several English cases in which the Court has refused to give to the mortgagee any collateral advantage not strictly belonging to the contract of mortgage. Thus, where money was lent on mortgage at six per cent., and by a deed of even date the mortgagor agreed to convey, at the request of the mortgagee, ground-rents at twenty years' purchase, the Court decreed redemption on payment of merely prin- cipal, interest, and costs. (Jennings v. Ward, 2 Vern., 520.) So, again, if a mortgage is made redeemable upon payment of the mortgage-money at a certain day, but with a condition that if the money is not then paid the mortgage shall become absolute, if the mortgagor will pay an additional sum, the estate will notwithstanding be redeemable by the mortgagor until it is regularly foreclosed by the mortgagee. (Willet v. Winnell, 2 Vern., 488.) Indeed, English equity has gone so far as to hold that a stipulation at the time of the loan that unpaid interest will be converted into principal cannot be enforced against the mortgagor, and that the abolition of the usury laws has not had the effect of withdrawing the protection which the mortgagor had always enjoyed in the Court of Chancery. (See the cases collected in White and Tudor's Leading Cases, Vol. II, pp. 1184-1185.) But every condition made by a mortgagee with the mortgagor will not be regarded as invalid by the Court, although it might have remotely the effect of fettering the equity of redemption. Qualified restrictions on the remedies of the mortgagor are allowed as well in this country as in England. " The parties may make any conditions or covenants so long as these are not in them- selves illegal, as that the mortgagee in possession shall pay the mortgagor a certain allowance or rent; that the loan shall be repayable by instalments, and that in default of payment of any one instalment, the mortgagee shall be entitled to foreclose for the balance then due ; 246 LAW OF MORTGAGE. LECTURE * * * that after payment of Government revenue and VI ; village expenses the mortgagor shall pay to the mortgagee the entire surplus collections, aud also all that may be derived from alluvion, and that if in the month of Jait in any year, the whole surplus is not paid to the mortgagee, he shall be entitled to enter into possession ; that if any ground shall be lost from the encroachment of a river bordering on the estate, the mortgagor shall make good the loss, and if anything is gained from the same river, the mortgagee shall make an allowance for it ; that a third party named, as well as the mortgagor, shall have the right of redeeming ; that the mortgagor shall make good the balances of rent unpaid by cultivators * * * * that the mortgagor not retaining possession shall pay the Government revenue." Macphersou, pp. 134, 185. Time not of . D. A., 1859, p. 1273.) No person will be entitled to redeem at his peril, leaving the rightful owner to recover against him (1 Spence's Equity, 668 ; Jhuver Bhai v. Narain, Bom. P. J., 1874, 1.) It seems that the purchaser of the equity of redemption from a Hindu widow, will be bound to prove that the alienation was justifiable under the Hindu Law. (Dhondoo v. Salkrishna, I. L. R., VIII Bom., 190.) A primd facie title, however, will be sufficient, as the decree in an action for redemption does not bind third persons (/) It ought to be noticed that a person claiming under an assign- ment pendente lite, cannot bring a suit to redeem. (Ramchundra v. Jfahadaji, I. L. R., IX Bom., 141.) 250 LAW OF MORTGAGE. LKCTUKB (Fisher's Mortgage, p. 674). And it seems, a person origiu- VI - ally with an imperfect title will be allowed to redeem if a perfect title is established at the hearing. (Krishnaji v. Ganesh, I. L. R., VI Bom., 139.) Then again, a mortgagee has only a right to be satisfied that the person claiming to redeem is not an absolute stranger, arid cannot avail himself, for instance, of the objection that the plaintiff has not paid the full amount of the purchase-money to his vendor, the mortgagor. (Heera Singh v. Raghunath, IV & V Agra H. C. Rep., 30.) Mortgage It is necessary to observe that a mortgage security is indivisible indivisible, and that no one is entitled to redeem a part of the estate in mortgage on payment of a proportionate amount of the debt secured by the mortgage ; you must cither redeem the whole, or not at all. Thus, if four brothers, each of whom is entitled to a fourth share of an estate, mortgage it to a creditor as security for a debt contracted by them, one of the brothers cannot redeem his share on payment only of a fourth part of the debt secured by the mortgage. He would, no doubt, have a right to redeem the whole, but he cannot redeem a part, although there may be no question as to the extent of his share. (See Mujeedoonissa v. Dildar, XIV Suth. W. R, 216 ; Chandika v. Phokar, I. L. R., II All., 906 ; Balambhat v. Sitaram, Bom. P. J., 1883, 312; Bliugwun v. Mahomed, IV All. H. C. Rep., 161 ; Hashim v. Aivjeet, Suth. W. R, 1864, 217; Ram Baluk v. Ramlal, XXI Suth. W. R, 428 ; Hureehur v. Dabee Sahoy, Suth. W. R., 1864,260; Razee- oodeen v. J/iubboo, Suth. W. R., 1864, 75 ; Saligram v. Barun Red, IV All. H. C. Rep., 92.) Caseofsev- I ought to mention that one of several mortgagors on ga"-ors! lt " redemption of the whole mortgaged property will be entitled to a lien on the shares of his co-mortgagors. The purchaser of part of an estate under mortgage, for instance, is entitled to redeem the whole, if the mortgagee insist on it, and in that case he puts himself in the place of the mortgagee redeemed, and acquires a right to treat the original mort- gagor as his mortgagor, and to hold that portion of the estate in which he would have no interest but for the pay- ment as a security for any surplus payment he may have made. [Asansab Ravuthan v. Vamana Raw, I. L. R., II Mad., 223 ; Punchum Sing v. Aliahmad, I. L. R., IV All., 58; see also Gobindpershad v. Dtvarkanath, XXV Suth. W. R, 259 ; Vithal Nilkanth v. Vishvasrab, I. L. R., VIII EIGHT OF REDEMPTION. 25 J Boin., 497; Hirachand v. Abdul, I. L. R., I All., 455; LKCTUBH Ganesh v. Raghu, Bom. P. J., 1880, 300 ; Pandji v. Sada- VI. s&ifc, Bom. P. J., 1881, 57, and the cases collected in Mac- pherson's Mortgage, pp. 342-343 (#).] You will, no doubt, find in the books several cases in Redemp- which a mortgagor has been permitted to bring a suit for 'I " " f por " possession of a portion of the mortgaged property, on the mo'JtgUed allegation that the whole of the debt secured by the mort- P ro P ert J'- gage has been satisfied. These cases, however, are no real exception to the rule that a mortgage-debt is indivisible, for in the cases to which I refer, there is no longer any debt due to the mortgagee. (Hurdeo v. Guneshee LalL, I Agra H. C. Rep., 3 ; see also I Agra, 3C ; IV Agra, 33.) In every such suit, however, the co-mortgagors should be placed on the record as defendants if they refuse to join in the action; but the plaintiff will be entitled to recover possession of his own share only. ( Fakir v. Sadat, I. L. R., VII All., 37G. But see MirzaAll v. Tara Soonderee, II Suth. W. R.^ 150.) It is necessary that all the parties should be before the Court, as the mortgagee might otherwise be harassed by twenty different suits, and although the language used by the Court in some reported cases is not free from ambi- guity, I do not think that it was ever intended to lay down the broad proposition that one of several mortgagors could sue without bringing in his co-mortgagors (h). (Ragho v Balkrishna, I. L. R., IX Bom., 128.) Cases in which the interests of the mortgagors appear Case of in- to be distinct and separate on the face of the instru- terest of ment, are sometimes supposed to form an exception to ^ee the rule that a mortgage-security is indivisible. There distinct is, however, no foundation for the notion except some carelessly reported dicta in Mulik Basab v. Dhana Bebee (VIII N. W. P., 220), and Hamkristo v. Ameeroo- nisa (VII Suth. W. R., 314) (i). It is true an instru- ment may be so worded that each of the mortgagors (g) As to form of the decree where the co-mortgagors are not parties, see Ganpati v. Damodar, Bom. P. J., 1874, 2. (/() As to the Court in which such suits should be brought, the law cannot be said to be quite settled, and, this is mainly owing to the difficulties inseparable from a system in which the jurisdiction of Civil Courts is regulated by the value of the subject-matter in dispute. ( Gobi ml Singh v. Kallu, I. L. R,, II All., 778 ; Bahadur v. Hawaii. I. L. R.. Ill All., 822; Amanatv. Bhajan, I. L. R., VIII All., 438; Rupchand v. Bal- Ihant. I. L. R., XI Bom., 591, and the cases there cited. (i) See also the cases cited in Macpherson's Mortgage, p. 348; the law laid down in these cases seems, however, to be extremely doubtful. 252 LAW OF MORTGAGE. LECTURE may redeem his share on payment of a rateable portion of VI - the mortgage-debt. (For instances, see Ramsaran v. Amrita Kuar, I. L. R., Ill All., 369 ; Sheogolam v. Ramrup, XXIII Suth. W. R., 25.) But such a clause is seldom, if ever, found in a mortgage-deed, and cannot safely be inferred merely from a recital of the different shares of the mortgagors in the document. Similarly, if a mortgage is made to two persons jointly, the mortgagor cannot redeem without discharging the whole debt, although the deed may specify the proportions in which the mortgage-money is owned by the mortgagees. (Iman Ali v. Oograh Sing, XXII Suth. W. R., 262.) Effect of To the general rule, however, that a mortgage must be mortgagors re( j eera ed entirely or not at all, there is one well-known purchasing i ,1 , i ,1 . c i portion of exception, and that is where the equity ot redemption ID apor- mortgaged fcj on O f the mortgaged property becomes vested in the mort- proper j. gjg^jjjjjj^^ "[ n suc h cases the mortgage-security is broken up, and the mortgagor or his representatives become entitled to redeem on payment of a proportionate part of the debt charged on the property. Thus, where two villages were mortgaged by the same instrument as security for one sum, and they were both subsequently sold under an execution against the mortgagor, and one of them was purchased by the mortgagee himself, and the other by a third person, the execution-purchaser was allowed to redeem on paying a proportionate part of the mortgage- Contribu- debt. As pointed out by Morgan, C.J., in giving the judg- tion. ment of the Court in Mahtab Singh v. Misree Lall, "A mortgagee is entitled to say to each of several persons who may have succeeded to the mortgagor's interest that he shall not be entitled to redeem a part of the property on pay- ment of part of the debt, because the whole and every part of the land mortgaged is liable for the whole debt. But it does not follow from this, that a mortgagee, who has acquired by purchase a part of the mortgagor's rights and interests, is entitled to throw the whole burden of the mortgage-debt on the remaining portion of the equity of redemption in the hands of one who has purchased it at a sale in execution of a decree against the mortgagor. Each has bought subject to a proportionate share of the burden, and must discharge it." (II Agra H. C. Rep., 88 ; see also Nathu Sahu v. Lalla Ameer Chund, XXIV Suth. W. R., 24 ; Bisheshar Singh v. Laik Singh, I. L. R., V All., 257; Ali Khan v. Mahomed, Bom. P. J., 1881, 319 ; Sakaram v. CONTRIBUTION. 253 Gopal, Bom. P. J, 1883, 51 ; Kesree v. Seth, II All. H. C. LECTURE Hep., 4 (j). Similarly, where aii usufructuary mortgagee VI - of different plots of land abandoned his possession of one plot and took a lease from the purchaser of that plot, it .was held that the mortgagee had, by his own conduct, des- troyed the individuality of the original contract and the purchaser of the other plot was let in to redeem on pay- ment of a proportionate part of the mortgage-debt. [Marana Ammanna v. Pendiyalla Perubotulu, I. L. R., Ill Mad., 230 ; cf. Subramanyan v. Maudayan, I. L. R., IX Mad, 453 (/<;).] These cases, however, must be carefully distinguished Case in from another class of cases with which they may be easily t Ton C of P r ~ confounded. The principle laid down iu Mahtab Sing v. equity of Misree Lall (II Agra II. C. Rep, 88) will not apply to r Sd u a case in which the equity of redemption of a portion of inamort- the mortgaged property becomes vested in one or more gngee< only out of several mortgagees, and the reason of this distinction is obvious. Where the whole estate as to one portion of the pledged property becomes vested in the mortgagee, or in all the mortgagees, if there are more than one, the mortgagor, if compelled to redeem on condition of paying the whole debt, would have an action for con- tribution for the excess payment, and thus two suits would be necessary in the place of one for the purpose of finally settling the rights of the parties. This reason, however, which is founded only upon grounds of convenience, does not hold good where the purchaser happens to be one of several mortgagees. In such a casethe other mortgagees could not be sued for contribution, and they might very reasonably (j) The dictum of Jackson, J., in Ilirdy v. Alloola (I. L. R, IV Calc., 72), cannot be supported, as the mortgagee did not in that case buy merely the equity of redemption. (k) In England, where there are several mortgagees, and the first is also part owner of the equity of redemption, the judgment directs that, upon payment to the first mortgagee of all that is due to him by the second, the former shall convey the whole estate, subject to his right to redeem the part in the equity of redemption whereof he is interested ; on default of payment, the second mortgagee is foreclosed in the usual manner. The owner of the residue of the equity of redemption redeems on payment of all that is due, but receives a conveyance only of that part iu which he is interested. But query if he ought not to have a con- veyance of all, subject to the right of the first mortgagee to redeem his share of the equity again, upon payment of a proportion ; on the principle that the mortgagee must be entirely redeemed, or not at all ; or whether, to avoid such a circuity, the part owner of the equity ought not, in the first instance, to redeem the mortgagee on payment of a sum proportioned to the redeeming party's share (Fisher 944). 254 LAW OF MORTGAGE. LECTURE complain if by the acts of one of them the indivisible VI - nature of the security was altered. Where, therefore, one of several mortgagees purchases a part of the property mortgaged, the case is governed by tjie general rule, and the purchaser of another part has no right to redeem except on payment of the whole of the mortgage-debt. (Sobha Sah v. Inderjeet, V All. H. C. Rep., 149 ; Mahtab Rai v. Sant Lai, I. L. R, V All., 276.) Ahmed AH We have seen that when the mortgagee, or if there are V Sing WJm ' more than one, all of them jointly purchase the equity of redemption in a part of the mortgaged property, they can- not insist upon the payment of the whole of the debt secured by the mortgage as a condition of the redemption of the rest of the mortgaged property. Questions, however, of considerable difficulty sometimes arise when the equity of redemption in a portion becomes vested in the mortgagee, while that in the rest passes to two or more different persons. In the case of Naivab Ahmed Ali Khan v. Joivhir Sing, the estate having been sold subject to mortgage to different persons, one of them being the mortgagee himself, a pur- chaser of a portion of the mortgaged property sought to redeem his share on payment of a rateable part of the mortgage-debt. The purchasers of the other portions were not parties to the suit, and on the mortgagee insisting that the plaintiff could not succeed without an offer to redeem the portion which had passed to the other purchasers, the Court refused to make any decree for redemption, being of opinion that the mortgagee had a right to insist upon the redemption of the whole of the property, with the excep- tion of that purchased by himself, on payment of a propor- tionate part of the mortgage-debt. (N. W. P., 1864, p. 425.) Privy You will observe that all that the Court ruled in the decision on above case was, that the plaintiff was bound to offer to the point, redeem the whole of the estate with the exception of that purchased by the defendant, and not that he was entitled to do so if the mortgagee should refuse to part with the shares of the other persons. The distinction is important and is well illustrated by the judgment of the Privy Council in the subsequent suit for redemption between the same parties, in which the plaintiff claimed to redeem the whole of the mortgaged property with the exception only of the portion which had passed to the mortgagee. The de- fendant, while conceding to the plaintiff the right to redeem the portion which had been purchased by him, resisted his EQUITY OF REDEMPTION. 255 right to redeem the rest. The Court below, being of opinion LECTURE that the mortgagee could not be permitted to turn round VI - after having " forced the plaintiff to bring the second suit," made a decree for redemption in the terms of the prayer in the plaint. (Nawab Ahmed All Khan v. Joivhir Sing, 1 Agra H. C. Rep., 3.) From this decree there was an appeal to the Privy Council, when the mortgagee again insisted upon his right to retain possession of that portion of the estate which had not been purchased by the plaintiff. In giving judgment their Lordships observed : " The remaining question is what, upon the facts found by the Courts below, ought to have been their decree. The appellant now complains that the plaintiffs have been allowed to redeem as against him the villages other than their own village of Hosseinpore, i.e., to put themselves in his shoes as mortgagee in respect of these villages ; and further, that the decrees were wrong in refusing to treat him as the owner under a subsequent purchase of three-fourths of Rookumpore. " The first objection does not come with a good grace from the appellant, who defeated the plaintiffs' former suit, on the ground that they had not offered to redeem the villages in question, and who, in this very suit, has included in his calculation of the amount, which, as he alleges, ought to have been brought into Court, the shares of the mortgage-debt which he said were charge- able on those villages. The Courts below, however, seem to their Lordships to have mistaken the effect of the former decision of the Sudder Court. It merely ruled that the plaintiffs were bound to offer to redeem the villages in question ; it did not rule that they were entitled to do so, or to acquire the interest of the mortgagee in them against his will. It is unnecessary to determine in this suit whether, in the peculiar circumstances of this case, the former proposition is correct. Their Lord- ships are of opinion that the latter cannot be supported. They think that the appellant, if desirous of retaining possession of these villages as mortgagee, is entitled to do so against the plaintiffs, whose right in that case is limited to the redemption and recovery of their village of Hos- seinpore upon payment of so much of the sum deposited in Court as represents the portion of the mortgage-debt chargeable on that village." (XIII Moore Ind. App., 404 ; XIV Suth. W. R., P. C., 20.) 256 LAW OF MORTGAGE. LECTURE You will observe that the Judicial Committee refused to YI - express any opinion as to the correctness or otherwise of Allahabad the proposition laid down by the Sudder Dewany Adalut in case on the the previous suit. The latter ruling, however, has since point ' been followed by our Courts, and it certainly does not seem to be open to any serious objection. [Saligramv. Barun tfai, IV All. H. C. Rep., 92 (I).] A mortgagee, by pur- chasing a portion of the mortgaged property, does, no doubt, destroy the indivisible character of his security to a certain extent ; but it would be going too far to hold that the indivisibility of the debt was absolutely des- troyed, so that any one of the other persons interested in the equity of redemption might be let in to redeem on payment of the proportion of the debt attributable to the portion in which he himself was interested. To take a simple case, suppose two brothers execute a mort- gage of their property. If one of the brothers should die leaving three sous, and the other brother should sell his share in the mortgaged property to the mortgagee, I do not think any one of these sons would be entitled to redeem his share without offering to redeem the shares of the other representatives of the deceased mortgagor. Right to This principle, however, applies only where the mort- S a g ee himself becomes the owner of a portion of the mort- gaged property. The general rule on the subject undoubt- edly is that a person who has any right to redeem at all has a right to redeem the whole of the mortgaged property, and the mortgagee cannot compel him to redeem only the part in which he may be interested. In a very recent English case it appears that real and personal estate were mortgaged together. On the death of the mortgagor, who died leaving a will of personalty, but intestate as to real estate, the executrix claimed to redeem the whole of the mortgaged property, which claim was resisted by the mortgagee, who insisted that her only right was to redeem the mortgaged personalty on payment of a proportionate part of the mortgage-debt. But the defence was not al- lowed by the Court, and the mortgagee was directed, on payment of what was found due on his mortgage, to convey and assign the mortgaged properties, real and per- (Z) The right of one of several mortgagors to redeem cannot, how- ever, be defeated by the conduct of the mortgagee post litem mot am, either by the purchase of a share in the equity of redemption pending a suit for redemption, or by any partial redemption allowed by him. (Xarohari v. T : itJutl, I. L. B., X Bom , 648.) EQUITY OF REDEMPTION. 25? sonal, to the plaintiff, subject to such equity of redemption LECTURE as might be subsisting therein in any other person or VI - persons. In the course of the argument Lord Justice Cotton asked, if there was any case where the owner of one of two estates, comprised in the same mortgage, had been compelled to redeem that one estate separately ; and in giving judgment the learned Judge said: " The mortgage Hall v. comprises two properties, one of which, subject to the Coward. mortgage, belongs to the executrix. She, therefore, is entitled to redeem, but to redeem what ? The appellant says ' to redeem the one estate which belongs to her.' But there is no precedent for that. The owner of the equity of redemption in one of two estates comprised in the same mortgage cannot claim to redeem that estate alone. The mortgagee might refuse to allow him to do so. So, on the other hand, the mortgagee cannot compel him to redeem that estate alone he is entitled to redeem the whole, reserving the equities between him and the other part-owner he can redeem the whole, leaving the rights of the other parties interested in the equity of redemp- tion to be decided afterwards. The case of Pearce v. Morris (L. R, 5 Ch. D., 227) is an instance of this the owner of one- fourth of the equity of redemption was allowed to redeem the whole, leaving open the rights of the owners of the other three-fourths as between them and the party redeeming." Lord Justice Lindley added " The plaintiff is the executrix of a mortgagor, and asks to be allowed to redeem the whole of the mortgaged property. The defend- ant asks us to declare that the plaintiff is entitled to redeem only the personal estate. Now has the plaintiff a right . to redeem a part of the mortgaged property ? I think clearly not, except as a matter of arrangement ; neither can she be compelled to redeem part. A person who has any right to redeem, has a right to redeem the whole of the mortgaged property, and not a part of it, unless there is a special bargain." (Hall v. Howard, 32 Ch. D, 436 (m) ; Ramkristo Manjee v. Amirunnessa, VII Suth. W. R , 314. (w) I may mention thai the heir-at-law was not a party to the suit, but the Court thought that as he was not known, the objection was not a substantial one, and that it would be a new departure and contrary to the spirit of recent legislation to refuse redemption altogether until he could be found and made a party ; as to the necessity of making all persons interested in the equity of redemption, ordinarily, parties, see Raglio Sah-i v. JBal Krishna Sukha J?am, I. L. R.. 9 Bom., 128, in which however the question of the plaintiff's right to redeem, although raised, was not decided by the Court. B. B. G., M. 17 258 LAW OF MORTGAGE. LECTURE Of. Wuzeerunessa v. Bebee Saldun, VI Suth. W. R., 240 ; VI - Mirza AH Eeza v. Tarasundry, II Suth. W. R., 150; Asansab v. Vamana, I. L. R., II Mad., 223 ; cf. Bitthul Nath v. Toolseeram, I Agra H. C. Rep., 125, where redemp- tion was allowed of the whole with the exception only of the share which had been bought by the mortgagee, and this, although the mortgage-debt had been satisfied ; the case, however, was decided before the Privy Council judg- ment in. Naiuab Azimut All's case, XIII Moore Ind. App., 404, and may not be safely followed.) Bombay An exception has, however, as we have seen, been en- decisiona grafted on the general rule by the case of Nawab Azimut All Khan v. Zoohur Singh (XIII Moore Ind. App., 404.) Considerable difficulty, however, has arisen in defining the true limits of the exception, and there are conflicting dicta, if not decisions, on the point. In the opinion of the Bombay High Court, the exception applies only where the mort- gagors are the owners of distinct parcels, and not where they are either joint tenants or tenants in common; but the Allahabad High Court apparently recognizes no such distinction. (Kuray Mai v. Puran Mai, I. L. R., II All., 565.) Referring to the judgment of their Lordships of the Privy Council in Naiuab Azimut All's case, Sir Charles Sargent observes in the case of Shakeram v. Gopal (I. L. R., X Bom., 656 note) : " The ground of that decision we appiehend to be that the plaintiffs were only the own- ers of a distinct village comprised in the property mort- gaged, and not sharers in the whole of such property. In the case, however, before the Court of Allahabad, the owners of the equity of redemption were tenants in com- mon, and except as to the share purchased by the mort- gagee, there would appear to have been no reason for departing from the ordinary rule, that one of several tenants-in-common may redeem the whole, as was practi- cally decided, under similar circumstances, in the case to which our attention has been drawn by Melvill and Kem- ball, JJ." (Alikhan Dandkhan v. Mahomadkhan Sam- sherkhan, I. L. R., X. Bom., 658, note. See also Narahari Vitalvat, I. L. R., X Bom., 648; cf. Raglw v. Balkrishna, I. L. R., IX Bom., 128.) Bombay I must, however, confess I find some difficulty in under- cases con- standing the distinction taken by the Bombay High Court between a case in which the mortgaged property is held in several ty and one in which it is held in common tenancy. EQUITT OF REDEMPTION. 59 The mortgagee, by becoming the owner of a portion in the LEOTUHK equity of redemption, acquires at least the same right to re- VI - deem the shares of those who do not join in the action as the plaintiff in the case, and there ought to be no distinction in principle between a case in which the mortgaged property is held in severalty and one in which it is hekTin common. The case of a joint tenancy, no doubt, presents greater difficulty. It is clear that in the case of a joint tenancy, none of the coparceners can redeem any particular share be- fore partition. (Gansabant v. Narayan, I. L. R., VII Bom., 467.) The real difficulty, however, lies in saying whether the plaintiff should be allowed to redeem the whole property, leaving the mortgagee to have his rights ascertained and defined in a suit for partition, or whether the suit of the plain- tiff for redemption should be dismissed, reserving to him the right to enforce a partition, or whether a prayer for par- tition and redemption may not be combined in the same suit. A question of this kind arose in the case of Mora- ker Akuth v. Punja Patath (I. L. R., VI Mad., 61), where a suit was brought to redeem the whole of the mortgaged property by one of the mortgagors, a portion of the equity of redemption having been acquired by the assignee of the mortgagee in possession of the property. The original Court gave the plaintiff a decree, but only for the recovery of his share of the lands on payment of a proportionate amount of the mortgage- debt. On appeal, the Subordinate Judge gave the plaintiff a decree for all the land on payment of the whole mortgage-debt. On appeal to the High Court, it was contended by the mortgagee that he was only bound to surrender to all the co-owners of the land jointly, and that at any rate his right to a share in the land ought to have been determined in the suit. The High Court allowed the appeal and dismissed the plaintiff's suit, on the ground that to allow plaintiff to redeem the whole would en- able him to get possession of the property to the exclusion of the mortgagee who was in possession and had a share in the right to redeem. The Court was of opinion that the mortgagee could not be required to surrender possession of the whole against his consent, until the plaintiff had, by a proper suit for partition, ascertained definitely to what shares in the property he and the mortgagee were respect- ively entitled. A decree for redemption of a portion was also disallowed upon the ground, that it could not be given without converting the suit into a suit for partition, which 260 LAW OF MORTGAGE. LECTURE the Court was unable to do without the consent of all the VI - parties interested in the property. Method of I shall now proceed to consider the method by which redemp- redemption may be accomplished, and I propose, in the first instance, to state the law as it is administered in this Presidency. Now the mortgagor may either assert his right of redemption actively, or he may be proceeded against by the mortgagee seeking to foreclose, when the mortgagor may prevent a foreclosure by the repayment of the debt within a limited time. For reasons which are obvious, except when the mortgagee is in possession, a mortgagor seldom, if ever, takes any steps to redeem the mortgage till the mortgagee applies for foreclosure. Sec- tion 7 of Regulation XVII of 1806, however, applies as well to cases in which the mortgagee is in possession as to those in which the mortgagor has never parted with the pos- Bengai session of the pledge. That section provides, that " when law. the mortgagee may have obtained possession of the land on execution of the mortgage deed, or at any time before a final foreclosure of the mortgage, the payment or established tender of the sum lent under any such deed of mortgage and conditional sale, or of the balance due, if any part of the principal amount shall have been discharged, or, when the mortgagee may not have been put in possession of the mortgaged property, the payment or established tender of the principal sum lent with any interest due thereupon shall entitle the mortgagor and owner of such property or his legal representative of the redemption of his propertjr. Instead, however, of paying or tendering the money to the mortgagee, the debtor may deposit the money in the Dewany Adalut of the zillah in which the property is situated." Forecio- In the last lecture I had occasion to refer in some detail Sure> to the provisions of the 8th section of Regulation XVII of 1806, which relates to foreclosure. That very section points out the method by which a foreclosure may be prevented, and the redemption of the mortgage accom- plished, by the mortgagor. When an application for foreclosure is made, the mortgagor is bound to pay to the mortgagee, or to deposit in the Dewany Adalut, the prin- cipal, or the balance, if any part of the principal shall have been paid, together with interest (n), if possession has not (n) If the deed is silent as to interest, payment of the bare principal will be sufficient to bar foreclosure. (liadhanatli v. Bungo Chunder,Suth. W, R., 1864, p. 157 ; Roopnarain v. Madlio, Marsh., 617.) FORECLOSURE. 261 been taken by the mortgagor. It is not necessary that LECTUBB the costs incurred by the mortgagee in the matter of the Vf - mortgage should be paid. (Zalens Ray v. Deb Shahu, Marsh., 167.) And it would seem that a deposit in the terms of the Regulation would be sufficient even if there is an agreement, that money spent in im- provements should be paid by the mortgagor to the xvir T" mortgagee (N. W. P., 1853, page 101); nor would it 180G - be necessary for the mortgagor to deposit any money as interest where the mortgage-bond provides that the rents were to be taken in lieu of interest although the mortgagee was unable to obtain possession ; the object of the Regulation being, as pointed out by the Court, to render as definite and precise as possible the amount which has to be deposited [I. L. R, III AIL, 653; VIII N. W. P., 441 (o).] But the tender or deposit, in order to be good, must be un- conditional. It must not be made in such a way as that its acceptance will impose a condition upon the creditor, or supply evidence of an admission that no more is due than the amount tendered or deposited ; and I need hardly add, that, as it is the very essence of a tender that the person to whom it is made should be at liberty to take the money at once, a deposit under the Regulation, which takes the place of a tender, must necessarily be bad if accompanied by a protest that the money should not be paid away (o) A question of some nicety, as to the right of a mortgagee to claim interest as part of the mortgage-debt, was discussed by the Allahabad High Court in the recent case of Allah Bukfk v. Sada Sur (I. L. R., VIII All., 182). A deed of mortgage by conditional sale executed in 1872, giving the mortgagee possession, contained the stipulation that the principal money should be paid within ten years of the date of execution of the deed, and that in default of such payment the conditional sale should become absolute. It contained the following condition as to interest: " As to interest it has been agreed that the mortgagee has no claim to interest and the mortgagor has none to profits." The mortgagee however did not obtain possession. In 1878 the mortgaged property was purchased by the appellant at a sale in execution of a decree. In 1884 the mortgagee brought a suit for foreclosure against the purchaser and heirs of the mortgagor, claiming the principal money with interest at 8 annas per cent, per mensem. The defendants pleaded that the plaintiff was not entitled to claim interest. It was held that whatever claim he might have against the mortgagors for damages by way of interest in consequence of the failure to get pos- session under the contract, he had none enforceable in this respect against the land which had passed free from charge or interest to the pur- chaser. It would seem that the deposit of the principal alone will be sufficient where the mortgagee has obtained a decree for possession and mesne profits, whether he executes it or not. (Sakriaran v. Lharani. Ill Ben. L. Rep., Hl.A.C. J.) 262 LAW OF MORTGAGE. LECTURE to the mortgagee immediately. (Goluckmonee Debea v. VI - Nobongomonjoree Debea, Suth. F. B., 14 ; see also S. D. A., 1847, p. 462 ; S. D. A., 1848, p. 897 ; S. D. A., 1859, p. 852.) Deposit A somewhat different question arises when the deposit, test* 11 * " i ns ^ ea( i f being clogged with any condition, is merely accompanied by a protest that the money is not due, and that the mortgage-deed ,is invalid. The question actually arose in the case of Prannath Chowdhry v. Rookea Begum, which was heard in the last resort by the Privy Council, and in which their Lordships held that such a deposit is bad. In delivering the judgment of the Board, Lord Kingsdown said: "The remaining objection relates to the payment into Court in the nature of a tender, which was made by the defendant Ramruttun Roy. Ramruttun Roy direct- ed the money to be paid out to the appellant, but at the same time, in his petition to the Court, he disputed the validity of the appellant's title to foreclosure, and expressed an intention, amounting to a notice, to sue the appellant to recover back the very money which he was tendering. Prannath " The meaning of the direction that the money may be v. Rookea. p a j^ j n ^ Court clearly is, that the mortgagor may have adequate and lasting evidence of that which is put in place of a tender, and the mortgagee the security and advantage of a deposit in acknowledgment of the title. The mort- gagee would have little inducement to take the money, waiving his lien by its acceptance, if litigation on the very same subject were to recommence upon the accept- ance of the money ; and though mere words, in the form of a protest, which may accompany a tender, will riot defeat, where they can reasonably be regarded as idle words, their Lordship thinks that the proceedings of Ram- ruttun Roy with respect to the mortgagee's title to fore- closure forbid such an interpretation of his language and his act." (VII Moore Ind. App., 323. See also Makhun Koar v. Jassoda Kuar, I. L. R., VI All., 399; Abdar Kuhman v. Kisto Lall Ghose, VI Suth. W. R., 225. Com- pare Babu Gobind Prosad v. Dwarkanath, XXV Suth. W. B., 259.) I may mention that this decision has been sometimes criticised as treating a tender with a threat that the money is not due as a conditional tender; but the judgment really proceeds upon the ground that the Indian Regulations con- template cases in which the relation of mortgagor and mortgagee is undisputed, and that section 7 of Regulation XVII of 1806 was not intended to apply to a case in TENDER. 263 which an alleged mortgagor makes, under protest, a tender LECTURE of money upon a mortgage, the validity of which he VI - refuses to acknowledge. The tender must be made at a proper time and at a pro- per place. If no particular place is agreed upon, a person- al tender is, generally speaking, necessary. In exceptional circumstances, however, a tender may be good if made at the mortgagee's house or last place of abode, as, for instance, where he is keeping out of the way to avoid the tender (Fisher, 737). It is scarcely necessary to observe that a tender in order to be valid must be a tender of money, except where the parties have agreed impliedly or expressly upon some other mode of discharging the debt, a very strong instance of which is to be found in the case of Lyons v. Skinner (N. W. P., 1853, p. 441). In England the law relating to tenders is extremely rigid (p], but the rigidity of the English law on the point has been consider- ably relaxed by the Indian Legislature, and under the Indian Contract Act, it is sufficient if an unconditional offer be made to pay at a proper place by a person in a posi- tion to pay. (Kanye Loll Khan v. Khetter Money, V Cal. L. Rep., p. 105.) We must remember that in those parts of India where Bengal Regulation XVII of 1806 is in force, the right to redeem a mortgage by conditional sale is governed by the terms, not of the agreement, but of the Regulation. Where, therefore, the mortgagor deposited only the principal debt and interest for the last year, alleging that interest for the previous years was according to the conditions of the document to be recovered by separate suit, it was held that his suit for redemption must be dismissed. There had been default in payment of the interest due, and by section 8 of the Regulation, the mortgage, notwithstanding the conditions relied upon, had been finally foreclosed. (Mansur All v. Sarju, I. L. R., IX All, 20.) I ought to add that in an usufructuary mortgage where there is no stipula- tion for interest, the usufruct going in lieu of interest, the mortgagee is not entitled to claim any additional sum by way of interest, and, generally, when a deed of mortgage is silent as to interest, payment of the bare principal within O) See the subject discussed in Fisher, pp. 736743. The English cases are interesting as illustrating the method adopted by Judges in England in dealing with the embarrassments created by archaic rules, which, however inconvenient, are too firmly established to be directly overthrown by Courts of Justice. 264 LAW OF MORTGAGE. LECTURE the year of grace is sufficient to bar foreclosure. (Radha- VI - nath Sen v. Bango Chancier Sen, W. R., 1864, p. 157 ; Roop- narain Sing v. Madhab Sing, Marsh., 617 ; Gangaprasad Bay v. Enayet, 16 W. R, 251.) It may not, perhaps, be out of place here to state that a Judge has no discretion to extend the time allowed to a mortgagor under section 8 of Regulation XVII of 1806. (Mohammad Gari v. Abdul Mohammad, V Suth. W. R., Mis., 31.) If, however, the mortgagee takes out the mort- gage-money as deposited by the mortgagor within time, he cannot afterwards sue for foreclosure. (Nowazush v. Woosulunnissa, 6 W. R., 249.) It is necessary to observe that only those who are entitled to redeem are able to make a valid tender, as the mortgagee is entitled to retain the property as against all strangers. Where, therefore, an execution-creditor of the mortgagor made a tender on his own account which was refused by the mortgagee, the mortgagor was not allowed the benefit of the tender, on the ground that the execution- creditor who made the tender was not entitled to redeem. Oopal Loll v. Maharajah Pitambar Singh (III Selc. Rep., p. 54). A person, however, who has only a partial interest is entitled to make a valid tender. (Pearce v. Morris, L. R., 5 Ch., 227, but see Ram Buksh v. Mohunt Ram, XXI Suth. W. R., 428.) Time with- ^ e now coine to the time within which the money must in which be tendered or deposited. Now, the Regulation, as you fnusTbe w ^ observe, allows one year from the date of the 'notifi- made. cation,' which has been held to mean from the date of the service and not of the mere issue of the notice. This was decided in the case of Moliesh Chunder Sein v. Mussamut Tarinee (X Suth. W. R., F. B., 27). The Court, however, refused to say from what point of time the period should run when the mortgagor cannot be served. There can, however, be little doubt that where substituted service is permitted, the period would run from the date of such substituted service. I may mention that, in calculating the year of grace, the date on which the service is effected is excluded. (MoheshChunderSeinv. Tarinee, XSuth. W. R, F. B., 27; I Ben. L. Rep., F. B., 14, approved of by the Privy Council, Norendro v. Dwarkalal, I. L. R., Ill Calc., 397.) Tender or We have seen that the mortgagor is at liberty either deposit. tender the money to the borrower, or to deposit it in Court within the statutory period of oiie year. If, how- TENDER. 265 ever, the Court is closed on the clay on which the year of LECTURE grace expires, a deposit cannot be properly made on the VI - first day on which the Court reopens. In order to save the equity of redemption, it must be made strictly within the- year allowed by the Regulation, aud the rule would seem to be the same as well when the Court is closed accidentally aud unexpectedly, as when it is closed during an authorized vacation. In the case of mortgages, the law allows the mortgagor an alternative, and if he prefer, for his own security, to deposit the money in the Zillah Court, he must avail himself of the privilege at a time when it is within his reach. As observed by the Court in a late case : " If we were to hold otherwise, we should be allow- ing the mortgagor to extend the year of grace at pleasure. He might say, ' If I pay the money to the mortgagor, I must doit within one year; but if I pay it into Court, I shall have thirteen or fourteen months.' " (Komala Kant Mytee v. Narainee Dossee, IX Suth. W. R., 583. But see the cases cited in Macpherson's Mortgage, p. 521.) The class of cases of which the above is an illustration Extension must be carefully distinguished from those in which, by an of penod ' agreement between the mortgagor and mortgagee, the time for payment is extended beyond the statutory period, and owing to the unexpected closing of the Court, the deposit cannot be made within the time fixed by the parties. This point was decided in the case of Davi Rawoot v. Heeramon Maliatoon, in which the mortgagee having extended the time for repayment to the 25th of November 1863, on which day the Court was unexpectedly closed, the mortgagor de- posited the money on the first day on which the Court reopened, and the question arose whether ther deposit was made in time to save the equity of redemption. The Court held that the deposit was good; but in giving judgment the Chief Justice, Sir Barnes Peacock, made certain observa- tions which were certainly not necessary to the decision of the case, and are, perhaps, somewhat open to criticism. The learn- Sir Barnes ed Chief Justice is reported to have said : " The day fixed for payment to prevent a foreclosure of the estate was not a day peremptorily fixed by the law, but a day fixed by the mortgagee himself. Now Courts of Equity, as a general rule, will relieve from forfeiture caused by not doing an act on a day fixed by the parties ; and I think they ought also to relieve when the day is fixed by l*^and the act is prevented by some accident which the person to be affected 266 LAW OF MORTGAGE. LECTUEE by the forfeiture could not prevent, and which was not VI - caused by any default or misconduct on his part. Courts of Equity will not allow a lessor to forfeit a lease, because the rent is not paid on a particular day." Now, although Courts of Equity are always willing to relieve against forfeitures caused by the non-performance of an act on the day fixed by the parties, I am not aware that there is any instance of the exercise of such power when the time is appointed by statute. Indeed, it is difficult to see how such a power could be exercised without trenching on the province of the Legislature. Take the Statute of Limitations for instance : can it be said that if a plaintiff was prevented by some un- foreseen accident, without any default on his part, from suing in time that a Court of Justice would be justified in receiving his plaint. I should, therefore, venture to think that where the period for doing an act is fixed by law, the person who would be affected by the non-performance must perform io within the statutory period at his peril. There is another observation of Sir Barnes Peacock which would also seem to be open to question. The learn- ed Judge says, " I should hold that the plaintiff has the option, either of depositing the money in the Judge's Court, or of tendering it, and that if there is a sufficient excuse for not depositing it in the Judge's Court, he is not bound to tender the money and prove that tender." (VIII Suth. W. R., 223.) Now, although the mortgagor may not be bound to tender the money to the mortgagee, he should certainly, it seems to me, deposit it in Court at a time when it is within his reach to do so. The case may be a very hard one when the Court is closed unexpectedly, but the mort- gagor who defers payment till the last moment, does not perhaps deserve much sympathy. Year of It very frequently happens that the mortgagee, during grace. ^ ne currency of the year of grace, allows an extended period to the mortgagor to repay the debt. In such cases the mortgagor must take care to tender or deposit the money within the limited period, otherwise the mortgage would be foreclosed at the expiration of the stipulated time. (Goonomonee Dassee v. Parbutty Dassee, X Suth. W.R., 326.) Redemp- I have said that the mortgagor may, without waiting ^ ^ ne mor tga-gee attempts to foreclose, take steps for the purpose of redeeming the mortgage, a right which, how- ever, may not be exercised before the money falls due. (Burno Moyee v. Benode Mohinee, XX Suth. 'W. R., 387.) REDEMPTION BEFORE FORECLOSURE. 267 I ought to add that, under the Regulations, the mortgagor LECTURE may, on deposit of the principal, in cases in which the mort- VI - gagee has been in possession, call upon the Court to restore the possession of the property to him, subject, however, to an adjustment of accounts between the parties. (Section 2, Regulation I of 1798.) If, however, a less sum is deposited! the mortgagor cannot get back into possession except under a decree in a regular suit, in wldch all questions arising between the parties may be regularly brought before, and determined by, the Courts of Civil Justice. C In those parts of the country to which the Bengal Regu- lations do not apply, the mortgagor may, at any time be- fore foreclosure and after default, bring a suit for redemp- tion against the mortgagee, when the Court takes an ac- count of the amount due on the mortgage-security, and allows the mortgagor a certain period, which is usually six months, to pay the money. In England, it is an established rule of the Court that if a bill for redemption is dismissed for any reason except for want of prosecution, the dismissal operates as a decree for foreclosure ( - I have already stated that down to the year 1855, a usufructuary mortgage, whatever might be the terms of the contract between the parties, came to an end by virtue of the enactment contained in Section 9 of Regulation XV of 1793, as soon as the principal, together with interest at twelve per cent., if no lower rate should have been agreed upon between the parties, was realized from the usufruct of the mortgaged property, or otherwise liquidated by the mortgagor. The mortgagor, therefore, might redeem the property at any time, and the Court was bound to allow him to do so without any regard to the period mentioned in the mortgage. There might, perhaps, be good reasons for 282 LAW OF MORTGAGE. LECTUBE enacting that the mortgage should be cancelled as soon as YI1 - the money was realized from the usufruct, but it is difficult to see why the mortgagee should be compelled to be paid off by the mortgagor before the appointed time. There is, perhaps, no system of law which guards the rights of the mortgagor with greater jealousy than the English, and yet the Court of Chancery, in the absence of any fraud or im- proper dealing, will not set aside an agreement, postponing the equity of redemption to a long deferred day, and in one case, the Court refused to relieve the mortgagor, even though he offered to pay the whole of the interest receiva- ble by the mortgagee in advance. [Brown v. Cole, XIV L. J. N. S. Ch., 167. See also Burrowes v. Molloy, II Jo. and Lat, 521 (0-] Ri therefore, under the Regulations, had ofmon- the right to redeem at any time on payment of the yagor. money due, either on account of principal, or interest, or both, and it was no answer to such a suit that the term for which the mortgage had been granted had not expired, or that the money had not been realized from the usufruct. Position of The position of the zuripeshgeedar, perhaps, deserves geedar Sh ~ a c l ser examination. I have already called your attention to the light in which zuripeshgee leases were always re- garded by our Courts. They were not regarded as mere leases, and could not therefore be set up as a defence in an action by the mortgagor for possession instituted before the expiration of the term. It is true that the decisions of the Sudder Dewany Adawlut of Calcutta at one time showed a considerable fluctuation of opinion, but all the more recent authorities are in favor of the view that a zuripeshgee, before the repeal of the usury laws, might be redeemed, even before the expiration of the term. (Pungian Singh v. Amina Khatun, VI Suth. W. R., 6 ; S. D. A., 1860, p. 174 ; S. D. A., 1852, pp. 280, 304.) Usufmctu- I will now discuss the nature of usufructuary mortgages ary mort- created after the repeal of the usury laws. The utmost fep^Ti of ter latitude is now given to the parties to contract in any usury manner they choose, and the restrictions, which the Regu- lations imposed on the creditor, have been wholly with- drawn. While the usury laws were in force, the mort- gagee was bound to account for the gross profits, allowance (i) There may, however, be a proviso enabling the mortgagor to redeem on a certain day or on payment before or after it. v. Tint/cy, XXXIV L. J. Oh., 13.) REDEMPTION. 283 being only made for necessary outlay and expenses of col- LKCTUBK lection, and the mortgagor could not deprive himself of V11 ' this right even by contract. Since the repeal, however, of those laws, the mortgagor and mortgagee may make any contract they please, and the mortgagor may by con- tract deprive himself of the right to call for an account of the rents actually received by the mortgagee out of the estate. In the case of Munnoo Lall v. Eeet Bhoobun Sinqh (VI Suth. W. R, 284), the Court observed : " With regard to the first part of the contention that a mortgagee in possession is bound in every case to account for the profits, and that a mortgagor cannot by contract deprive himself of his right, it is no doubt true that, while the usury laws were in force, a restriction in this respect did certain! v exist. But this prohibition on the free power of the par- ties to contract as they please was solely a consequence of the usury laws then in force ; and on the abolition of those laws, the restriction in question fell with them. Bv Section 4 of Act XXVIII of 1855, it is expressly enacted that an agreement that the use of usufruct of any proper- ty shall be allowed in lieu of interest, shall be binding upon the parties. We are of opinion that a mortgagor and mortgagee are now at liberty to make what contract they please with reference to the profits of the mortgaged estate." This case is, therefore, an authority that tlie mortgagor is at liberty to contract in any manner he pleases, and will not be relieved from any covenant bind- ing him not to ask for an account of the actual profits. A zuripeshgeedar, therefore, is, as the law now stands, bound to account, not for the profits actually received by him out of the estate, but only for the rent reserved on the lease. The question has arisen whether a zuripeshgee, created Right of since the repeal of the usury laws, may be redeemed before [|;f n emp ~ the expiration of the term specified in the deed ; and the reported cases on the point show the inclination of our Courts to treat zuripeshgees as ordinary leases, which can- not be put an end to before the expiration of the term for which they have been created (j). Zuripeshgee leases, (.;' ) Of course where no term is fixed, a usufructuary mortgage may be redeemed at any time, and the mortgagee will be entitled to re-enter on the property, if on taking an account it appears that the principal and interest have been satisfied. (Doul Narayan v. Riinjlt Singh, I Cal. L. Rep., 256.) It is necessary to observe that the transaction in this case bore date the 18th of July 1845, but it seems to have been decided on the assumption that it was unaffected by the usury laws. See also Venneri v. Patanattil, II Mad. H. C.Rep., 382. 284 LAW OF MORTGAGE. however, are seldom intended to create a distinct estate, but are only effected as security for the mortgage-money. In this view, it would perhaps be difficult to treat them as ordinary leases. Be that, however, as it may, there is little doubt that a zuripeshgee, created since the repeal of the usury laws, cannot be redeemed before the term for which it has been executed has expired (/j). (Khajeh Lootf AH v. Goozraz Thakoor, XI Suth. W. 11., 408 ; Soorjun Choivdry v. Imam Bandee Begum, XII Suth. W. R., 527 ; Sreemunt Dutt v. Krishna Nath Dutt, XXV Suth. W. R., 10 ; Joomna Pershad v. Joyaram, II Gal. L. Rep., 26 ; Khojah Lutif Ali v. Goojraj, XII Suth. W. R., 528, note ; Chunder Coomar v. Isiuur Chunder, XIV Suth. W. R., 455.) It is perfectly valid as an agreement settling beforehand the annual amounts with which the mortgagee would be charge- able in account, and as the equity of redemption may be postponed to any day that the parties may agree upon, I do not think that the Court will permit the mortgagor to pay off the mortgage-money and re-enter upon the estate before the expiration of the term for which the zuripeshgee has been created, that being the period fixed for the redemption of the mortgage. It may, no doubt, be suggested that, in the absence of any express stipulation, postponing the right of redemption, the mortgagor ought to be permitted to redeem; but, except in very badly-drawn, instruments, there is sufficient indication of the intention of the parties, that the money shall be repaid on the determination of the term for which the zuripeshgee is effected, atid as in the case of an ordinary creditor, the mortgagee has the right to refuse payment at an earlier date. It may, perhaps, strike some of you, that it is of no consequence whether you treat the zuripeshgee as a lease on a reserved rent, or as an agreement settling the basis on which the account between the parties are to be taken. This, however, is by no means so, and the distinction is an important one, as I shall endeavour to show in the next lecture. In either view, however, a zuripeshgee is valid since the repeal of (&) The question, however, whether the transaction is a mere lease or a mortgage may be of considerable importance in cases in which limitation is set up as a defence, or in which a transaction is sought to be set aside on the ground of its improperly fettering the equity of redemption. (Gopal v. Desai, I L. R., VI Bom.. 674 ; Abdul v. Kashi, I. L. R., XI Bom., 462.) The question may also arise in connection with the provisions of particular statutes, the Registration or Stamp Act, for instance. (Ram v. Thacoor, I. L. R,, IV Gale., 6 ; Ex-parte Hill, I. L. R., VIII Calc., 254.) ZURIPESHGEE. 285 Regulation XV of 1793, as an engagement excluding an LBCTOBE account of the actual profits realized by the mortgagee in VIL possession. But it requires a clear expression of intention to deprive the mortgagor of his right to redeem. If, there- fore, a usufructuary mortgage is made for a definite term, but no further term is created, the mortgage may be re- deemed at the end of the term. (Kanara v. Ryrappar 1. L. R., Ill Mad., 213, N. W. P., 1853 ; p. 356.) It is necessary to observe that, in the absence of any contract to that effect, a usufructuary mortgagee has no right either to foreclose or to sell the property comprised Forecio- in the mortgage. (Mohesh Sing v. Chanhorju Singh, I. L. 8U . re " nd R., IV All., 245 ; Sheo Narayan v. Jai Gobind, I. L. R., IV * All., 281 ; Oangaprasad v. Kusagari, I. L. R., I All., 611 ; Dulli v. Bahadur, VII All. H. C. Rep., 55.) In a late case the Court observed : " Although it is true that these leases are treated by the Courts as usufructuary mortgages, and that parties to them have, to some extent, the rights of mortgagor and mortgagee, it does not follow that in a case of this kind the lessee is entitled to have the property sold. To do that would be to give him a greater security than he has'stipulated for. All that has been held by the Courts in regard to transactions of this kind, as I under- stand it, is, that the parties ought to be considered, not simply as lessor and lessee, but as mortgagor and mortgagee, the lease being granted as a security for repayment of the money. This would put the lessor in the position of a mortgagor and give him the rights of a mortgagor, and, to the extent of the security given, would put the lessee in the position of mortgagee with the rights and liabilities at- tached to that character. What is now asked for is beyond that. We think that the "decision of the lower Appellate Court is right, and that the plaintiff is not entitled to the decree which he sought in this suit." (Kewal Sahu v. Rash- narain Sing, XIII Suth. W. R., 446.) A zuripeshgeedar, to whom the property itself is not pledged, has, therefore, a very imperfect security. (Cf. Nundolal v. Kullipa, Mar- shall, 209; Muyeedannissa v. Dildar Hossein, XX Suth. W. R., 178; for cases in which it was held that the property itself was mortgaged as security for the debt, see Phul Kuar v. Musli Dhur, I. L. R., II All., 527 ; Mun- noolal v. Reetbhoobun, VI Suth. W. R., 283, distinguish- ing Dulli v. Bahadur, VII All. H. C. Rep., 55. It is, perhaps, scarcely necessary to remind you that a 286 LAW OF MORTGAGE. LECTURE usufructuary mortgagee in possession may not, any more VII. Redemp- tion when there are several mortga- gors. Redemp- tion. than a mortgagee in any of the other forms, deny the title of the mortgagor to mortgage or to redeem. (Santaji v. Baya- ji, Bom. P. J., 1876, p. 70; Chinto v. Lakshman, P. J., 1876, p. 28.) As in other kinds of mortgage, one of several mort- gagors in a usufructuary mortgage is entitled to redeem the whole mortgage, but the rule does not, it seems, apply where possession is sought to be recovered on the ground that the debt has been satisfied out of the usufruct. In such cases the plaintiff can only claim his own share, and the extent of it should be determined in the presence of all the co-mortgagors. (Fakir Bukush v. Sadat Ali, I. L. R., VII All., 376; but see Mirza Ali Reza v. Tarasoondari, II Suth. W. R., 150.) The mortgagor who redeems the whole estate will be entitled to possession and receipt of the whole of the rents, subject to account with his co-mortgagors. (Oobind Pershad v. JDwarkanath, XXV Suth. W. R., 259.) A usufructuary mortgage may be redeemed within the same period as any other mortgage. Before the passing of Act XIV of 1859, however, a usufructuary mortgage might be redeemed at any time ; but, as the law stands at present, the mortgagor must exercise the right of redemption within sixty years from the time when the right to redeem or to recover possession accrues to the mortgagor. The period, however, as I have already had occa- sion to observe, may be enlarged by a written acknowledg- ment by the mortgagee (I). It must be borne in mind that the general article relating to suits for immoveable property has no application to an action by a mortgagor who has executed a usufructuary mortgage for a term of years, seeking to recover possession of the mortgaged pro- perty, alleging that the mortgage-debt has been paid off. The possession by a mortgagee for a term of years after the expiration of the term is not necessarily adverse to the mortgagor, and so long as the relation of mortgagor and mortgagee exists, the mortgagor has sixty years within which to redeem. (Chuda v. Mahant, Bom. P. J., 1883, p. 145. Distinguish Gopal v. Desai, I. L. R., VI Bom., 674.) There are some other points connected with usufruc- tuary mortgages, which, however, will be more con- veniently discussed in the next lecture when I come to treat of accounting. (I) See further on the subject of limitation generally, App. Sta- tutes, tit. Limitation. LECTURE VIII. Liability of mortgagee in possession to account Regulation XV of 1793 Meaning of " gross receipts" Mortgagee not competent to create middlemen Allowance for expenses of collection Practice of our Courts Nature of accounts which mortgagee is bound to produce Verification of account* Right of mortgagee to interest not exceeding 12 percent. Shah Makhun Loll v. Sreekissen Sing Liability of mortgagee since Act XXVIII of 1855 Zuripeshgee leases Allowance for necessary repairs Improvements how far allowed Payment of Government revenue Mode of taking accounts Liability of mortgagee after notice of subsequent incumbrance Mortgagor not liable to account Mortgagee not a trustee for mortgagor Wassilat distinct from usufruct Mortgagee chargeable with occupation rent Suit for redemption Practice of the Courts iu Bengal Procedure in such cases elsewhere. I STATED in the last lecture that the position of the mort- gagee in possession has been considerably modified by the 1 0:>!K *~ passing of Act XXVIII of 1855. It will, therefore, be convenient to deal, in the first place, with mortgages governed by Bengal Regulation XV of 1793 (a), and then to deal with those which are governed by Act XXVIII of 1855. In mortgages created before the repeal of the usury Liability laws, the mortgagee, if in possession, is bound to account of mor . l ~ for the gross proceeds, allowance, however, being made for poss'essTon the " costs of collection and preservation of the estate to nc ~ in mortgage," and any contract excluding an account of the actual rents and profits, is, as I said in the last lecture, as a rule, wholly inoperative. (Hyder Buksh v. Hossein Buksh, IVSuth. W. R., 103; Fuzlool Muhman v. Ali- kureem, V Suth. W. R., 163 ; Punjum Singh v. Ameena Khatoon, VI Suth. "W. R., 6 ; Doorga Debee v. Issur Chunder, X Suth. W. R., 367. Distinguish Mahadu v. Bhagiratti, Bom. P. J., 1877, p. 169, where the Court held that no condition for an account could be engrafted on the (a) As to laws regarding usury, afc one time in force in the different presidencies, see Macpherson, p. 149, note. I may mention that the rule of ditmdiipat is still applied in the Presidency of Bombay, but not where, in taking the accounts against the mortgagee in possession, credit is given to the mortgagor for the rents and profits as against the prin- cipal and interest due to the mortgagee. (NuthuWiai Parrachand v. Mul- cliand Hirachand, V Bom. H. C. Rep., 196; Sheobart v. Dliaree, II Agra H. C. Rep., Part II, 194 ; Narayan v. Satvaji, IX Bom. H. C. Rep., 83 ; Hari v. Salambhat, I. L. R., IX Bom., 233.) 288 LAW OF MORTGAGE. LECTURE contract.) And the mere fact that the purchaser of tlie equi- VIII. ty o f redemption retained a certain sum for payment to the mortgagee as due on the mortgage, would not preclude the former from claiming an account. (Ja/ree v. Ounga, III Agra H. C. Rep., 91 ; Bibee Suyeedun v. Zuhoor, Suth. W. R., 1864, p. 44.) But there may be cases in which the mortgagee may relieve himself from the obliga- tion ; for instance, when the only sum he is to receive beyond the interest allowed by law is an unvarying and not a fluctuating amount which the Court, under the circum- stances, regards as a fair allowance for the costs of collection. (Badri Frosad v. Murali Dhur, I. L. R.,II All., 593.) But an agreement to exclude accounting absolutely would not, as I have already said, be sustained under the usury laws, nor would a mere recital of such an agreement, in the absence of a new contract in a document executed after the repeal of those laws, affect the right of the mortgagor to call for an account. [Mahtabkuar v. The Collector ofShahabad, I. L.R., V All., 419 (6).] The duty of the mortgagee is defined in Regnia- Section 11 of Bengal Regulation XV of 1793, which says : of 'i793. "For the adjustment of the accounts, in the cases of mort- gages specified in Section 10, where the mortgagee shall have had the usufruct of the mortgaged property, the mortgagee is to be required to deliver in the accounts of Ids gross receipts from the property mortgaged, and also of his expenditure for the management or preservation of it. The mortgagee is to swear, or (if he be of the description of persons whom the Courts are empowered to exempt from taking oaths) to subscribe a solemn declaration, that the accounts which he may deliver in are true and authentic." laf's case Now, although the section speaks of the gross receipts, they must be such as the mortgagor himself could have realized before the mortgage, and if he could not by reason of an intervening lease call for the account of the collec- tions, neither can the mortgagee. The terms of the law are not inflexible, and must receive a construction such as may suffice to accommodate its provisions to the variable and different natures of estates and possession. (Shah Makhun Loll v. Sreekissen Sing, XII Moore Ind. App., 157 ; XI Suth. W. R., P. C., 19.) The mortgagee, however, (Z>) The mode of accounting, except where it is only a device to exclude accounting altogether, may, of course, be regulated by the terms of the deed. (Ram Pershad v. Kishen, III Agra H. C. Rep., 146; lladhalenode v. Kripamoyee, XIV Moore Ind. App., 443. Cf. 451 ; S. D. A., 1848, p. 649 ; N. W. P., 1855, p. 22.) ACCOUNTING. 280 must not create a middleman between himself and the LKCTVKK tenants ; and if he does so, he is not relieved from the respon- Viir - sibility of accounting for the gross rents payable by the tenants. (S. D. A., 1852, p. 1137 ; S. D. A., 1857, p. 1513.) Again, a mortgagee in possession cannot grant a title to any one for a period in excess of the duration of his own Interest in the estate, and it would seem that, unless the tenant of the mortgagee attorns to the mortgagor, the latter will not be entitled on redemption to sue the former for rent. (Adjoodhya Sing v. Oirdharee, II All. H. C. Rep., 199.) In England large leasing powers hare been given both to the mortgagor and mortgagee by the Conveyancing Act of 1881, but in this country it seems that the mortgagee in possession, and the same remark applies to the mortgagor, is only entitled to create a tenancy from year to year, or in the case of house property, from month to month, in the ordinary course of management. Formerly in England a mortgagee could not make a valid lease without the concurrence of the mortgagor except in a case of necessity. (Hungerford v. Clay, 9 Mad. 1 ; Corbett v. Plowden, 25 Ch. Div., 678.) Nor was the mortgagor in possession clothed with any implied authority to let the premises, even from year to year, at a rack rent. (Keech v. Hall, and the notes to it, I Smith L. C., 574.) The rule, however, would seem to be ;i somewhat inconvenient one, but as pointed out by Lord Mansfield, it is not likely to work any practical mischief, for where the lease is not a beneficial lease, it would be undoubtedly for the interest of the mortgagee to continue the tenant. Where the lease happens to be a beneficial one, the tenant may always put himself in the place of the mortgagor by redeeming the mortgage. The mortgagee, however, is not an assurer of thecontinua- Grow tion of the same rate of profit as the mortgagor was able J^ to raise, although he may be liable for the non-receipt of profits which he might have received with common care and attention. (XII Moore Ind. App., 192-193.) In England amoitgagee accounts for rent according to the rate at which the premises were let when he took possession, unless the contrary is shown by him. (Black- lock v. Barnes, Sel. Ca. Ch., 53.) This rule, however, must be applied with great caution in this country, where so much depends on personal qualities?, and where a change of management nnd possession may cause a falling off of R. B. G., M. 19 290 LAW OF MORTGAGE. LECTURE receipts ; an estimate of a preceding rental, is not, there- VHI' fore, always a proper measure of actual receipts. (XII Moore Ind. App. ; 193.)(c) The mortgagee is, strictly speaking, liable only for the amount actually realized by him, except in cases of fraud or wilful neglect of which primd facie evidence must be given by the mortgagor. The general rule on the subject is that the mortgagee in possession is only accountable Mortgagee for what he has received, and is not bound to take any v hat d l particular trouble to make the most of another's pro- exteut. perty. Choti v. Kalka, VII All. H. C. Rep., 100. (d} But, on the other hand, he is bound, as pledgee of the estate, to take the same care of it as every prudent owner is in the habit of taking of his own property, and he is responsible for waste, for the consequence of wilful de- fault, and for all loss resulting from negligence amounting to a breach of trust ; but the mortgagor cannot lie by (- be liable if he is guilty of gross mismanagement in the gence ' cultivation of the land, and a mortgngee in possession of cultivable land must cultivate the ordinary crop which it is capable of yielding. (Girjoji v. Kesliaorav, II Bom. H. C. Rep., 211, the head-note of which is incorrect ; Wragg v. DenJtam, II Y. & C., Exe., 117.) It seems somewhat doubtful upon the authorities ( I Agra Usnfrnctu- H. C. Rep., 281 ; Of N. W. P. 1864, p. 305) whether a usufruc- J5?. ort tuary mortgagee can plant trees without the consent of the mortgagor, but if he does, he will be liable to account for the profits arising from the trees planted by himself on the mortgaged land, and he may either be charged with a fair occupation rent or with the actual net profits realized by him after deducting all outgoings, and allowing a reasonable rate of interest on the capital employed in the undertaking. (Prabhakar v. Pandurang, XII Bom. H. C. Rep., 88.) You will observe that the mortgagee is entitled to the ^ f xp ^ 8C8 expenses of collection, and a fixed percentage on the gross tion" collections is generally allowed to him under that head vary- ing from five to ten per cent. In one case, however, the Court observed : " No item should be allowed to the mortga- gee, which is not either admitted by the mortgagor, or sup- ported by evidence of some sort. For instance, neither ten (e) Cf . Noyes v. Pollock, 30 Ch. D., 336. where it was held that the accounts of the mortgagee are not sufficient if they only show sums received in lump from the mortgagee's agent. 202 LAW OF MORTGAGE. LECTURE per cent, nor five per cent, should be allo-vred for collection VIII- charges, but only so much as the expenses of collection actu- ally amounted to, and if proper vouchers for this are not forthcoming, at least some evidence should be adduced sufficient to lead to a reasonable estimate of what the expenses under this head probably were." (Mukund Loll Sukitl v Goluk Chunder Dutt, IX Suth. W. R., 575; cf. Bro- jonautlt v. Bhugobutty, I Suth. W. R., 133; Roghonath v. Lu-dtiiu, I Agra H. C. Rep., 132.) Accounts 1 need hardly observe that the accounts which the to be full mortgagee is bound to deliver must be full and complete. They must exhibit detailed items of all actual receipts- and disbursements, and must be accompanied by all vouchers. ID one case in which the mortgagee put in certain jurnma-wasil-bakee papers, the Court observed : " Jumma-wasil-bakee papers, although they may, and per- haps may very strongly and directly, support a mort- gagee's account put in under the law (section 3, Regula- tion I of 1798), are not and cannot be that account itself. That account which the mortgagee by law has to put into Court, is not that of his agent or tehsildar, given by the latter for his master's (the mortgagee's) information as to such agent's collections. The jumma-vvasil-bakee paper, however, is this latter only. The account to be put in under the law is one to be made, verified, and proved by the mortgagee himself in the way before indicated. His jurama-wasil-bakee papers, duly attested by those who prepared them, or who collected according to them, and supported by the receipts of the talookdars or ryots, who also may be called to depose to those receipts and to what was the real demand, collection, and balance LoU's case, of each of their respective tenures may well be adduced to support the mortgagee's own account when made and put into Court under the law cited. " In fact, the account required from the mortgagee is one setting forth what he has realized, from what portions of the mortgaged property, in what terms or periods, with what loss and gain on the several assets, with what neces- sary reductions, and what remains then as the net profits which can be taken as actual realizations towards liquidat- ing the sum due under the mortgaged transactions." (Mohun Loll Sukul v. Goluk Chunder Dutt, V Suth. W. R., 276 ; cf. Bibee Suyeedunv. Zuhoor, Suth. W. R., 1864, 44 ; Ram- kissenv.ShahKundun,Sut\i.W. R., 1864, 177; Ameer- ACCOUNTING. 293 ooddeen v. Ramchand, V Suth. W. R., 53 ; Ramlochan v. LECTURE Kunhyalal, VI Suth. W. R., 84 ; Tasaduk v. Beni, XIII vm - Cal. L. R., 128 ; N. W. P., 1850, p. 244.) It used to be thought at one time that the accounts vrffl- must, in every case, be verified by the mortgagee himself, cnrion ol and that the terras of the law were inflexible. The Privy " Council, however, observed in a late case : " Their Lordships think that the language which, like other provi- sions of the earlier Regulations, is curt and applied to the more common cases, must, to preserve even the spirit of the enactment itself, be construed reasonably, as admitting in rase of necessity, of some delegation also in the person deputed to perform the duty of attesting the accounts. If the general manager who did till, and knows all, with whom the mortgagors, with that knowledge, contracted, whose name is used, whose accounts in one sense they are ; and who far more than mere representative knowing nothing of their own knowledge of the transactions, satisfies the spirit of the law swears to the truth of them, it is such a reasonable compliance with the spirit of the law at least, that its performance, in a case circumstanced like the pre- sent, by a substitute, furnishes no ground whatever for suspecting malpractice or designed evasion of the law; and with that alone their Lordships are concerned in this case, since the mere mode of the verification has no other importance in this case than as it raises a case of suspicion against the accounts themselves," (Shah Makhum Loll v. Sreekishen Singh, XII Moore Ind. App., 157 ; XI Suth. W. R., P. C., 25.) The necessity for an account, however, does not arise in *tre every case. In the case of a usufructuary conditional sale, necessary, for instance, the mortgagee is bound to account only when the mortgagor has deposited the principal, leaving the question of interest to be afterwards settled, or has deposit- ed all that he alleges to be due, or asserts that the whole of the debt has been liquidated by the usufruct. (Forbes v. Ameerunissa, X Moore Ind. App., 340.) The onus is on the mortgagor to show that the debt has been discharged out of theusufruct. (Mukhum Loll v. Sreekisi&n, XII Moore Ind. App., 157 ; Bama Soonduree v. Bama Soonduree, X Suth. W. R., 301 ; cf. Kullyan Das v. Sheonundun, XVIII Suth. W. R., 65, where the onus is said to be on the mortgagor to show that the principal sum has been satis- fied, 'and on the mortgagee to show what, if anything, 294 LAW OF MORTGAGE. LEOTUEE is due to him for interest.) (/) If the mortgagee refuse or VIII> neglect to deliver in the accounts, the Court must take the best evidence available and decide upon it. The general presumption will, no doubt, be against the mort- gagee, but this would not justify the Court in accepting without examination any evidence which may be offered by the mortgagor. Presumptions in odium spoliatoris have known limits, although it may fairly be doubted if those limits have not been overstepped in some of the cases in the books. (Shah Makhum Loll v. Sreekishen Singh, XII Moore Ind. App., 157 ; XI Suth. W. R., P. C., 25 ; SJiah Gholam Nazaf v. Mussamut Emamun, IX Suth. W. R., 275 ; Mohanlal v. Goluck Chunder, X Moore Ind. App., 1 ; Hashum v. Ramdhone, VII Suth. W. R., 82 ; Tikaram v. Kamiram, Bom. P. J. 1876, 191.) Rate of I have already said that in a mortgage, created before interest. ^ Q repeal of the usury laws, the mortgagee cannot take any higher interest than twelve per cent, on his money. He may, no doubt, agree to take less, and such agreement will be binding upon him. But he cannot in any case exceed the limit fixed by the Regulation. Cases, however, may occur in which the interest reserved by the mortgage will not be the true measure of the annual stipulated return for the loan. A very interesting question on this point arose in the case of Shah Makhum Loll v. Sreekishen Singh. The interest reserved by the instrument of mortgage was nine per cent., but the mortgagor, as part of the transaction, executed a lease in favour of the mortgagee, which would leave to the mortgagee an annual profit of something more than three per cent, on the principal money. The mortgagee thus secured to himself a return of something more than twelve per cent, on his money. The mortgagor brought a suit, not for avoiding the transaction altogether as a (/) Ordinarily where there isno question of the satisfaction or discharge of the mortgage-debt, on taking the account on a mortgage, it lies upon the mortgagee to prove what is due from the mortgagor in res- pect of principal and interest. In a mortgage suit, where the defendant admitted that he was in possession of the property in dispute as a mortgagee under the plaintiff, but refused to put in evidence the mortgage-deed, which was insufficiently stamped, it was held that the plaintiff was entitled to redeem on paying what was due from him on the mortgage, together with the costs of the suit, and that, if the mortgagee refused to pay the penalty and put the mortgage-deed in evidence, he could only be credited in the account with the sum which the plaintiff admitted to be the amount of the principal, and must be debited with the income derived from the land, since he. the mortgagee had been in possession. (Ganga v. Bayajec, I. L. R., VI Bom., 669.) RATE OF INTEREST. 'J5 device to evade the laws against usury, but for redemp- LBCTUBK tion, and contended that, under the Regulation, the mort- VIIJ - gagee, while he could not demand more than the rate of interest specified in the deed of mortgage, was bound to account for the actual collections, and that such account could not be excluded by the lease which was only part of the mortgage security. The Privy Council, while holding that the mortgagor had a right to insist on the mortgagee's accounting for the actual collections, were of opinion Ihat the latter was entitled to have the bargain performed, so far as the law allowed, and that the rate of interest reserv- ed by the mortgage was only a part of the annual stipulat- ed return for the loan which would not have been grant- ed at nine per cent, only, the rate mentioned in the deed of mortgage. In giving judgment, their Lordships observed: " It is clear that if the mortgagees had been suing the mort- gagor on the mortgage-deed for the debt, they could have recovered no higher rate of interest than nine per cent., thfj contract being in writing and incapable of being varied by parol evidence ; but this is by no means decisive of the question, for, supposing that the extra profits on the several engagement forming one mortgage security had amounted only in the whole to three per cent., making a twelve per cent, only in all, precisely the same consequence would have ensued ; the reserved interest would have been correctly viewed as constituting part only of the profit, and as such, would have been all that the parties stipulated for as to that part of the transaction ; but it would not have mea- sured the stipulated return for the loan annually. The rules of evidence and the law of estoppel forbid any addi- tion to, or variation from, deeds or written contracts. Makhum The law, however, furnishes exceptions to its own salu- ^ tary protections ; one of which is, when one party for the advancement of justice is permitted to remove the blind which hides the real transaction, as, for instance, in cases of fraud, illegality, and redemption, in such cases the maxim applies that a man cannot both affirm and disaffirm the same transaction to show its true nature for his own relief, and insist on its apparent character to prejudice his adver- sary. This principle, so just and reasonable in itself, and often expressed in the terms that you cannot both appro- bate and reprobate the same transaction, has been applied by their Lordships in this Committee to the consideration of Indian appeals as one applicable also in the Courts of 296 LAW OF MORTGAGE. LECTUBE th.it country which are to administer justice according to V1IL equity and good conscience. The maxim is founded not Maxim. s much on any positive law, as on the broad and univer- sally applicable principles of justice. The case of Forbes v. Amerunissa Begum (X Moore Ind. App., 356) furnishes one instance of this doctrine having been so applied, where it is said in the judgment of their Lordships : ' The res- pondent cannot both repudiate the obligations of the lease and claim the benefit of it.' Unless, therefore, some posi- tive law has said that, in cases similar to fche present, the written engagement, though not extending to the whole profit stipulated, must be adhered to against the defendant, though the plaintiff may go beyond it to show the full ex- tent of the profit, and so to be relieved from the consequen- ces of his actual contract, their Lordships must hold that the bargain disclosed should be performed so far as the law allows ; in other words, that twelve per cent, was in tins in- stance the interest to be computed.'' (Shah Makhum Loll v. Sreekishen Singh, XII Moore Ind. App., 157 ; XI Suth. W. R., P. C., 21 ; Ta&ieduk v. Beni, XIII Gal. L. Rep, 128 ; Perladh v. Vroughton, XXIV Suth. W. R., 275.) The judgment of their Lordships, however, does not touch the general rule on the subject, which is, that in usufructuary mortgages, where there is no stipulation for interest, the mortgagee is not entitled to any, but must be satisfied with the usufruct which goes in lieu of interest, although such usufruct may not amount to twelve per cent, on the principal money. (Ganga Persad Roy v. Bibee Enayit Zaheria, XVI Suth. W. R., 251, distinguishing Shah Ma- khum Loll v. Sreekishen Singh, XII Moore Ind. App., 157. Of. Kullyan Das v. Sheonundun, XVIII Suth. W. R., 65 ; Ram v. Admed, Bom. P. J., 1882, 385.) We saw in the last lecture that, since the repeal of the laws against usury, mortgagee may always relieve him- to account, self from the liability of accounting for the actual profits by an agreement with the debtor. The prohibition on the free power of the parties to contract in any manner they please has been withdrawn. The profits may be either taken in lieu of interest (Act XXVIII of 1855, section 5), or the parties may agree upon a certain sum beforehand, as the basis on which the account between them is to be taken, and this brings me back to the question of zuripeshgee leases. You will remember that our Courts refused to Acknowledge zuripeshgees as leases on a reserved rent, Effect of an agree- ment not EFFECT OF AQRHKMKOT. 297 because they might be made the means of obtaining usu- LECTOHB rious interest. That argument cannot any longer hold VHI - good, now that the laws against usury have been repealed, and a mortgagee, entering into possession as a zuripeshgee- dar, will probably be now regarded, not as mortgagee in possession but as lessee at a fixed rent. (See Lecture VII.) The relation, however, is so peculiar that we must be cautious in extending to it all the incidents of an ordinary tenancy. The English Court of Chancery, I must tell you, looks upon such transactions with the greatest jealousy, a jealousy which has not been relaxed by the repeal of the usury laws. " One effect," says Vice-Chancellor Stuart, " of the repeal of the usury laws was to bring into operation to a greater ex- tent than formerly another branch of the jurisdiction of the English Equity Courts, namely, the principle which pre- vented any oppressive bargain, or any advantage exacted from a man under grievous necessity, from prevailing against him." " In order," adds the learned Judge, " to render a contract or an agreement of any kind binding, there must be the assent of both parties to the agreement, under such circumstances as to show there was no pressure, no influence existing of a kind to make the assent an imper- fect assent, or an assent which, under other circumstances, would have been refused. If the assent to the agreement is not an assent given under such circumstances as that both parties are on an equal footing, and the agreement, one perfectly free from any influence or pleasure in the eye of this Court, it is not an assent sufficient to constitute an agreement." (Barret v. Hartly, 2 L. R., Eq., 795.) It may, however, be suggested that such a doctrine, un- ^ r e "j^." f less fenced in by limitations, which would narrow its appli- trine, cation only to every exceptional cases, would be likely to introduce the very same evils which the Legislature intend- ed to remove when it applied the sweeping brush to the usury laws in our statute book. Indeed, the doctrine itself in its relation to debtors and creditors is a " survival." It is another illustration of the "half-conscious repulsions," which we feel to doctrines which we cannot deny. In speaking of them, Sir Henry Maine says : " It seems to me that the half-conscious repulsions which men feel to doctrines which they do not deny, might often be examined with more profit than is usually supposed. They will some- times be found to be the reflection of an older order of ideas. Much of moral opinion is no doubt in advance of 298 LAW OF MORTGAGE. LECTURE law, for it is the fruit of religious or philosophical theories VIIL having a different origin from law and not yet incorporat- ed with it. But a good deal of it seems to me to preserve rules of conduct which, though expelled from law, linger in sentiment or practice. The repeal of the usury laws has made it lawful to take any rate of interest, yet the taking of usurious interest is not thought to be respectable, and our Courts of Equity have evidently great difficulty in bringing themselves to a complete recognition of the new principle." (Maine's Village Communities, p. 195.) Moral I have dwelt at some length on the point, as there are semi- indications at the present moment of a desire on the part lt3 ' of our Courts to introduce into this country some of the doctrines of the English Court of Chancery, which rest, not upon the basis of economical science but upon certain vague moral sentiments, which lie outside the pale of positive law. See for instance Vinayak v. Raghi (IV Bom. H. C., Rep., 202, A. C. J.) Extent of We saw that since the repeal of the usury laws, a 'liability mortgagee may not only receive the rents and profits in > account. j. eu Q i n eres ^ b u t- he may also protect himself from accounting for the actual receipts by an agreement with the mortgagor. In the absence, however, of any such agreement, the mortgagee is still bound to account for every farthing received by him out of the estate, and he will not only have to account for the rents actually rea- lized, but also for such as he might have received but for his wilful default^/). Allowance A mortgagee, however, is entitled in account to any for neces- outlay made by him in the preservation of the property, pairs.* 6 " as f r necessary repairs, and interest is generally allowed on the amount of the outlay at the rate reserved by the mortgage. In the case of Jogendranath Mullick v. Raj- narain Palooye (IX W. R., 488). Mr. Justice Kemp observed : " Under the law as administered in this country, a mortgagee in possession is in the position of a trustee. The mortgagee must use the mortgaged premises as liable to become the property of the mortgagor, and must not do anything to diminish the security upon which the money was lent. In this case, the mortgaged property was a thatched (<7> Where the rights of the parties are defined by a decree of Court, they must be determined, not with reference to the general law, but with reference to the terms of the decree. (Navlii v. Raghu, I. L. R., VIII Bom., 303, where the mortgagee in possession under a decree was held not liable to account to the mortgagor for the rents and profits.) REPAIRS. 299 house. To allow it to fall out of repair and to become un- LKCTUHK inhabitable, would have been diminishing the value of the vm - security on which the money was advanced, and preventing the mortgagor from paying off the debt from the usufruct. It is the bounden duty of the mortgagee in possession to keep the premises in necessary repair, and he will be allowed to charge for the same with interest." (Ameeroola v. ttamdass, II Agra H. G. Rep., 187; Manchursa v. Kamrunisa, V Bom. H. C. Rep., 109, A. C. J.; Rugho v. Anaji, V Bom. H. C. Rep., 116, A. C. J. ; Jamal v. Malta- med, Bom. P. J. 1874, 7; Balaji v. Nana, Bora. P. J. 1881, 195, a case of repairing wells). You will observe that, in the judgment of the Court in Repairs Jogendranath Mullick v. Rajnarain Palooye, it is said howfar that it is the duty of the mortgagee to keep the mortgaged ao'ry?" 1 * premises in repair. This is, no doubt, true in a certain sense, but the proposition requires one qualification. A mortgagee is not bound to make any outlay even in necessary repairs, except where there is a surplus left after the deduction of the interest from the rents. A different rule might be ruinous to the mortgagee. A mortgagor is not only bound to pay as the price of Hepnirs redemption the cost of proper and necessary repairs, but \ also any expenses incurred by the mortgagee in restoring the mortgaged premises where they have been accidentally destroyed, and the mere fact that the expenses greatly exceed the amount of the principal money secured by the mortgage would not, it seems, constitute over improvement. (Manchar- sha Ashypanoiori v. Kumrunisa Begum, V Bom. H. C. Rep., 109.) A mortgagee has also been allowed in this country for the expenses incurred in connection with the Revenue Survey of the land mortgaged to him. (Bapusabin Sadasiv v. Ramjibun Gopalji, II Bom. H. C. Rep., 220 (h). If, how- (h) It is necessary to state that the Bombay High Court has refused to apply the strict rule of the English Courts of Equity as against :v mortgagee in possession under a mortgage made before the decision of the Court in Rumji v. Chintoo, and who had been led into the belief that by reason of the non-payment of the money at the time fixed in the mortgage-deed his right had become absolute. (Anandrav and Devrav v. Rarji. II Bom.H. C. Rep., 24 4 ; Smith v. Simpson. VII Moore, 205 ; Ramji v. Chintoo, lEom. H.C., 199 ; RamsJiot v. Paudhay, VIII Bom. H. C. liep., 236. A. C. J.) If the mortgagee is not called upon to account, no allowance will be made for cost of repairs, such cost being necessary to the enjoyment of the profits. (Lakshman v. Hari, I. L. R., IVBom., 584.) But he may be entitled to be repaid sums expended in constructing a new work, an embankment, for instance, for the protection of the mortgaged property. (Fakir v. Urn-abai, Bom. P. J., 1884, 9.) 300 LAW OF MORTGAGE, Summary. LECTURE ever, there is an express agreement between the parties on VIII. the point, it is not competent to the court to go outside the instrument. (Narayan v. JRangu Bai, I. L. R., V Bom., 127.) To sum up what I have said ; the right of the mortgagee to be reimbursed for necessary repairs is not co-extensive with his liability to answer for non-repair by which the mortgaged premises may be diminished in value or wholly destroyed. The mortgagee in possession is not bound to rebuild a ruinous house, for instance, or increase his debt by laying out anything beyond the rent. The property may deteriorate by lapse of time, or even owing to want of repair, but the mortgagee will not be held answerable in the absence of gross or wilful negligence. The extent to which the mortgagee may safely go in repairing the mortgaged estate, is thus laid down by Fisher in his work on Mortgages, and the rule has been followed in this country as founded in equity and good conscience. " The mortgagee will be allowed for proper and necessary repairs to the estate, and if buildings are incomplete or become ruinous so as to be unfit for use, he may complete or pull them down, and rebuild for the preservation of his security. And the rebuilding or repairing may be done in an improved manner and more substantially than before, so that the work be done providently, and that no new or expensive buildings be erected for purposes different from those for which the former buildings were used, for the property when restored ought to be of the same nature as when the mortgagee received it ; and if it be thus wholly, or in part, converted from its original purposes, the money expended will not be allowed to be charged upon it." (Fisher on Mortgage, p. 887.) A mortgagee will be allowed all his fair expenses in renewing leases, protecting the title to the mortgaged property, paying head rent, as well as the costs of necessary repairs. I may mention that interest is general- ly allowed on such outlay, but not apparently on sums expended for repairs, although the reason for this distinction is not quite obvious. (Seton on Decrees, 4th Edition, 1067.) The question of improvements presents much greater difficult}^. It would, however, seem that as a rule, allow- ance will not be made to the mortgagee for improvements, even of a lasting kind, unless they are made with the sanction of the mortgagor, or are absolutely necessary for Improve- IMPROVEMENTS. 301 the preservation of the estate. The mortgagor must not LECTUKK be improved out of the estate. (Sandon v. hooper, 12 VI11 - L. J. Ch.,309.) (i.) It may not, perhaps, be here out of place to mention that in no case will a second mortgagee be entitled to charge for improvements as against the first. (Land-owners West of England and South Wales Land Drainage and Enclosure Company v. Ashford, 16 Ch. D., 411) Fry, J., in that case said that no authority had been shown to him for such a proposition, and that he was not going to make such an inconvenient precedent for the first time. A mortgagee in this country will be 1 allowed in account all payments made on account of (i) I ought to meiition that iu a recent case in England (Sandon v. Hooper has been commented upon, and a view more favourable to the mortgage tb an that stated in the text has been taken by the Court. (She- pard v. Jones. 21 Ch. D., 469) ; the head note, which is not very full, is to the following effect : " If a mortgagee in possession, or a mortgagee selling under his power of sale, has reasonably expended money, in permanent works on the property, he is entitled, on prim a facie evidence to that effect, to an inquiry whether the outlay has increased the value of the property, aud it has done so. he is entitled to be repaid his expenditure so far as it has increased such value. And iu such case it is immaterial whether the mortgagor had notice of the expenditure. Notice to the mortgagor is only material when the expenditure is unreasonable, for the purpose of shewing that he acquiesced in it." This judgment, however, I need scarcely point out, is not absolutely binding on our Courts any more than the decision in Sandon v. Hooper. J am also bound to mention that, although the observations of Jessel. M. R., are somewhat general, the judgment of Cotton. L. J.. is more guard- ed and is confined to the case of a mortgagor seeking to obtain the surplus proceeds of a sale by the mortgagee without allowing for the improvements made by the mortgagee, and without which the property would not have fetched the price which it did. The judgment, moreover; was given on an appeal from an order of Kay, J.. refusing to direct an inquiry, and did not, therefore, finally dispose of the question. (Tiptou v. Tipton, 1 Ch. D., 192.) As to the lloman Law on the subject. Dr. Huuter says : A question arises whether expenses not necessary, but be- neficial to the property, ought to be allowed. Paul speaks generally of improvements (Paul. Sent. 2, 13, 7,) which would include beneficial ex- penditure (ntiles empenose.) Ulpian speaks with more hesitation (D. 13, 7, 25. ) He recommends a middle course to the judge : on the one hand, not to be too burdensome on the debtor ; and on the other, not to be too fastidious in disallowing beneficial expenditure by the creditor. He puts two cases illustrating of his meaning. A creditor teaches slaves a handicraft or skilled work. If this was done with the consent of the debtor, of course, the expenditure must be allowed ; also, if the creditor only followed up what had already been begun. Necessary instructions must also be allowed, but further than that Ulpian was not inclined to go. The other case is somewhat different. A large forester pasture is hypothecated by a man who is scarce able to pay the creditor ; this cre- ditor cultivates it, and makes it worth a great deal of money. Ulpian thought it was too hard that the debtor should thereby be improved out of his property. (Hunter's Roman Law, p. 440). 302 LAW OF MORTGAGE. LECTURE paramount charges on the mortgaged estate, as also for what he has expended in preserving the property from de- terioration. Again, if a mortgagee is put to expense in de- fending the title to the mortgaged estates, the defence be- ing for the benefit of all parties interested in it, he is enti- tled to charge such expenses against the estate (Damodar v. Vamanrav, I. L. R., IX Bom., 435 ; Sandon v. Hooper, 6 Beav., 248 ; Parker v. Watldns, Johns, 133). (As to what a mortgagee is entitled to claim in England, under the head of just allowances, see White and Tudor, L. C., Vol. 2, pp. 1237-1242). It is somewhat remarkable that till the passing of Lord Cranworth's Act in England, the mortgagee was not entitled to add to his mortgage-debt any premiums paid by him for insurance, without the consent of the mortgagor. But premiums paid by the creditor on a life-policy pledged to him were always re- coverable on the ground that such payments were made for the purpose of protecting the mortgaged property from forfeiture. 34, L. J. Ch., 251. Payment In the absence of any express contract to the contrary, ^ ^ s ^ ne duty of the mortgagee in possession to pay the Government revenue, and if the mortgagee wilfully default to pay the revenue and purchase the property himself, the Court will fasten a trust upon the purchase in favour of the mortgagor. The mortgagee, who properly or im- properly allows an estate to fall into arrear, cannot pur- chase it so as to acquire an irredeemable interest. (Nawab Sidhi Nazir Ally Khan v. Adjuharam Khan, X Moore Ind. App., 540 ; V Suth. W.R., P.O., 83 ; see also Raja Adju- dyaram Khan v. Ashootosh Dey, Supreme Court, 6th July 1855, and Kelsall v. Freeman, Englishman, 4th September 1854 ; Juggut Mohini v. Sokheemoney, XIV Moore Ind. App., 289 ; Rammanick v. Brindabun, V Suth. W. R.,230.) Any payment, however, made by the mortgagee, either to prevent a forfeiture, or a sale for non-payment of revenue or rent, will be credited to him in account. In Nurjoon Sahoo v. Shah Moorzeerooddeen (III Suth. W. E., 26), which was a suit to redeem a usufructuary mortgage on paymemt of the principal only, there being no stipula- tion for interest, the mortgagee in his defence insisted upon his right to retain possession so long as the sums which he had been obliged to pay as revenue, the estate having been assessed with revenue subsequently to the mortgage, were not repaid by the mortgagor or realized from the ACCOUNTING. 303 rents and profits, the Court observed : " Ordinarily the LECTCRK law gives to a person interested in land a lien against VHI - the defaulting owner for sums of money paid by the for- A'ur/oon v. mer in discharge of the public revenue. The payments Moorzee- made by the defendant appear to us to entitle him to a ro lien within this principle. His equitable claim to such protection is certainly not diminished in this case by the fact that the plaintiff has pledged to him, as lakheraj land, which was not valid lakheraj, and has now been actu- ally assessed with revenue ; nor can the plaintiff con- tend that the annual receipts from the land, which, when it passed into the defendant's hands, were clearly to be appropriated solely to the defendant's use (subject to the mortgagor's right to an account), became subsequently bound for the mortgagor's benefit, although in violation of his express agreement to discharge his estate from the lien of the person who actually paid the revenue. This right is, we think, sufficient to qualify the otherwise un- doubted right of the mortgagor to redeem his land on pay- ment of the principal alone. If we gave effect to the latter right in the present suit, we should, in the probable event of the mortgagor requiring no accounts of the mort- gagee's receipts while in possession, leave only to the mortgagee a doubtful remedy by suit for the money which he has paid, a great portion of which would be met by setting up the law of limitation as a defence." (Of. Achumbit v. Keso, XX Suth. W. R., 128, which was a case of dispossession from a part of the mortg.-ige premises). Similarly it has been held that, in the case of a usufruc- Payment tuary mortgage where the rents and profits were to go in d Avenue, lieu of interest, an action may be brought by the mortgagee for any enhanced revenue which may have been paid by him ; and it has been said that it is not necessary for the mortgagee to wait till the end of the term, nor is it neces- sary- for the Court to take any account (Nikka Mai v. Suliman Sheik, I. L. R., II AIL, 193). I shall now discuss tho mode of taking accounts against Mode of the mortgagee in possession. The gross collections are ascertained at the end of each year, and, after deducting the necessary outlay on account of revenue, expenses of collection, and preservation of the estate, the balance goes to reduce either in whole or ir part the interest, and if there is a surplus over, it goes to the reduction of the principal, the account being closed at the end of each 304 LAW OF MORTGAGE. LECTURE year. (Cf. lladah Benode v. Kripa Maye, XIV Moore Ind. VJI1 - App., 443) in which another mode is pointed out, but the result is the same. (RaghunatJt v. Lachman, I Agra H. C. Rep., 132; Enaet All v. Khiir Roy, II Suth. W. K, 289 ; Chutoorbhooj v. Doorga Churn, V Sutli. W. R, 200 ;S. D. A. 1853, p. 464; S. D. A. 1848, p. 549; S. D. A. 1852, p. 831 ; S. D. A. 1859, p. 497; S. D. A. 1859, 1211 ; S. D. A. 1859, p. 1543.) In England it is not, of course, to direcc annual rests against the mortgagee in possession, but a different rule obtains in this country. It is, how- ever, doubtful whether the right of the mortgagee not to be paid piecemeal has been sufficiently considered by our courts.- If, however, the mortgage-debt is paid off by means of the rents and profits during the possession of the mortgagee, he will ordinarily be liable to pay interest on all subsequent receipts. (Jai Jit Rai by his guardian Porhati Kuor v. Oobind Tewari, I. L. R,, VI All., 303 ; Bechoo v. Shebsahoy, I All. H. C. Rep., 111.) (j.) liight of It is necessary to observe that the only payments which a of" equity* purchaser of the equity of redemption can claim to deduct of redemp- from the mortgage-debt are sums actually received in re- duction of the mortgage-debt, and that the fact that the mortgagee (/c) owed money on some other account to the (j) In England the usual practice is to set the total amount of rents and profits which are chargeable to the mortgagee against the whole amount due on his security, first in discharge of the interest, then of moneys, if any, advanced for the preservation of the mortgaged property, and lastly, in reduction of the principal. But the excess of rent over interest is not annually applied in reducing the principal, as the mort- gagee may reasonably object to be paid piecemeal. If, however, there is no interest in arrear when the mortgagee enters, the annual surplus is generally applied in reduction of the principal money, and this is called taking the accounts with rests. If the mortgage, however, con- ists of lease-hold property, and there are grounds for apprehending hat the rent and insurances will not be duly paid or the houses will tnot be kept in proper repair, annual rests will not be directed, even though no interest may be in arrear when the mortgagee enters in possession. As a rule, however, the mortgagee does not make himself liable to this mode of account if he takes possession when the arrear of interest is due until the whole debt is discharged. The above rule, however, does not apply where any part of the mortgaged property is sold iu which case the surplus, after payment of costs and interest, is applied to the reduction of the principal and the accounts are continued on the footing of the principal thus reduced. Fisher, 872 876. (&) There seems to be some conflict of opinion as to whether interest should run from the date of the overpayment, or only from the date of the institution of the suit for redemption. (Janofiv. Janofi, I. L. R., VII Bom., 185 ; Bechoo v. Sheosahay, I All. H. C. Rep., 111). It may be here noticed that a mortgagee (and the same remark would apply to a mortgagor), seeking to redeem, who has obtained a decree for au ac- LIABILITF OF MORTGAGEE. mortgagor, would not of itself entitle the purchaser of the LECTURE mortgagor's equity of redemption to set off that money vni - against the mortgage-debt (Tarineev. Ganoda, XXIV Suth. W. R, 460). It seems, however, that a purchaser of the equity of redemption will be entitled, on taking the mort- gage accounts, to credit for malikana reserved to the mortgagor by the mortgage-deed but withheld by the mortgagee (Basant Rai v. KanaujiLal, I. L. R., II All., 455). It may be here stated that if the mortgagee comes to an agreement with some of the mortgagors, by which he con- sents to take a money decree against them, the amount of the decree must be considered as a sum actually paid in reduction of the liability under the mortgage. (Ramkanth v. Kalimolian, XX Suth. W. R, 310.) I ought to mention that in India, as in England, a mort- Liability gagee may transfer his right to a third person by way of "^"in assignment, but such transfer must be without prejudice to session the rights of the mortgagor ; and in a suit by a mortgagor the assignee will be bound by the state of the account be- tween the mortgagor and mortgagee (Chinnayya v. Chidam, I. L. R., II Mad., 212 (I). The question of the liability of the mortgagee in possession after assignment, when it is not made with the assent of the mortgagor, for the rents and profits received by the assignee, does not seem to have been ever raised in this country. In England, the mortgagee continues to be liable on the principle that the mortgagee must be responsible for the person to whom he assigns the mortgagor's estate (m). It may, however, be doubted whether the doctrine will be recognized in our Courts. The jealousy with which the Court of Chancery guards No allow- the interest of the mortgagor, is well illustrated by the rule invariably acted upon, that no personal allowance is count and sale, is not entitled to withdraw from the taking of accounts when those accounts appear to be going against him. (J)oolee Chand v. Omda, I. L. R., VI Cal., 377.) ( 1) Quesre, whether the account arrived at in a decree obtained by the prior mortgagee against the mortgagor only is binding on a puisne mortgagee, who had no notice of the subsequent incumbrance (Sankona. v. JSiru, I. L. R., VII Bom.. 146.) In one case in the Calcutta High Court an account was directed to be taken in a suit by a second mortgagee against his mortgagor and a third mortgagee, not only of what was due to the plaintiff but also of what was due to the third mortgagee. (Auhindro v. Chunnoolol, I. L. R., V. Cal., 101.) (m) It has been recently held that no such liability is incurred by the mortgagee if the transfer is made under an order of Court. (Hall v. Heward, L. R., 32 Ch. D., 430.) R. B. G., M. 20 306 . LAW OF MORTGAGE. LECTURE to be made to the mortgagee himself, although the salary VIII. of an agent may be allowed when the collections cannot conveniently be made otherwise. Any agreement to make an allowance to the mortgagee is absolutely void, and the repeal of the usury laws has made no change in this res- pect in the practice of the English Court of Chancery. Right and I shall now treat of the rights and liabilities of the mortgagee* mortgagee when he allows the profits to be received by when mort- the mortgagor instead of entering upon possession himself. g ofsessk>n ^ ne ru ^ e ^ English law on the subject is thus stated by Fisher as the result of the authorities : " After receiving notice of a puisne mortgage, the mortgagee in possession becomes liable to account to the puisne incumbrancer for so much of the surplus rent as he has paid to the mortga- gagor or his representatives ; but so long as the mortgagee in possession is without notice, the puisne mortgagee can- not call upon him or the mortgagor for an account of the bygone rents" (Fisher on Mortgage, p. 875.) This rule was applied to an Indian mortgage in this country by the Privy Council in Jugjeewan Dass v. Ram Dass. In that case, the mortgage-deed, after stating that the village of Mujeegum and the house at Sural should be mortgaged for a certain sum, went on to say : " The profit of this money is settled for twelve annas, on these conditions, that the holders of the mortgage are to receive in redemption the whole of the produce of the said village, about 3,000 or 3,200 rupees, and after allowing for interest, the remain- der will go for the purpose of liquidating the principal, and they shall continue so to receive and appropriate the annual produce until the whole of their demand be liquidated. The risk of collecting the income, and of any deficiency in the revenue, is upon our heads, that is the mortgagor's ; and we do further declare that the holders of the said mortgage shall station a mehta or clerk of their own in the said village, for the purpose of making the collections ; and we, the mortgagors, so long as this pro- perty remains in mortgage, do agree to give him a month- ly salary of five rupees and his daily food so long as we can afford to do so." It seems that the mortgagee continu- ed in possession under this deed for a short time, but Jugjeewan afterwards allowed the mortgagors to receive the rents v. and profits. In execution of a decree obtained by the " 9< plaintiff against the mortgagors, the property was placed under attachment when the mortgagee for the first LIABILITY OF MORTGAGEE. 30? time had notice of the plaintiffs claim. In determining LECTURE the respective rights of the parties, the Privy Coun- vin - cil said : " Now the question will be, in what way the mortgagee's rights are affected by this conduct ; and that will depend, first, upon the construction of the instrument itself. If this is a binding contract, binding between him and the mortgagors, binding him to apply the rents and profits to the payment of the debt, he might be con- sidered as having forfeited his right to payment in conse- quence of having allowed the mortgagors themselves to take possession of the rents and profits during some of the years during which his mehta was in possession. But their Lordships are of opinion that that is not the true construction of the deed, but that it is merely a power to satisfy himself, just as an English mortgagee may, by taking possession of the rents and profits of the estate ; and if an English mortgagee chooses to forego the benefit of receiving the rents and profits, and permits the mortga- gor to take them, it would have no effect as between him and the mortgagor ; he would have a full right to recover his debt by reason of the mortgage. The only effect would be, when some subsequent incumbrancer came in, and he had notice of that claim. In that case, the rule and law in England would be that if, after notice, he per- mits the mortgagor to receive the rents and profits, he exposes himself to the claim of the second incumbrancer ; and that is the principle which their Lordships think ought to be applied to the present case." (Jugjeewan Dass v. Ram Dass Brijbhukun, II Moore Ind. App., 487 ; VI Suth. W. R,, 11 P. C.) By the decree which was ultimately made, the mortgagees were postponed to the attaching creditor in respect of the rents which might have been received by them, but for their allowing the mortgagors to continue in possession. The rights of the mortgagees against the mortgagors personally were left .untouched, and they were only permitted to continue in possession till the balance settled on the above principle was realized. A fortiori if the mortgagee makes any pay- ments to the mortgagor after he has notice that the equity of redemption has been purchased by a third person, he will not be allowed such payments in account (Jai Jit Rai by his guardian Porbah Kuor v. Oobind Tewari, I. L. R, VI All., 303.) Similarly, if the first mortgagee, with notice of a subsequent incumbrance, joins with the 308 LAW OF MORTGAGE. LECTURE mortgagor in a sale of the mortgaged premises, and permits VIIL the latter to receive the purchase-money, he will be post- poned to the second mortgagee in respect of the amount received by the mortgagor. (Bentham v. Haincourt, Pre. Ch. 30 ; Of. West L. G. Bank v. Reliance, P. B. 8., 27 Ch. D., 187. S. C. in appeal, 29 Ch. D., C. A., 954.) Mortgagor While on the subject of accounting, I may mention that s?onnot S ~ the mortgagor in possession is not bound to account,al though bound to the security may be insufficient. This is the rule of English account. j aw ^ an( j j g a j g() ^Q j aw j n fa^ country. A mortgagor, how- ever, may be liable to an action for mesne profits, if he with- hold possession from the mortgagee in violation of the terms of his contract, or after notice by the mortgagee. It is scarcely necessary to repeat that the mortgagor will also be liable for mesne profits from the date of the final fore- closure (i.e., from the expiration of the year of grace). There are expressions in some of the reported decisions of the Sudder Dewany Adawlut, which might, at first sight, seem to countenance the notion that it was only from the date of the decree for foreclosure that the mort- gagor would be liable for mesne profits. I have, however, already pointed out to you that the rights of the parties, after a decree for foreclosure, are precisely those which they possessed at the date of the expiration of the year of grace. The decree only declares those rights, and it must therefore follow, that, if there is any liability in the mortgagor for mesne profits, that liability must exist before the decree for foreclosure, and consequently at the expiration of the year of grace, which may be called the dividing point of time. Mortgagee The question has arisen as to the precise position of a tee for"" 3 " mortgagee after the mortgage-debt has been liquidated mortgagor, by the usufruct. It seems to have been held in some cases that his position was that of a trustee, and that therefore no limitation was applicable to a suit brought by the mortgagor for surplus profits. These decisions were, how- ever, overruled by a Full Bench of the Calcutta High Court, and the period of limitation was held to be six years (Baboo Loll Doss v. Jamal Ali, IX Suth. W. R, 187.) This was under the old law. Under the present Act, a suit for surplus profits must be brought within three years of the date on which the mortgagor re-enters on the mort- gaged property (n). The interpretation clause also tells (tt) It may be noticed that an action for redemption ought to include a claim for over-payments. (Baloji v. Taman, VI Bom. H. C. Hep., 97, LIABILITY OF MORTGAGEE. 309 us that a mortgagee is not a trustee within the meaning LECTUBK of the Act. ( Willoughby v. Willoughby, 1 Term Rep., 765 vin - Casburne v. Inglis, 2 Jac. and Walk., 194, 196, in note ; see also Warner v. Sack, 20 Oh. D., 220, in which case Doivnes v. Grasebrook, 3 Mer., 200, aud Robertson v. Norris, I Giff., 421, were observed on.) A question of some nicety arose a few years ago in the Joymungut High Court of Calcutta as regards the liability of a mort- 8ing>B c ** e - gagee to account for mesne profits, which was ultimately heard by a Full Bench. In that case, which was a suit for re- demption, the principal having been deposited, the mortgagee was called upon to account for moneys which he had real- ised by means of a decree for mesne profits against the mortgagor, who had evicted him from the mortgaged pre- mises. The question arose under Regulation XV of 1793, and it was contended for the mortgagor that the mortgagee was bound to account to him for the moneys which he had succeeded in realizing from the mortgagor in excess of the legal interest of twelve per cent, per annum. It was, how- ever, held by the Full Bench that the mortgagee was not liable to account for the mesne profits. In giving judgment, Peacock, C. J., said : " There is a wide distinction between usufruct collected by a mortgagee in possession and damages which are awarded to a mortgagee in a suit brought by him against the mortgagor for evicting him. We think that the defendants were not bound under the words or the spirit of Regulation XV of 1793, or Regula- ^^ tion I of 1798, to account for the wasilat or damages which f rom usu- they have received under the decree in the suit brought fruct - by them against the mortgagor for possession. If a mortga- gor wrongfully turns a mortgagee out of possession, it is his own fault, and the mortgagee is entitled to retain any wasilat which he may recover against the mortgagor, and is not bound to account for it. To prevent an evasion of the usury laws, the Regulation compelled the mortgagee to account for the usufruct ; if that exceeded interest at twelve per cent., the balance was to be accounted for. We think that a Regulation of this kind must be construed strictly, and that we ought not so to construe it as to A. C. J. Distinguish Gour v. SaJiay, VII Suth. W. R., 364 ; cf. Fisher's Mortgage, p. 857, note. Qutsre, as to the effect of Art. 105 of Act XV of 1877.) The general practice seems to be to allow interest on the over- payments from the date of the institution of the suit for redemption by the mortgagor. (Jattoji v. Janojl, I. L. R., VII Bom., 185 ; S. D. A. 1853, p. 464 ; N. W. P. 1855, p. 257.) LAW OF MORTGAGE. LECTURE substitute wasilat recovered by a decree of Court for usu- VIII. fVuct enjoyed by a mortgagee. The case of Chutterdharee Kowar v. Ramdoolun Kowar (Sudder Decisions of 1859, p. 1181), is a case very much in point, though the question arose in a different form." (Joymungul Sing v. Sardeen, VI Suth. W. R., 240.) Niikant In the case of Nilkant Sen, the facts of which were Sen's case, somewhat peculiar, the mortgagee had wrongfully dis- possessed the mortgagor, the mortgage being one by conditional sale, and not giving the mortgagee power to receive the rents and profits. The mortgagor brought a suit for possession and mesne profits. He got a decree for possession, but the prayer for mesne profits was rejected, apparently because there was some technical informality in the prayer in the plaint. The mortgagee subsequently proceeded to foreclose, and when he brought a regular suit for possession as absolute owner, the Court held that he was bound to account for the profits during the time he was in possession, just in the same manner as if he had been let into possession by the mortgagor. It would seem, although the fact is not clear from the report, that a suit for inesne profits would have been barred (Nilkant Sen v. Joynedin, VII Suth. W. R., 30 ; cf. Jaigit v. Govind, I. L. R, VI AIL, 303.) Mortgagee A mortgagee in possession, who instead of letting the chargeable land to tenants and realizing the rent in the ordinary way, pationrent. cultivates it himself, is not liable to account for the whole of the profits arising to him from farming the land, but only for such profits as he would have received, if he had let the land to a tenant, and so in the case of any other profits, the mortgagee, if in possession, is chargeable only with an occupation rent. (Rughunath Roy v. Gridhari Sing, VII Suth. W. R., 244.) Mortgagee '"' ne position of the mortgagee is not, however, that of a not a fen- tenant. He is in as mortgagee. Thus, for instance, where "** the mortgagee of a house was let into possession under an agreement, that he should pay a certain rent annually, part of which was to be set off against the interest, and the residue payable to the mortgagor, and the house was destroy- ed by fire, the Court was of opinion that the mortgagor was not entitled to recover any rent, although the decision would not improbably have been the other way, if the relation be- tween the parties had been only that of landlord and tenant. The gist of the agreement was, as the Court pointed out, not ATTOKNMENT CLAUSE. a letting of the premises with a rent reserved, but a usufruc- LKCTUBK tuary mortgage with a certain small portion of the usufruct VIII. payable to the mortgagor (Venkatashwara v. Keseva Shetti, Eg ~ t I.L.R., I.L Mad., 187.) It is necessary to observe that an attornment attornment clause in a mortgage-deed, such as is frequently clau5 * in found in an English mortgage, will not render the mortgagee K 8 ** liable to account on the footing of mortgagee in possession in respect of the rent reserved by the attornment clause (o). A mortgagee is not obliged to avail himself of this clause, and there is no ground for saying that, because the mortgage- deed contains such a clause under which, however, no posses- sion is taken, the mortgagee is fixed with all the liabilities of mortgagee in possession (Stanley v. Grundy, L. R., 22 Ch. D., 478.) But if the mortgagee gives notice to the tenants not to pay their rents to the mortgagor, he be- comes entitled to take possession, and though he may not afterwards actually take possession, he will be answerable to the mortgagor for any loss sustained by him. It is the duty of the mortgagor either to take possession himself or to leave the mortgagor alone (Heabes v. MacMurray, 23 Beav., 401). Again, the fact that the mortgagee is in receipt of the rents and profits of the mortgaged estate,does notneces- sarily make him chargeable as mortgagee in possession. The question, whether he is a mortgagee in possession, depends upon whether he has taken out of the mortgagor's hands the power and duty of managing the estate and dealing with the tenants. Thus, for instance, where B was the agent of the mortgagor, and received the rents of the estate, apply- ing them in payment of the interest to the mortgagee, and the mortgagee wrote to B, enclosing notices to the tenants to pay the rents to him which B was to serve on them if the mortgagor should attempt to interfere, and B replied, promising to pay the rents to the mortgagee, and not to the mortgagor, and the notices were not served on the tenants, but B paid the rents, as he received them, to the mortgagee, it was held that the mortgagee could not be charged as mortgagee in possession (Noyes v. Pollock, 32 Ch. D., 53.) Appointing a clerk for the purpose of collecting the rents may amount to taking possession (Jugjeewan v. Ram Dass, II Moore. Ind. App., 487). It is, perhaps, scarcely necessary to point out that a mortgagee in possession of only a part of the mortgaged estate, who allows the inort- (o) As to the distinction between an ordinary tenancy and an attorn- ment clause in a mortgage-deed, see In re Ishericood, 22 Ch. D., 384. 312 LAW OF MORTGAGE. LECTUBB gagor to retain possession of the rest, will not be charged vm ; constructively as if he had beeu in possession of the whole. (Soor v. Daily, 15 Beav., 156.) ? Iort ^ a s gee ^ ou ghk to niention that, although it is not correct to sellable speak of a mortgagee in possession as a trustee for the for dam- mortgagor, he will be liable to account for any damage done to the property, as by pulling down buildings improperly (Sandon v. Hooper, 6 Beav., 246, 14 L. J. Oh., 120). Simi- larly the mortgagee will be liable if he allows any minerals to be taken away by third persons from the mortgaged lands (Hood v. Easton, 2 Giff., 692), and in one case a mort- gagee in possession of lease-holds was charged for permit- ting the forfeiture of a lease by reason of a breach of a cove- nant to complete buildings on the demised land. (Perry v. Walker, 1 Jur. N. S., 746.) fedem for ^ n concluding this lecture, I wish to say a few words on tion. the manner in which suits for redemption are treated by the Courts in Bengal and the North-Western Provinces. The practice has been to treat a suit for redemption as a suit for ejectment, and to refuse any relief to the plaintiff, except upon proof that every condition necessary to the right to immediate possession, has been fulfilled. You will find it laid down in several cases, that, in a suit for redemp- tion, the mortgagor must fail, if anything is due to the mortgagee on the security, and the plaintiff cannot show that he had deposited or tendered the amount (p~). In some instances, however, conditional decrees have been made, and in recent cases the Court has shown some disinclination to adhere to the old practice ; a practice which, I venture to think, is attended with inconvenience as well to the mortgagor as to the mortgagee. It is true that plaints are Bengal "* n0 ^ verv artificially framed in the Mofussil Courts, and suits are very frequently brought for recovery of possession on the allegation that the mortgage-debt has been satisfied. Such suits, however, are substantially brought for the pur- pose of ascertaining as between the parties what is the state of the account, a right which is expressly given by Statute to the mortgagor. We saw that, according to the (p) Ordinarily, a suit for an account upon a mortgage cannot be maintained by a mortgagor, unless lie also prays for redemption. (Hurry v. Lakshman,!. L. R., V Bom., 614; SliamJtarapa v. Dattapa, I. L. R., V Bom., 604.) Where, however, the objection was not taken in the Court below, the mortgagor has been allowed, even in second appeal, to convert the suit into one for redemption. (Hart v. Sitaram, Bom. P. J., 1882, 159 ; Jicaji v. Kaha, Bom. P. J. 1883, 9.) REDEMPTION. 313 practice of the English Court of Chancery which is LECTURE followed in the other provinces, the Court, in a suit VIIL for redemption, invariably takes an account of the monies due to the mortgagee on his security, and if anything is due to the mortgagee, the mortgagor is directed to pay it by a time appointed by the Court, and on his failure to do so, the suit for redemption is dismissed ; such dismissal having generally the same effect, and carrying with it the same consequences, as a decree for foreclosure. It would be difficult to suggest any reason why the same practice should not be followed in Bengal. According to the present practice of our Courts, the Court is bound to take an account in a suit for redemption, but, even if a single rupee be found due to the mortgagee, the suit is dismissed ; and, however carefully the account may have been taken, the finding of the Court would seem not to be binding upon either party in any subsequent suit. This naturally leads to a perfect waste of litigation which might be easily prevented by the exercise of the power, which our Courts undoubtedly possess, of moulding their decrees in such a way as to meet the exigencies of each case. (See the ob- servations of Phear, J., in Mu/tund Loll Suhul v. Goluk ChunderDutt, IX Suth. W.R., 572. Compare IV N.W. P., 37; V N. W. P, 104 ; VI N. W. P, 221 ; X N. W. P., 543 ; S. D. A., 1849, p. 392). The following recent cases may be use- fully consulted by the student : Shah Lutafut Hossein v. Choivdry Mahomed Moneim, XXII Suth. W. R., 269 ; Rajah Saheb Perladh v. Broughton, XXIV Suth. W. R., 275. See also Kullyan v. Sheonundun, XVIII W. R., 65 ; Dinkur Doyal v. Sheogolam, XXII W. R., 172. Compare Brijoolall v. Muity, Suth. F. B., 33. In a recent case a conditional decree for redemption was made by the Allahabad High Court in a usufructuary mortgage. (Sahibzada v. Por- meshor Dass, I. L. R., I All., 524.) See also Raja Radha Kant Rai v. Bhagwun Das, I. L. R., I AIL, 344 ; Bhairab Mondal, XVII W. R., 408. LECTURE IX. Liens legal and judicial. Liens Legal and Judicial Distinction between Statutory liens Regulation VIII of 1819 and Act VIII of 1869 (B.C.) Act XI of 1859 Salvor's lien- Lien of co-sharer for revenue paid by him Unpaid vendor's lien Mackreth v. Symmons What constitutes waiver of lien Objections to legal liens Registration Purchasers without notice Practice of English Court of Chancery Purchaser's lien Lien of partners and agents Tenants in com- mon No lien for dower in Mahomedan law None in favour of creditors on assets of deceased debtor in Hindu or Mahomedan law Judicial lien At- tachment before and after judgment Operation of Section 240 of Act VIII of 1859 Alienation by debtor not absolutely void Anund Mohun Dass v. Radha Mohun Shah Striking off attachment Effect olPuddomoney v. Roy Mothuranath Chowdhry. IN the present lecture I propose to treat of liens or securi- ties created by the operation of law. In the introductory lecture I pointed out to you the difference between these charges and charges created by the express or implied consent of the parties. I also stated that liens may be divided into two groups, legal and judicial ; the one consti- tuting a part of substantive law, and the other, a part of the law of procedure. I propose to discuss the law relat- ing to legal liens in the first place, and then to treat of judicial liens (a). (a) The liens here discussed are known as non-possessory in the English law, and are divided by English lawyers into equitable and judicial. Liens of this class are actively enforceable, and do not con- fer a mere passive right of retainer. I may here mention that the application of the word ' lien ' from a French word signifying ' tie ' is of comparatively modern date in the English law. " The right of retainer which was allowed by the English law, at least as early as the reign of Edward IV, is not mentioned by this name in the early reports ; and the word ' lien ' appears not to have found its way into the Law Dictionaries so late as 1671 and 1672. Editions of Termes de la Ley and of Cowell's Interpreter, printed in those years do not contain it. The want of precision in its use is remarkable. A common law lien depends upon retainer ; and as there can be no retainer without pos- session, the word itself is often said to imply possession, although it originally had no such force and even at law it is used to denote the right of a judgment-creditor. But in equity it ia used not only in the common law sense, and also as descriptive of an equitable right not depending upon possession (such as the vendor's lien for the purchase- money of land), but is also often applied to equitable mortgages and LEGAL LIENS. 315 I have already said that there are some cases in which LECTURE a hen is expressly conferred by statute, while there are IX others in which the right has been recognised by our Courts of Justice as resting on those principles of equity which the Indian Courts are bound to administer. But though they are the growth of 'judicial legislation,' I need hardly point out, they do not differ in any essential feature from the class which may be called statutory liens. The earliest instance of the latter is furnished by the enact- ment contained in the 13th section of Regulation VIII of 181 9. That section says : "If the person or persons making such a deposit in order to stay the sale of the supe- rior tenure, shall have already paid the whole of the rent due from himself or themselves, so that the amount lodged is an advance from private funds, and not a disbursement on account of the said rent, such deposit shall not be carried to credit in ,or set against, future demands for rent, but shall be considered as a loan made to the proprietor of the tenure preserved from sale by such means, and the taluk so preserved shall be the security to the person or persons making the advance, who shall be considered to have a lien thereupon in the same manner as if the loan had been made upon mortgage (6); and he or they shall be entitled, on applying for the same, to obtain immediate possession of the tenure of the defaulter in order to recover the amount so advanced, from any profits belonging there- to. If the defaulter shall desire to recover his tenure from the hands of the person or persons, who, by making the advance, may have acquired such an interest therein and entered in possession in consequence, he shall not be en- titled to do so except upon repayment of the entire sum advanced, with interest, at the rate of twelve per cent, per annum, up to the date of possession having been given as above, or upon exhibiting proof in a regular suit to be insti- tuted for the purpose, that the full amount so advanced, with interest, has been realized from the usufruct of the tenure." securities of a like nature which rest simply upon contracts. Although contracts are sometimes expressed to be made for mercantile liens, no actual liens are so conferred. The express stipulation and agreement for a seecurity excludes the lien and limits the rights by the extent of the express contract. Ex-pressutn faclt cetsare taciturn. Per Sir W. Grant, 2 Mer. 404 ; per Lord Westbury, L. R., 1 P. C., 305." Fisher's Mortgage, p. 107, note () (i) Compare section 17, clause 5. of the same Regulation, and see Surnomoye Dassya v. The Land Mortgage Bank, I. L. R., VII CaL, 173, on the question of priority. 316 LAW OF MOETGAGE. LECTURE This, I need hardly point out, is a very beneficent provi- 1X1 sion, and was extended by section 62 of Act VIII of 1869 Provisions (B.C.), to the case of a tenure about to be sold under that of the Ac^ anc i the payment of the rent by any one interested in Act. an y the protection of the under-tenure ; and now by the Bengal Tenancy Act a similar privilege is given to any person hav- ing, in a tenure or holding advertised for sale, an interest, which would be voidable upon the sale, if he pays the amount requisite to prevent such sale. It is worthy of notice that the Act goes on to provide that the lien in favour of the person making the payment shall take prior- ity over every other charge on the tenure or holding other than a charge for arrears of rent (Act VIII of 1885, section 161.) (Of. Act II of 1864 (Madras) which gives the mortgagee a charge on the land in respect of arrears of revenue paid by him, " but such charge shall only take priority according to the date at which payment was made.") Revenue Another provision of a similar character, but somewhat Sale Law. j egg am pj e j s to be found in section 9 of Act XI of 1859. That section, after enacting that the revenue in arrear may be tendered in certain cases by a person who is not the pro- prietor of the estate, goes on to say : " And if the person so depositing, whose money shall have been credited as aforesaid, shall prove before a competent Civil Court that the deposit was made in order to protect an interest of the said person, which would have been endangered or dam- aged by the sale, he shall be entitled to recover the amount of the deposit, with or without interest as the Court may determine, from the defaulting proprietor. And if the party so depositing, whose money shall have been credited as aforesaid, shall prove before such a Court that the depo- sit was necessary in order to protect any lien he had on the estate or share, or part thereof, the amount so credit- ed shall be added to the amount of the original lien." Salvage These enactments rest upon a plain principle of equity, hens. ^0 cnar g es created by them being recognized in most systems of law under the name of salvage liens, an expres- sion not wholly useless nor absolutely misleading, and conveying, notwithstanding the recent protest of an eminent English Judge, a definite meaning, a recommendation not always possessed by some of even the most familiar terms in the English law. In the case of Nogender Chunder Ghose against Sreemutty Dasi, although the Act then in LEGAL LIENS. 317 force in terms gave only a personal remedy to the mort- LKCTUBI gagee (c), their Lordships of the Privy Council observed : IX - " Considering that the payment of the revenue by the mortgagee will prevent the taluk from being sold, their Lordships would, if that were the sole question for their consideration, find it difficult to come to any other conclu- sion than that the person, who had such an interest in the taluk as entitled him to pay the revenue due to the Government, and did actually pay it, was thereby entitled to a charge on the taluk, as against all persons interested therein, for the amount of the money so paid " (XI Moore Ind. App., 241; S. C., VIII Suth. W. R., P. C., 17.) And this dictum of their Lordships was held to justify the mortgagee of a putnee taluq in claiming a lien for pay- ments made by him on account of the head rent due to the zemindar Mohesh Chundra Banerjee v. Ram Prosonno Chowdhry (I. L. R., IV Cal., 539 ; VI Cal. L. Rep., 289). It was thought at one time that the principle laid down Case of co- by their Lordships in Nogender Chunder Ghose's case 8harers - was applicable to the case of a co-sharer, who was com- pelled to pay a paramount charge on the joint property when such payment had the effect of protecting the pro- perty from sale, and the same rule was applied even in cases where the person who made the payment was not aco-owner, but one claiming under a derivative title as a lessee or mortgagee under some one or other of the coparceners. (Syed Enait Hosain v. Moddonmuni Shahun, XIV Ben. L. Rep., 155; Nobin Chundra Roy v. Rungo Lall Das, I. L. R., IX Cal. 377 ; Ram Dut Singh v. Hurruck Narain Singh, 1. L. R., VI Cal., 549 ; Mohesh Chunder Banerjee v. Ram Prossunno Chowdhri, VI Cal. L. Rep., 28 ; Deo Nun- don Agha v. Desputty Singh, VIII Cal. L. Rep, 210. ) But these cases cannot now be regarded as law, as they have been overruled by a Full Bench judgment of the Calcutta High Court, and a co-sharer must, at least on this side of India, rest satisfied with a personal suit for contribution, as any payment which may be made by him will not carry with it a right to a lien on the joint property. (Kinuram v. Hosain, I. L. R., XIV Cal., 809). A different view, however, has been taken both by the Bombay and the Allahabad High Courts. (Achut Ram Chundro Pai v. (c) The case arose under a Statute (Act I of 1845) which did not ex- pressly confer any lien on the mortgagee, a privilege which was given to him by Statute for the first time by the Legislature in 1869. 318 . LAW OF MORTGAGE. LECTURE Hori Kamti, I. L. R., XI Bom., 313 : Lachman Singh v. IX. Saligram, I. L. R., VIII All., 384.) The law on the subject, therefore, is in a somewhat unsettled state, and must, it is to be feared, continue in that unsatisfactory condition till it is authoritatively settled by their Lordships of the Privy Council, or the Legislature sees fit to interfere. Uncertain- Coparcenery being the rule in India, it is certainly very [aw^ tbe desirable that the rights and liabilities of coparceners should be clearly defined, and yet there are perhaps few portions of Anglo-Indian law which are so deservedly open to the reproach of uncertainty. I do not refer here to matters which must be governed by the personal law of the parties, but to those altogether outside the pale of that law, and regulated either by statute or by the general principles of justice, equity and good conscience, which ' high-sounding phrases ' only too often mean an exact reproduction and not a careful adaptation of Eng- lish law. The Indian Legislature has, it is true, occasion- ally in dealing with certain special matters, embodied in the statute-book some of the general principles of equity, but the result of such fragmentary legislation has been not to assist but rather to embarrass our judges in apply- ing such principles in analogous cases not governed by statute law. A complete code, artistically arranged, is, no doubt, a triamph of legislative skill. But a sincere, and indeed fervent, advocacy of legislation proper as distinguished from judge-made law, is perfectly consis- tent with a wholesome distrust of the beneficial effect of piecemeal legislation, or as it has been sometimes irreverently called, legislative tinkering. I cannot find a better illusti'ation of what I mean than the recent Kinuram case f Kinura'm Das v. Muzuffer Hossain (I. L. R., XIV Das'scase. Cal., 809), in which a majority of the judges came to the conclusion that a part-owner is not entitled to a charge upon the share of his co-sharer for land-revenue paid by such co-sharer as against a purchaser whether with or with- out notice. It seems to me extremely doubtful, however, whether this conclusion would have been arrived at if the matter had been free from the entanglement created by the provisions of an Act, which, while laying down the proce- dure regulating sales for arrears of revenue, incidentally gives a right of this kind to a mortgagee, but is wholly silent as to the rights of a part-owner. The inference which was drawn by a majority of the learned judges from SALVAGE LIENS. . 319 the silence of the legislature was, that a mortgagee alone LECTTTBE was entitled to the benefit of a lien. We must remember IX - that the Putnee Regulation, as well as the Bengal Tenancy Act, give a lien to sub-tenants, by whom the head rent is paid, and yet the learned judges were virtually forced to the conclusion that no such right can be gained if the proper- ty saved is not a putnee or any other description of under- tenure but a zemindari, or if the person who saves it is not a tenant, but a co-partner. I do not deny, if I may say so without impropriety, that the language of the Act may fairly suggest such an inference ; but the inference under the circumstances is not a very strong one. The foregoing case is also an illustration of the canonical authority of the decisions of the English Court of Chancery, although, for reasons which are not quite obvious, very little respect seems to be paid to the decisions of other courts or to principles underlying other systems of law, whicli at least deserve equal consideration. The subject is too large to be adequately discussed here ; but I may be permitted to observe that, although the system administered by equity in England is far more rational than that of the common law, it is, if not in a greater degree, at least equally with the latter, open to the reproach of artificiality (d ). But, whatever doubts may exist as to the right of a person interested in making a payment to claim alien, it is clear that a mere volunteer can claim no such right. A mere volunteer cannot generally say to the owner, " I have saved your property by the expenditure of my money, and am, therefore, entitled to a lien on that property for reimburse- ment." The person making the payment must have some interest in the property or some right or duty towards the owner impelling him as it were to make the expenditure. And this is the cardinal distinction between maritime sal- vage liens and those we are now discussing. As Lord Justice Bowen points out, the maritime law for the purposes of public policy and for the advantage of trade, imposes, in such cases, a liability upon the thing saved, a liability which is a special consequence arising out of the character of mercantile enterprises, the nature of sea- perils, and the fact that the thing saved was saved under great stress and exceptional circumstances (Falcke v. Scottish Imp. Ins. Co., 34 Ch. D., 234). The ana- logy is not, therefore, quite complete, because in cases ( have clustered round it in the English law, and which must inevitably be introduced with it. In order to ex- plain myself I ought to state that, in the English law, a vendor may waive his lien either expressly or by implication, and the circumstances which will be suffi- cient to raise an inference of waiver have given rise to a cloud of distinctions which are extremely refined, and which have produced a degree of uncertainty such as led Lord Eldon to say : "It would have been better at once to have held, that the lien should exist in no case, and the vendor should suffer the consequences of his want of caution ; or to have laid down the rule the other way so distinctly, that a purchaser might be able to know, without the judgment of a Court, in what cases it would not exist." It has been held in England that the lien exists even when the money is secured to be paid at a future day Unpaid ( Winter v. Lord Anson, 3 Russ., 488), while the mere j"^' 3 taking of a security does not amount to an abandonment England, of the lien. If, however, the vendor take a totally distinct and independent security, it will then become a case of substitution for the lien. The question, however, in all these cases is simply whether or not the circumstances show a clear and unequivocal intention to give up the lien a question on which there must necessarily be a great conflict of opinion. It is, therefore, to be regretted that the doctrine should have worked its way into our law. It rests upon grounds altogether different from those on which the lien of the salvor has been recognised. In the case of the vendor of land, it is always open to him to protect himself against the consequences of the fraud or in- solvency of the purchaser ; and if he does not choose to take the most ordinary precautions, he hardly deserves much sympathy. I need scarcely point out that the case of a person who is obliged to make a payment for the protection of his own interest, is essentially different. But there is another and a still more serious objection, which applies to all legal liens alike. They are neither agreements nor declarations, and are therefore wholly untouched by the Registration Acts. They, however, confer real rights, and a 324 LAW OF MORTGAGE. LECTURE bond fide purchaser for value might be easily misled. This is a serious evil. We know how it is guarded against in England. The right being merely " equitable," the Eng- lish Court of Chancery, acting upon a well-known doctrine, will not suffer it to be enforced against a bond fide pur- chaser for value without notice of the lien (/ ). The doctrine itself is a curious illustration of the way in which the "g^ts an< ^ obligations of parties have been gradually moulded by equity. We saw that in archaic law it was not easy to make a secret transfer of land. The transac- tion must be attended with a number of solemnities which served to give it publicity, and the omission of any one of them was fatal to the validity of the transfer. It is hardly necessary to observe that a rigid adherence to the doctrine was likely to lead to considerable hardship, and the Court of Chancery, therefore, allowed in certain cases the same relief as if the plaintiff had acquired a real right, notwithstanding his inability to make out a complete legal title. But, in order to prevent injustice to third persons, equity allowed a peculiar defence to a purchaser for value who may have been misled by the presumable want of publicity. As a fact, in modern times, a conveyance does not necessarily carry with it any greater publicity than a contract, but the old doctrine still remains as a " survival." Registra- In countries in which this peculiar defence is not admit- *egai f ted, the same object is accomplished by the hypothec books mortgages, in which all transfers of real rights are carefully entered. In the French Code, for instance, the registration of legal mortgages is as compulsory as the registration of conven- tional securities (Code Napoleon, Book III, tit. XVIII, Ch. II, Sec. 4). But the Indian Statute does not permit the registration of such transactions. This fact of itself ought to induce our Courts to be cautious in the admission o of legal liens. If, however, we adopt the law as adminis- tered by the English Court of Chancery on this subject, the equitable defence open to a purchaser for value should (/) The above observation applies only where the purchaser has the legal estate. As between two merely equitable titles, the rule qui prior est teinpore potior est jure holds good, unless there is something to dis- place the prior equitable lien (MacJtreth v. Symmons, 15 Ves, 350 ; Sug- den, 682, Ed. 14. But see Rice v. Rice, 2 Drew, 73, where it is said that priority of time is the ground last resorted to, that is to say, only where there is no other sufficient ground of preference, and a similar view has been taken in other cases ; see the notes to Maekreth v. Sym- >nn.t, I White and Tudor. L.C., 355. See also Lecture XII, post). PURCHASER'S LIEN. 325 also be admitted. So long as the registration of legal LECTUBE mortgages is not rendered compulsory, any other course IX - must necessarily lead to very great hardship. It may, no doubt, be said that it would be inconsistent with the logic of the law to hold that a real right may not be enforced against a subsequent purchaser ; but, as observed by an eminent jurist, logical antinomy is more easily to be borne than a rule which fails to do justice between man and man. In this country the lien of the unpaid vendor seems to Unpaid have been very much taken for granted, but, as I have vendor's already said, it is too late now to dispute the right (<;) India!* (Tremalrav v. The Municipal Commissioner of Hubli, I. L. R., Ill Bom., 172 ; Ramlakhan v. Baudan, I. L. R., II All., 711; Hariramv. Danaput,!. L. R., IXCal., 167.) Cu- rious attempts have occasionally been made to extend the doctrine, but, I need hardly add, without any success. In one case it seems to have been argued that a creditor oi the vendor was entitled to enforce the lien, because by mutual agreement between the vendor and the vendee, the purchase-money was to be paid by the vendee to the creditor, who claimed by virtue of that agreement a prior lien over a mortgage executed by the vendee. But the Court refused to countenance any such extension, adding that, although an unpaid vendor has a lien on the property, a creditor of the vendor cannot claim the same right (Hari- ram v. Danaput, I. L. R., IX Cal., 167.) In 'another case, a second vendee in possession attempted to resist an action of ejectment by a prior purchaser till the balance of the purchase-money was paid, the second vendee claim- ing to be the representative of the vendor, but I need scarcely say that the attempt failed (Ramlakhan Roy v. Baudun Roy, I. L. R., II All., 711.) A case may, however, arise where a third person advancing the purchase-money or a part of it, may claim to have the benefit of the vendor's lien Dry den v. Frost, 3 My. & Cr., 673 ; Neesom v. Clark- son, 4 Ha., 97). I shall now treat of some other liens recognised by the Other liens English law. A lien arises in favour of a purchaser for purchase -money prematurely paid by him. There is also a lien in favour of partners on the partnership estate, on dis- solution, in satisfaction of any demands arising out of the partnership business. An agent also is, in certain cases, 0?) See aec. 55, para. (4), cl. (6) of the Transfer of Property Act. 326 LAW OF MORTGAGE. Joint- owner's lien. LECTURE protected by a lien on property on which he has made IX - advances on account of his principal. Trustees also enjoy a similar privilege of which creditors by whom the advances may have been actually made may be entitled to avail themselves on the principle of subrogation (In re Johnson, 15 Ch. D., 553.) A bond fide possessor may also sometimes claim the right in respect of any outlay made by him (Cooke, p. 421). As a general rule, however, a person is not entitled to a charge, simply because he has laid out money on the property of another. But where the person who makes the outlay is interested in the property, but not as agent or trustee, the question, as we have already seen, presents considerable difficulty. According to the English common law, one tenant in common of a house, who expends money on ordinary repairs, has no right of action against his co- tenant for contribution (Singh v. Dickson, 12 Q. B. D., 194 ; S.C. on appeal 15 Q. B. D., 60.) And even in equity, which could not always disentangle itself from the common law, a lien is only allowed in certain cases. The law on the subject is thus stated by Story : " An- other species of lien is that which results to one joint-owner of any real estate, or other joint-property, from repairs and improvements made upon such property for the joint benefit and for disbursements touching the same. This lien, as we shall presently see, sometimes arises from a contract, express or implied, between the parties, and some- times it is created by courts of equity upon mere princi- ples of general justice, especially where any relief is sought by the party, who ought to pay his proportion of the money expended in such repairs and improvements, for in such cases the maxim well applies " Nemo debet locuple- tari ex alterius inconiinodo." (Story's Equity, 1234.) But the doctrine of contribution in equity is larger than it is at law ; and in many cases repairs and improvements will be held to be not merely a personal charge, but a lieu on the estate itself. Thus, for example, it has been held that if two or more persons make a joint-purchase, and afterwards one of them lays out a considerable sum of money in repairs or improvements and dies, this will be a lien on the land and a trust for the representatives of him who advanced it. (Story's Equity, 1236.) In many cases of this sort, the doctrine may proceed upon the ground of some express or implied agreement as to the repairs and improvements between the joint-pur- Doc trine of contri- bution. Lien for repairs. OTHER LIENS. 327 chasers and an implied lien following upon such an agree- LECTUBE ment. But courts of equity have not confined the doc- IX - trine of compensation or lien for repairs and improvements to cases of agreement or of joint-purchasers. They have extended it to other cases, where the party making the repairs and improvements has acted bond fide and innocent- ly, and there has been a substantial benefit conferred on the owner, so that ex cequo et bono he ought to pay for such benefit. Thus, where a tenant for life under a will has gone on to finish improvements permanently beneficial to an estate, which were begun by the testator, courts of equity have deemed the expenditure a charge for which the ten- ant is entitled to a lien. So, where a party lawfully in possession under a defective title has made permanent improvement, if relief is asked in equity by the true owner, And or he will be compelled to allow for such improvements. So, improve- money bond fide laid out in improvements on an estate by meuts< one joint-owner will be allowed on a bill by the other if he ask for a partition. So, if the true owner stands by, and suffers improvements to be made on estate without notice of his title, he will not be permitted in equity to enrich himself by the loss of another ; but the improvements will constitute a lien on the estate. For, it has been well said : " Jure naturae sequum est neminem cum alterius detri- mento et injuria fieri locupletiorem." A fortiori this doc- trine will apply to cases where the parties stand in a fidu- ciary relation to each other ; as, where an agent stands by, and without notice of his title, suffers his principal to spend money in improvements upon the agent's estate. (Story's Equity, 1237.) On the subject of liens generally, see Burge's Foreign and Colonial Law, Vol. Ill, pp. 314 377. English equity thus proceeds in a very guarded manner, Character the explanation of which must be sought in the history g^ of the rise and growth of the equitable jurisdiction of the liens. Court of Chancery. It seems to me that the person who lays out money in repairing a house to which he is enti- tled in common with others has a much stronger equity in his favour than the unpaid vendor, and yet, although a lien arises in favour of the latter, it is denied to the former. In India properties are very frequently held in coparcenary, and although the remedy may in one sense be said to be in the hands of the coparceners themselves, a partition, as we all know, cannot be had without great delay and expense to the parties. It is, therefore, satis- 328 LAW OF MORTGAGE. equity in England. LECTURE factory to notice that the question in this country has been IX - decided on broader principles than those recognised by English equity, which is often merely a pale reflection of Roman law (Mahomed v. Shaista Khan, II All. H. C. Rep., 248; Buzlool Hossein v. Gunput, XXV Suth. W. R., 170). We must remember that, although equity is much more in accordance with common sense than the common law, and Growth of although some of its doctrines are still refining themselves, there are parts which disclose to the student, if I might borrow an expression from physiology, unmistakable evi- dence of ' arrested growth.' This is very clearly pointed out by Sir Henry Maine in a passage in his Ancient Law in which he draws an interesting parallel between Roman and English equity. " It would be wearisome," says the learned author, " to enter on a detailed comparison or contrast of English and Roman equity ; but it may be worth while to mention two features which they have in common. The first may be stated as follows : Each of them tended, and all such systems tend, to exactly the same state in which the old common law was when equity first interfered with it. A time always comes at which the moral principles Sjr Henry originally adopted have been carried out to all their legi- timate consequences, and then the system founded on them becomes as rigid as unexpansive, and as liable to fall behind moral progress as the sternest code of rules avowedly legal. Such an epoch was reached at Rome in the reign of Alex- ander Severus ; after which though the whole Roman world was undergoing a moral revolution, the equity of Rome ceased to expand. The same point of legal history was attained in England under the Chancellorship of Lord Eldon, the first of our equity judges, who, instead of enlarg- ing the jurisprudence of his Court by indirect legislation, devoted himself through life to explaining and harmonising it. If the philosophy of legal history were better under- stood in England, Lord Eldon's services would be less exaggerated on the one hand and better appreciated on the other than they appear to be among contemporary lawyers. Other misapprehensions, too, which bear some practical fruit, would perhaps be avoided. It is easily seen by English lawyers that English equity is a system founded on moral rules ; but it is forgotten that these rules are the morality of past centuries not of the present that they have received nearly as much application as they are capable of, and that though, of course, they do not differ largely from Maine's remarks. CIVIL LAW. 329 the ethical creed of our own day, they are not necessarily LECTUUE on a level with it. The imperfect theories on the subject Ix - which are commonly adopted have generated errors of opposite sorts. Many writers of treatises on equity struck with the completeness of the system in its present state, commit themselves expressly or implicitly to the paradoxi- cal assertion that the founders of the Chancery jurispru- dence contemplated its present finality of form when they were settling its first basis. Others again complain and this is a grievance frequently observed upon in forensic arguments that the moral rules enforced by the Court of Chancery fall short of the ethical standard of the present day. They would have each Lord Chancellor perform pre- cisely the same office for the jurisprudence which he finds ready to his hand which was performed for the old common law by the fathers of English equity. But this is to invert the order of the agencies by which the improvement of the law is carried on. Equity has its place and its time ; but I have pointed out that another instrumentality is ready to succeed it when its energies are spent." (Maine's Ancient Law, pp. 68 70.) I trust I shall be excused for venturing to suggest that Appika- the caution thus indirectly conveyed is not perhaps alwa3*s *i on ,? f . ' j v T j- j -u i- j. English borne in mind by Indian judges, who seem sometimes to law in forget that equity in this country has not yet crystallised India, into system, but possesses all the fluidity which charac- terised it in England before it hardened into the shape which it wears in our day. There is very little danger of any rash experiments being made under the name of equity and good conscience, as the professional learning, and I must add, the professional prejudices of the English law- yers, who preside over the superior courts in India, will always prevent any hasty or unnecessary departure from the English law. The principles of justice, equity, and good conscience, Lender's however, so long as they do not harden into system, are heu * often extremely vague. They should, therefore, be applied with very great caution. Various liens, for instance, are recognised by the civil law and the continental codes, which find no place in the English system. The lien of the lender who advances money for the purchase of land, or for repairing a building, or of the architect or labourer employed in the construction of any works, is not recog- nised by the English Court of Chancery ; and yet it would 330 LAW OF MORTGAGE. Solicitor's lien. LECTUEB be difficult to deny that the creditor in the one case, and IX< the architect in the other, have at least as stroug an " equity " in their favour as the unpaid vendor (Code Napoleon, Book III, tit. XVIII, Ch. II.) The truth is, the principles of justice, equity, and good conscience are at best but an uncertain guide, and not unfrequently wear an appearance of vagueness, which, it must be con- fessed, is rather bewildering to the student of Indian law. Indeed, it may fairly be doubted whether our courts ought not to confine the right to a legal mortgage only to those cases in which, as in the case of the salvor, the person claiming the right could not have protected himself by an express agreement. In every other case the parties may be safely left to take the consequences of their own want of caution. Several other descriptions of equitable liens are also recognised by the law. A solicitor, for instance, has a lien on the fruits of any judgment recovered by him, a privilege, I may add, denied to other classes of practition- ers. But the lien will not be allowed to override the right of a party to a set-off, at any rate where the mutual payments are under the same decree (Baikesserbai v. Narranji Walji, I. L. R., IV Bom., 353 ; Brij Nath v. Juggernath, I. L. R., IV Cal., 742.) A solicitor, however, who discharges himself forfeits his lien (In re McCor- Jdndale, I. L. R., VI Cal., 1 ; Cf. In re Wadsworth, 34 Ch. D., 155, where the solicitor at the time the fund was recovered was held entitled to priority over the solicitor who had conducted the action, but had been discharged before the trial.) In certain cases servants and labourers have a lien for their wages (In the matter of the Indian Companies Act 1866, II Ind. Jur., N. S., 180 ; II Ind. Jur., N. S., 257.) Maritime liens form also a very important class of securities, but they are of very little practical im- portance to the Indian lawyer. (See on the subject Fisher, pp. 166171 ; see also Coote, pp. 604-606.) Distraint. In this country, generally speaking, the land-revenue is a paramount charge, and the sale of a tenure for rent has also in many cases the effect of sweeping away all incuin- brances ; but I do not think that it would be quite correct to say that there is a lien in such cases. A modified right in favour of the landlord is, however, recognised by the legis- lature under the name of distraint, and this is strictly a legal lien, and would apparently take rank above all other charges. CREDITOR'S LIEN. 331 I shall now treat of one or two cases in which it is some- LECTURE times thought that a lieu exists. It is sometimes said that IX - a Mahommedau widow has a lien on the estate of her hus- N o~iie7f r band for dower due to her. The question was very fully dower iu discussed in the case of (Amanee v. Mir Meher AH, J Iahomme - XI Suth. W. R., 212), and the Court, after a review of all the authorities, came to the conclusion that the widow has no special charge on the property, but ranks pari passu with other ordinary creditors. (See also Shah Enayet Hossain v. Syud Romzan, X Suth. \V. R., 216.) But dower, like every other debt, must be paid before the heirs are entitled to take anything, and the authorities show that a Mahommedan widow, in possession of her husband's estate, upon a claim of dower, has a lien upon it as against those entitled as heirs, and is entitled to the rents and profits till the claim of dower is satisfied. (See Macnagh- ten's Precedents, case 24, p. 275. WomatuL Fatima v. Mirunnissa, IX Suth. W. R., 318, reported also in VIII Suth. W. R., 51.) A similar right is sometimes put forward on behalf of No lien of the creditor of a deceased Hindu, but it is now conclusive- ly settled that a creditor has no lien on the assets in the hands of the heir, and cannot, therefore, reach any property which may have been transferred by the heir in good faith to a third party. Sir Thomas Strange, indeed, in his book on Hindu law, says, that " debts are a charge on the inher- itance, and that they follow the assets into whatsoever hand it comes." (Strange's Hindu Law, Vol. I, p. 166.) And the learned author cites the very high authority of Colebrooke in support of his opinion. (Strange's Hindu Law, App., p. 282.) There is also the text of Katya- yana : " If any debts exist against the father, his son shall not take possession of his effects. They must be given to his creditors." (Stokes's Vyabahara Mayukha, p. 122.) Our Courts, however, have laid down a different doctrine, although it may fairly be doubted if this is not one of the many instances in which English lawyers have un- consciously introduced the doctrines of their own law, moulded by the commercial necessities of the country into a system comparatively archaic, and not shaped by such economic considerations. The Sudder Dewany Adawlut, presided over by Judges not so familiar with English law, adhered to the doctrine laid down by Strange and Cole- brooke. But the law has been differently interpreted in 332 LAW OF MORTGAGE. LECTUBE recent decisions. In the case of Zaburdust Khan v. Inder- IX - man (Agra F. B., 71), the Court, in giving judgment, observed: "In our judgment the real test to be applied in deciding the issue of law raised is to be found in the answer to the question to whom does the property pass on the death of the deceased ? Does it pass immediately and entirely to his heirs, or is the normal devolution inter- rupted, so that the whole or a portion of the estate suffi- cient to discharge his debts, vests, as if by hypothecation, in the creditors, and does only the residue pass to the heir ? Zaburdust " "We can find no authority for the latter proposition ; case."* nor has any other text been cited in support of it than that from Katyayana referred to by the Division Bench. Although Sir T. Strange enumerates debts among the charges on the inheritance, he nowhere expresses himself to the effect, that any interest in the inheritance vests in the creditor ; on the contrary, the language used by him rather shows that the whole estate of the deceased's ancestor passes to his heirs, affecting them with a liability for the debts of the ancestor to the extent of the assets received by them. The heirs may, if they please, avoid this liability by disclaiming the estate, but into the hands of whatever volunteer it conies, the liability attaches on him ; and so long as the estate remains in the hands of the heirs or any other volunteers, so long does it constitute a fund, to which the creditor is entitled to have resort for satisfaction of his claim. This is in our opinion the cor- rect interpretation of the dictum that debts follow the assets into whatsoever hands they come. We have exa- mined the authorities referred to by Sir T. Strange on this point, and can find nothing in them which warrants any stronger position in favour of creditors than that which we have expressed above. The text of Katyayana may, at first sight, seem to justify the contention that the whole estate of a deceased ancestor does not pass directly to the heirs ; but that there rests in them only the residue after satisfaction of the debts. But this text must be read in connection with other texts of writers of high authority on Hindu law; and so reading it, we are of opinion, that the proper construction of it is to hold, that it declares that the resulting benefit to the heirs from the succession cannot be greater than the surplus of assets over liabili- ties ; not that the estate does not altogether and absolutely vest in the heirs. Numerous texts may be referred to, ATTACHMENTS. 333 which indicate a power in the heirs to deal with the whole LECTURE estate before satisfaction of the debts. The very fact that IX - they may sell it to satisfy debts shows an ability to make a good title to the whole of it. " The construction of the texts of Katyayana in the sense contended for on behalf of the appellant is therefore untenable." (See also Annopurna Dassee v. Ounganarain Pal, II Suth. W. R, 296 ; Jamiyatram Ram Chunder v. Parbhu Das Hathi, IX Bom., 116; XII Bom., 78 ; compare N. W. P., 1859, p. 23 ; Mad., S. D. A., Vol. I, p. 166; Green- der Chunder v. Mackintosh, I. L. R., IV Cal., 877.) It would seem that although a Hindu widow has, in a widow's certain sense, a lien on the estate of her deceased husband liei ; for for maintenance, the charge cannot be enforced against a purchaser for value without notice of the lien. At any rate the widow cannot seek to charge the estate in the hands of a purchaser without showing that there is no property of her deceased husband in the hands of his heirs (Adhiranee Narain Kumaree v. Shona Malee, I. L. R., I Cal., 365 ; see also VIII B. L. R, 225 ; IX B. L. R, 11 ; XII Bom., 69 ; compare II Agra, 42 ; IV Moo. Ind. App., 246 ; I AIL, 191.) A notion also seems to prevail that in this country imiigo there is a lien on an indigo factory, or at least upon the hens- produce of the factory for the price of seed supplied to it. But the proposition rests on no authority, and was express- ly negatived in the case of Monohur Dass v. McNagli- ten (I. L. R, III Cal., 231.) It is, however, curious to observe that the Code Napoleon recognizes a lien in the nature of a privileged hypothecation for sums due for seed corn or for the expenses of the harvest of the year on the value of such harvest. (Code Napoleon, Art. 2102.) I now come to judicial liens or attachments. Now, an Judicial attachment under the Civil Procedure Code may be either hens - before or after judgment ; the process being intended in both cases to guard against the alienation of the property by the defendant. It does not fall within the scope of the present lecture to discuss all the various points in connec- tion with attachments. I shall confine myself only to the operation of an attachment under the code. Now, an attach- ment operates from the moment that the process is executed as a charge on the property, the judgment itself not having the effect of creating in this country a lien on the property of the judgment-debtor. But, in order to have the benefit 334 LAW OF MORTGAGE. LECTURE of an attachment, the provisions of the Procedure Cede IX - must be carefully followed. In one case in which the notice of attachment was not fixed up in the Court-house, or in the office of the Collector, the Court thought that an alienation made by the debtor could not be avoided by the creditor. Mr. Justice Macpherson, in giving judgment, observed : inderchand " The objection is by no means a technical objection. Babu's The affixing the notice in the Court-house and in the office se< of the Collector is a far more certain means of giving information to tlie parties immediately interested than the process of reading the notice aloud on the land or on some place adjacent to it. A man can always arrange so as to keep himself acquainted with all notices fixed up in the Court of the Judge or the Collector of a District. But there can be no certainty that he will happen to hear, or to be made acquainted with, orders which are merely read aloud on his land or on some place adjacent to it. In the case before us, it is not proved that the judgment-debtor was in personal possession of the lands which were the subject of attachment, and there is nothing whatever to show or to lead to the presumption that he was acquainted with the fact of the order of attachment having been read aloud by the peon who was sent to attach the property. The probability of the judgment-debtors having known that the attachment had been issued, would have been far stronger, if the order had been fixed up in the Court-house or in the office of the Collector. " Section 240 says that alienations after attachment are to be void, if the attachment or the written order ' shall have been duly intimated and made known in manner aforesaid.' The words ' manner aforesaid ' relate to the pro- visions of Section 239, and when two out of the three methods prescribed by that section for intimating and making known attachments have been wholly omitted, it cannot possibly be said that the order of attachment was duly intimated and made known within the meaning of Section 240. " (Inderchund Bahoo v. The Agra Bank, X Suth. W. R., 264; Dev endra Nath Saniol v. Torak Ghunder Bhattacharjee, andltamkumar Ghose v. Baikontnath Saniol, X Cal., 281; I. L. R., VII Gal., 107.) Again, there must be a debt in existence to support an attachment. Thus where an attachment was issued under an ex parte decree, which was afterwards set aside on an application for a ATTACHMENTS. 335 new trial, but was subsequently restored, it was held that LECTURE the attachment previously issued had not the effect of IX. invalidating an intermediate sale. (Jagat v. Tulsiram I Ben. L. Rep., 71, A. C.) An attachment under the code constitutes a perfect real Attach- security. The judgment-debtor may not alienate the pro- ment . b - perty, the purchaser under the execution following upon men/. Udg " such attachment not being bound by any transfer made by the debtor subsequently to the attachment. What passes to the purchaser is, therefore, not the rights and interests of the debtor as they stand at the time of the sale, but the rights and interests of the debtor as they stood at the time of the attachment. The alienation will, however, be void only as against claims enforceable under the attachment. It must, however, be borne in mind that an attachment does, to a certain extent, enure to the benefit of all the judgment-creditors. Thus, suppose A attaches property belonging to his judgment-debtor worth 5,000 rupees, and that the debt due to A is only 1,000 rupees. Now, if the debtor should sell the property to a third person before it has been attached by any other cre- ditor, and the property should eventually be sold under an execution, the balance of the purchase-money will not be paid over to the purchaser, but will be distributed among such of the other creditors as may have taken out execution prior to the order for distribution. (Section 295, Act XIV of 1882.) It should be observed that the mere fact that a particular attaching creditor is paid out of the proceeds would not avoid an incumbrance if the sale did not take place under that attachment. (Guruprasad v. Binda, IX Ben. L. Rep., 180; Umcsh Chunder Roy v. Raj- bulbh Sen, I. L. R., VIII Gal., 279; Hazir Gazi v. Sona- monee Dassee, I. L. R., VI All., 33. In conclusion, it is necessary to observe that, if an attach- striking ment has been permanently struck off, and a new attach- ment has become necessary, a conveyance which is execut- ed between the two attachments will be valid (Govindo Sing v. Mir Mushun Ali, S. D. A., 1855, p. 244.) A question of much greater difficulty arises when the con- veyance has been executed while the first attachment was subsisting. Does such a conveyance become valid by rela- tion, or is it void against the execution-creditor and those claiming under him. In the case of Puddomoney against Roy Muthooranath Chowdry, the Privy Council observ- 336 LAW OF MORTGAGE. LECTURE ed : " It seems to their Lordships that generally where IX. the party prosecuting the decree is compelled to take out another execution, his title should be presumed to date from the second attachment. Their Lordships do not mean to lay down broadly that in all cases in which an execu- tion is struck off the file, such consequences must follow. The reported cases sufficiently show that in India the strik- ing an execution proceeding off the file is an act which may admit of different interpretations according to the circumstances under which it is done, and accordingly their Lordships do not desire to lay down any general rule which would govern all cases of that kind; but they are of opinion that when, as in this case, a very long time has elapsed between the original execution and the date at which it was struck off, it should be presumed that the execution was abandoned and ceased to be operative, unless the circumstances are otherwise explained (Puddomoney Dassee v. Roy Mathuranath Chowdry, XX Suth. W. R., 133, over-ruling Ramchurn Loll v. Jhahbur Sahoo, XIV Suth. W. R., 25.) NOTE A. It is said by Mr. Justice Wilson in the case of Klnuram Das, I. L. R., XIV Cal.. 809, that the doctrine of salvage liens, acted upon in some Irish cases, has been authoritatively rejected in England by the Court of Appeal in Fa lelte v. Scottish Imperial Insurance Company (34 Ch. D,, 234.) It seems to me. however, with great deference, that all that the case lays down is that the owner of the ultimate equity of redemption is not entitled to claim a charge in the nature of salvage. Another principle, as I understand it, involved in the case is, that a person who officiously makes a payment, although such payment may have the effect of saving another's property, is not entitled to a lien in the absence of any acquiescence or lying by on the part of the owner or of any request, either express or implied, in the sense of the English law, and the observations of the Court with regard to the inapplicability of the principle of maritime salvage liens were made with reference to the facts of the case. This is shown as well by the arguments of counsel as by the judgments of the learned judges, who took part in the decision. For instance, it was argued for the appellant that in order to establish any claim, the person who made the payment must prove that he had an interest in the policy or that he was requested to make the payment. It was said that a man cannot by paying a debt due from A B without any request from A B make himself A B's creditor, and a fortiori he cannot by so doing give himself a lien on property. And Lord Justice Cotton, in giving judgment, said : "If here there had been circumstances to lead to the conclusion that there was a request by Falcke that this premium should be paid by Emmanuel, then there would be a claim against Falcke or his representative for the money ; and I do not say that there might not be a lien on the policy." page 241. So also Lord Justice Boweii says : " The general prin- ciple is, beyond all question, that work and labour done or money expend- ed by one man to preserve or benefit the property of another do not, according to English law. create any lien upon the property saved or Salvage liens in England. Falcke's case. SALVAGE LIENS. 337 benefited, nor, even if standing alone, create any obligation to repay the LECTURE expenditure," (p. 248). Further on, the learned Judge, after pointing out IX. that there was no express or implied request to Mr. Emmanuel to make the payment, adds : " So much therefore for the idea of a lien or even of a right to be repaid this sum at common law " (p. 250). Similarly Lord Justice Fry says : " I exceedingly doubt whether a mere request by a mortgagee to his mortgagor, though it might give rise to an action for the recov- ery of the sum paid, would create a lien as against the mortgagee upon the property saved by the payment, but it is not necessary to discmts that point " (p. 252). I may add that the true distinction between a maritime salvage and the case before the Court to which it was attempted to be likened, consists in the fact that in the former it is not at all necessary that the person who claims the lien should be under any compulsion to make the payment. In this country, for instance, if a third party volun- tarily pays the revenue, he will not be entitled to recover the money from the owner personally or from the property itself, on grounds of a salvage character, but the case is very different where the payment is made by a person who has an interest of his own to protect, in which case a request will be implied by the English law, although it would be, perhaps, more scientific to say that the obligation here arises out of a quasi-contract. In some cases in England, however, premiums paid by persons claiming but not really possessed of any bond fide interest in the policy or even by the mortgagor himself have been treated as salvage payments. (See the cases cited in Falckev. Scottish Imperial Insurance Company ; also White and Tudor's Leading Cases, vol. II, p. 1242). But these cases can scarcely now be regarded as law. And the same observation will to a certain extent apply to the case of Grinder Chimder v. Mackintosh (I. L. R., IV Calc., 897) where the Court said that as the avowed purpose for which the mortgage in that case was made was to raise money for payment of the government revenue, the payment of which would be in the natnro of insurance of the mortgage property, the mortgagee was entitled to priority. I may mention that English equity does in some cases unquestionably allow a lien to a part-owner or other person having a limited interest in. respect of repairs and even improvements made by them, and there seems to my mind to be no difference in principle between an outlay for repairs and one for payment of head rent, except perhaps that in the latter case the equity is much stronger. (See the cases cited and reviewed in the judgment of Mr. Justice Mitter.) In addition to these cases, we may refer to Exp. Linden (I. M. D. & D. 428) in which it was held that where a man agrees to sell his estate and to lend money to the pur- chaser, he will have a lien for the advances so made as well as for the purchase-money. (Cf. Neesom v. Cla^kson, 4 Ha. 97 ; Harris v. Poyner, I Drew, 174, XVI Jur., 880; Macnolty v. Fitzherbert, III Jur. N. S. 1237, M. R. ; Barrington's Sett, 1 Jo. and H. 142 ; 6 Jur. N. S. 1073, where the tenant for life was allowed for repairs and improvements). I may add that the principle has now been to a certain extent adopted by tho English Legislature (8 and 9 Viet., c. 56, 9 and 10 Viet., c. 101 and 1 0, and 1 1 Viet. c. 1 1 and 113). A lien has also sometimes been allowed in favour of a tenant in common for payments in respect of the estate. (Doddington v. Hallett, 1 Ves. S. 497 ; Exp. Leslie 3 L. J. N. S. Bky. 4 : Harrison Exp., 2 Rose 76 ; Laltc v. Gibson, 1 Eq. C. A. B. R. 291). Indeed, the English Court of Chancery has sometimes gone so far as to recognise a lien in favour of bond fide possessors for permanent improvements made by them (Neesom v. Clarkson, 4 Ha. 97 ; Thome v. Newman, Finch 38. See Swan v. S., 8 Pri. 518 ; Ludloio v. Gray all, 11 Pri. 58 ; Unity Sank v. King, 25 Beav., 72 ; 4 Jur. N. S. 470). The lien of consignees of West India Estates is a recognition of an analogous right which was no doubt originally forced on the English courts of equity by reason of R. B. Q., M. 22 338 LAW OF MORTGAGE. Case of joint-ten- ants. LECTTJBE ^ e difficulty of carrying on cultivation in the colonies without the JX. assistance of consignees in England. (3 Surge's Foreign and Colonial _ j. Law, 359. Coote's Mortgage 422. Fisher's Mortgage 148). On a similar principle a salvage lien may be claimed by a manager of certain under- takings by reason as well of the perishable nature of the works as of the exigencies under which they are carried on. (Fisher's Mortgage 147). I may add that, although mere co-owners have no such lien as ia enjoyed by co-partners in the English Law, a part-owner of a ship has a right to have the gross freight applied in the first instance in pay- ment of the expenses incurred in earning it. (Lindley on Partnership, pp. 683-84.) I ought to mention that, to my mind, not only is the joint- tenant or other limited owner entitled to a lien, but that seems ^0 be the only appropriate remedy, as the other owners are not bound to keep the property against their will, and indeed this is one of the arguments which was employed by the Court of Appeal in Leigh v. DicTison (15 Q. B. D., 60), where the Master of the Rolls, in holding that one tenant in common of a house who expends money on ordinary repairs has no right of action against his co-tenant for contribution, says: "If the law were otherwise a part-owner might be compelled to incur expense against his will ; a house might be situate in a decaying borough, and it might be thought by one co-owner that it would be better not to repair it, p. 65. This objection, however, which applies only to a personal action for contribution, will be obviated if you restrict the part-owner to proceedings in rem. It seems that in the Civil Law and the systems founded on it, a lien may be claimed by a person who advances money for the purpose of repairing or rebuilding a house. It may also be claimed in respect of expenditure incurred by a person possessing only a limited estate. (Burge's Foreign and Colonial Law, Vol. Ill, pp. 346377.) LECTURE X. Subrogation Application of rule Rights of puisne incumbraiicers Rights of surety Entitled to benefit of securities held by creditor How far discharged by relinquishinent of security Security not relinquished by payment Rule of English law Followed in India Co-debtors How far entitled to benefit of securities Purchasers of mortgagor's rights redeeming a mortgage, how far entitled to benefit of subrogation Other cases illustrative of the rule Contribution Principle on which founded Doctrine followed in India Marshalling of securities Rule of English law Adopted by our Courts Distinction between purchasers and incumbraiicers Notice immaterial in the case of a mortgage. IN the last lecture I treated of the various circumstances Subroga- under which a lien is created by operation of law, in- tlon< dependently of the assent of the parties between whom the relation is created. In the present lecture I propose to discuss a class of securities which, although distinguish- able from the class considered in the last lecture, have yet some features in common with them. I refer to cases in which a person, by whom an incumbrance is discharged, is sometimes allowed to stand in the place of the mort- gagee, and to avail himself of the security in precisely the same way as if the mortgagee had assigned it to him. The doctrine of subrogation, as it is called, rests upon ^ n equit- the plainest principles of justice and equity, and is recog- able priu- nized in almost every system of law. You must not, how- Clple> ever, suppose that every person who discharges the mort- gage-debt is entitled to the benefit of the security held by the mortgagee. As a rule, in the absence of an assignment of the security, the person by whom the debt is discharged has no right to avail himself of it. The discharge of the debt extinguishes the security, and the doctrine of subro- gation or involuntary assignment is, in reality, an exception to this rule. We have seen that every person who is entitled to redeem Appiica- acquires, on redemption, the right to stand in the place of tloQofrule - the mortgagee, and that it is not necessary that he should obtain an actual assignment of the mortgage in order that he may avail himself of the security. But there are other cases also in which the discharge of a debt secured by a 340 LAW OF MORTGAGE. LECTURE mortgage is followed by the same result. A surety who pays x> the debt due from his principal is entitled to enforce any security against the debtor possessed by the creditor. " A surety," to use the language of Sir S. Romilly, in his argu- ment in Craythorne v. Swinburne, " will be entitled to every remedy which the creditor has against the principal debtor to enforce every security and all means of payment ; to stand in the place of the creditor, not only through the medium of contract, but even by means of securities en- tered into without the knowledge of the surety ; having a right to have those securities transferred to him, though there was no stipulation for that ; and to avail himself of all those securities against the debtor." The surety is en- titled to the benefit of the securities, although he may not have been aware of their existence, and although they may have been taken by the creditor after the contract of surety- ship has been entered into (Sections 140-141 of the Con- tract Act; consider Forbes v. Jackson, 19 Ch. D., 615, and cases cited therein). It seems that the fact that the cre- ditor has made further advances on the security will not affect the right of the surety on paying off the original debt to claim an assignment (Forbes v. Jackson, 19 Ch. D., 615, overruling Williams v. Owen, 13 Sim., 597.) Indeed in some cases the effect of making further advances might be practically to discharge the surety altogether. (Mutual Life Assurance Co. v. Longby, 32 Ch. D., 460; Beevor v. Luck, L. E., 4 Eq., 537.) The creditor is not entitled to apply the security to the discharge of any other debt than that guaranteed by the surety. (Pledge v. Buss, Johns., 663.) But when the security is given after the contract of suretyship for the debt guaranteed by the surety as well as for other debts of the principal, the creditor is not bound to apply the proceeds either preferentially in payment of that debt or pari passu in payment of all the debts, there being no principle of law or equity by which the rights of the creditor can be so controlled in favour of the surety. (Bank of Bengal v. Radhakissen, III Moore Ind. App., 19.) I may, here mention that, as between themselves, sureties are entitled to the benefit of all securities which may have been taken by any one of them to indemnify himself. But it seems the surety is only entitled, as against the creditor, to the securities given by the debtor, not those given by the co-sureties. (Duncan v. N. W. Bank, 11 Ch. D., 88.) (As to marshalling against sureties and on the Oozter Alt, RIGHTS OF SURETIES. 341 rights of sureties generally, see DeColyar on Guarantees, LECTURE pp. 296-298.) In a late case in the Calcutta High Court, the ques- ffeera Lall tion arose whether or not a surety, by whom the debt had been paid, could proceed against the original debtor upoi the instrument itself by which the debt had been created. The facts were shortly these : the plaintiff brought a suit in the nature of an action of ejectment upon a mort- gage, which had been regularly foreclosed. The defence was that, prior to the mortgage under which the plaintiff made title to the property, the debtor had borrowed money from a third person on the security of that very property, and that the defendant was his surety on that occasion. The money not having been repaid by the principal debtor, the defendant paid the debt, and the creditor, at his in- stance, brought an action against the debtor on the mort- gage bond ; and in execution of the decree obtained by him, the property in dispute was sold and purchased by the defendant. In this state of facts it was contended for the plaintiff that the payment by the surety discharged the debt, and consequently extinguished the security ; and that the defendant under his purchase acquired only the rights and interests of the debtor as under an ordinary execution, and that, as the plaintiff's mortgage was prior in date to the defendant's purchase, the facts stated in the defence were no answer to the plaintiffs suit. This contention was, how- ever, overruled, and Mr. Justice Markby, in giving the judg- ment of the Court, said: " We must decide the question by analogy of the law of other countries ; and it appears to us clear, that, by the law of England and the law of Scotland, and, as far as we are aware, by the general law of Europe, when a surety has paid off the debt of his principal, not only all the collateral securities are transferred to the surety, but by what is called subrogation, the right is also transferred to him to stand in the place of the original creditor, and to use against the principal debtor every remedy which the principal creditor himself could have used. It seems to us, therefore, that the law of this country may be reasonably taken to be that which has been considered equitable in other countries, namely, that the surety is not debarred from proceeding against the original debtor upon the in- strument itself which created the debt by reason of the debt having been paid by himself." (Heera, Lall Samunt v. Syud Oozeer AH, XXI Suth. W. R., 347.) 342 LAW OF MORTGAGE. LECTURE The English law on the subject is now contained in the x - Mercantile Law Amendment Act, 1856 (19 & 20 Viet., Mercantile c - 97), which provides that " every person who being Law Act. surety for the debt or duty of another, or being liable with another for any debt or duty, shall pay such debt or perform such duty, shall be entitled to have assigned to him, or to a trustee for him, every judgment, specialty, or other security which shall be held by the creditor in respect of such debt or duty, whether such judgment, specialty, or other security shall or shall not be deemed at law to have been satisfied by the payment of the debt or performance of the duty; and such person shall be entitled to stand in the place of the creditor, and to use all the remedies, and, if need be, and upon a proper indemnity to use the name of the creditor, in any action or other proceeding at law or equity, in order to obtain from the principal debtor, or any co-security, co-contractor, or co-debtor, as the case may be, indemnification for the advances made and loss sustained by the person, who shall have so paid such debt' or performed such duty ; and such payment or performance so made by such surety shall not be pleadable in bar of any such action or other proceeding by him." Rights of The surety being entitled to use against the principal surety. debtor every remedy which the creditor himself could have used, it follows that, if the principal creditor improperly deals with the securities or relinquishes them, the surety will be discharged, at least (a) to the extent of the value of the security (Contract Act, Sec. 141, Narayan v. Gonesh, VII Bom. H. C. Rep., 118.) But there is an important dis- tinction between securities existing at the time that the con- tract of suretyship is entered into, and those which are taken subsequently. A surety is entitled to the benefit of the former class of securities absolutely ; but, as regards the latter, his right to avail himself of them arises only when he actively puts himself in motion (Sees. 141, 142 of the Contract Act.) These provisions of the Indian Act seem to have been modelled on the English case of Neiuton v. Chorlton (10 Hare, 646) a case, however, of more than doubtful authority (see Forbes v. Jackson, XIX Ch. D., 615 ; Campbell v. Roih- ivell, XL VII L. J. Q. B., 124; XXXVIII L. T., 33.) The (a) I say at least, because the provisions of the Contract Act are very far from being distinct on the point. Compare Section' 139, illustration (b), with Section 141 of the Act. RIGHTS OF CO-DEBTORS. 343 surety, however, will be discharged only if the creditor is LECTURE guilty of misconduct or wilful neglect, as he is not bound * to make the most of his securities, although no doubt on general principles he must conduct himself with good faith towards the surety. You will observe that the English Statute, following in English this respect the law of other countries, allows to the surety " the not only the benefit of any security possessed by the cre- ditor, but also the benefit of any judgment which may be held by the creditor. The same right is extended to one of several debtors who may have been obliged to pay the whole of the debt due to the creditor. The co-debtor has the same equity as the surety, and ought in justice to have the same facilities for reimbursement. It is true that there are some expressions in the judgment of the Court in Degum- Imree Dabee v. Eshan Chunder Sen (IX Suth. W. R, 230), which would at first sight seem to show that a co-debtor cannot have the benefit of any securities held by the cre- ditor ; but the point really decided in the case was, that a co-debtor purchasing a judgment against himself and the other debtors, had no right to issue execution on the judg- ment for the purpose of recovering the whole amount from the other debtors. It is, however, unfortunate that the Court should have rested their judgment in great measure upon the English case of Dowbiggin v. Bourne (2 Young and Collyer, 462), which followed Copis v. Middleton (Turner and Russell, 231 ), in which a somewhat refined distinction was taken between securities that were merged by the judgment, and those that were available to the surety notwithstanding the judgment. The rule, however, laid down in those cases was considered to be unsatis- factory ; and, as we have already seen, the English Legis- lature has since passed an Act for the purpose of giving increased facilities to sureties and co-debtors for reim- bursement. I have already said that, as the law stands at present, one Case of of several joint-debtors cannot have the benefit of any Joint-debt- judgment held by the creditor. The procedure of our Courts in matters of execution is ill adapted to the deter- mination of the various questions which must necessarily arise in such cases ; but, as I have already pointed out, it does not, by any means, follow that the debtor will not be permitted to avail himself of any securities held by the creditor, and which the creditor might have enforced 344 LAW OF MORTGAGE. LECTURE against his debtors. I may here remind you that where a x - person who is only interested in a portion of the mortgaged premises is compelled to pay the whole debt, he will be entitled not only to contribution, but also, as we have seen, to a lien on the share of the other mortgagors. (Punchum Singh v. All Ahmad, I. L. R., IV All., 58 ; Bhagirath v. Nanbut Singh, I. L. R., II All., 115 ; Eira Chand v. Abdul, I. L. R., I All., 455 ; Gobind Pershad v. Divarka Nath, XXV Suth. W. R., 259.) And it would seem that he will not be deprived of this right, although the mortgagee by bring- ing his action against only one of the parties might have put it out of his power to bring a second suit on his mort- gage. (Jagut Narayan v. Qutub Husain, I. L. R., II All., 807.) other ap- There are several other cases in which the -law allows a plication of person who discharges an incumbrance to stand in the place 11 e of the mortgagee. A purchaser of the debtor's equity of re- demption, who pays off incumbrances on the purchased pro- perty in order to acquire a safe title, may, under certain cir- cumstances, use such incumbrances as a shield against the claims of a subsequent incumbrancer who may not have been paid off. (Syud Ajid Hossein v. Hafiz Amed Reza, XVII Sutb. W. R., 480 ; and cases cited therein. Compare Raghu- nathPrasadv. Jurawan Rai, L L. R., VIII All., 105.) (fr) The question, however, is not entirely free from difficulty, and I reserve a fuller discussion of it for the last lecture. Many other instances of subrogation will also be found in the books. Thus, in the case of Syud Mohamed Shamsal Hasla v. Sheivak Ram, which was a suit by a reversioner to avoid a conveyance by a Hindu widow, it appearing that there was a valid mortgage upon the property for a certain sum which had been redeemed by money paid into Court by the defendant, the Court refused to make a decree for the plaintiff, except on the condition that the (&) lu Dilowar Salioy v. Bolaltee Ram, I. L. R., XI Calc., p. 258, where a purchaser of a mortgaged property with whose money a prior mortgage- had been paid off claimed to be entitled to the benefit of the first secur- ity, the Court was of opinion that, in the absence of anything to show the relative dates of the conveyance and the discharge of the mortgage debt, or that the money was paid by the purchaser himself and not by the vendor out of the purchase -money, the purchaser was not entitled by subrogation to the benefit of the first mortgage. This, however, would seem to be somewhat unduly tightening the meshes of techni- cality (see the observations of their Lordships of the Privy Council in Gocool Dass v. Pooran Mull, I. L. E., X Calc., 1035 Cf. 1014). See also Lecture XII, post. CONTUIBUTION. 345 plaintiff should pay to the defendant the amount of LECTURE the mortgage which had been redeemed by him. (XIV Suth. W. R., 315 ; S. C., on appeal, XXII Suth. W. R., 409 ; Nilopandurang v. Ramaputtoji, I. L. R., IX Bom., 35 ; Kuvarji v. Moti Haridas, I. L. R., Ill Bom., 234 ; Baikesar v. Dullabh, VIII Bom. H. C. Rep., 31.) An analogous rule is followed when a conveyance is set aside, the Court fre- quently directing that the conveyance should stand as a security for the amount actually advanced to the plaintiff, or applied to his benefit. I now come to the subject of contribution. Thin Contri- involves the determination of the proportions in which bution< two or more owners of an estate, subject to a common charge, ought to contribute to its redemption, or what is the same question under another aspect, the extent of the right which one of such persons, who has been compelled to discharge the common debt, has to be reim- bursed by the others. This is only a branch of the general law of contribution, and rests on the plainest principles of justice and equity. Any other rule would leave it open to the creditor to select his own victim, and from caprice or favouritism what ought to be a " common burden" might be turned into " a gross personal oppression." We have already seen that a mortgage-debt is one and indivisible, and if several distinct parcels of land are hypothecated to the creditor, and subsequently pass to different purchasers, the creditor may proceed against any one of those parcels ; and the only way to prevent a sale or foreclosure would be to tender to him the whole of the mortgage debt. It is but reasonable that, in such a case, the person who is compelled to discharge a common burden, should be permitted to seek indemnification from the other purchasers, and no fairer rule can be sug- gested than that each of the purchasers should contribute according to the value of the property purchased by him. (Bhoynib Chunder Module v. Nudear Chand Pal, XII Suth. W. R., 291 ; Kaliprosonno v. Kamini, I. L. R., IV Calc., 475 ; Newmarch v. Storr, 9 Ch. D., 12) (c). It would (c) The same rule holds good, where the properties are subject to two or more incumbrances, thus where three properties were twice mortgaged, and the second mortgagee afterwards at an execution sale purchased the Interest of the mortgagor in two of the properties, each property was held liable to contribute rateably in proportion to its value first to the debt due on the first mortgage, and next to the debt due on the second mortgage. (Ahmed Beg v. Row NuMtar') Court minute book 34G LAW OF MORTGAGE. LECTURE be manifestly unjust to allow a mere accident to cast upon Xt a particular portion of the land, and, therefore, upon the owner of that portion, a burden which was originally im- posed, and which ought in fairness, notwithstanding the proceedings of the creditor, to be laid equally on the whole, and, therefore, on all the purchasers ; and, as I have already said, no proportion can be suggested which is so equitable as that of the respective values at the date of the severance. English It would seem, although the point has never been point" the directly raised that, as no personal liability is incurred by the purchaser except where he is under a covenant to pay, the plaintiff will be only entitled to a charge on the portion purchased by the person from whom he seeks to be reimbursed. You will find the law similarly laid down by Story in his Equity Jurisprudence : " Cases may be easily stated where apportionment of a common charge, or, more properly speaking, where contribution towards a common charge seems indispensable for the purposes of justice, and accordingly has been declared by the common law in the nature of an apportionment towards the discharge of a common burden. Thus, if a man owning several acres of land is bound in a judg- ment or statute, or recognizance, operating as a lien on the land, and afterwards he alienes one acre to A, another to B, and another to C, &c. ; there, if one alienee is compelled, in order to save his land, to pay the judgment, statute, or recognizance, he will be entitled to contribution from the other alienees. The same principle will apply in the like case, where land descends to parcen- ers who make partition, and then one is compelled to pay the whole charge ; contribution will lie against the other parceners. The same doctrine will apply to cofeoffees of the land, or of different parts of the land." ( 477.) And again in 484 the learned author says : " Let us suppose a case where different parcels of land are included in the same mortgage and these different parcels are afterwards sold to different purchasers, each holding in fee and severalty the parcel sold to himself. In such case, each purchaser is bound to contribute to the dis- charge of the common burden or charge in proportion December 20th, 1880, and on further directions December 8th, cited in Belchambers of the Civil Courts, p. 327. As to the right to an appor- tionment at the instance of a puisne mortgagee, sec Gunga v. Iliurixh, VI Calc. L. Rep., 336. CONTRIBUTION. 347 to the value which his parcel bears to the whole in- LECTURE eluded in the mortgage." The principle is illustrated in the VI - case of Jeetram Dutt v. Durga Doss Chatterjee (XXII Suth. j w ^ v . W. R., 430). It appears that a creditor, who had a charge Dur ffa in the nature of a simple mortgage on two properties belong- Da "' ing to two different persons, levied the whole of the debt from one of the debtors. The person who was obliged to repay the whole of the debt brought a suit for contri- bution against his co-debtors, and in execution of the decree obtained by him, seized the property which had belonged to his co-debtor, and which formed a portion of the land on which the debt due to the principal credi- tor was secured. The creditor, who had in the meantime purchased the property, asked that the attachment might be withdrawn, and on the dismissal of the application depo- sited in Court under protest, the money due to the judg- ment-creditor, which was subsequently paid away to him. He then brought a suit for the money which he had been obliged to pay under protest, but the Court was of opinion that he was not entitled to recover back the money, apparently because the judgment-creditor had a lien on the land which formed a portion of the property on which the debt was originally secured ; and that he was entitled, "in respect of the security given for the original debt, to stand in the same position as the cre- ditor whose claim on th;it security had been satisfied." (Bhagirath v. Naiibat, I. L. R., II All., 115; Pancham Singh v. All Ahmad, I. L. R., IV AIL, 58 ; Asansal v. Vamana, I. L. R, II Mad., 223.) The general rule on the subject is, as I have stated, that General if two estates subject to one mortgage come to be owned e - " the by different persons, they must rateably bear the burden of the mortgage. But the rule is subject to the proviso that there is nothing to show a contrary intention. Thus, if part of an incumbered estate is sold with a cove- nant against incumbrances, the burden as between the mortgagor and the purchaser will be thrown entirely upon the residue in favour of the purchaser, and a similar equity will arise in favour of a person to whom part of the estate has been given in exchange. (Consult in re Athill, 16 Ch. D., 211, and cases cited therein.) In the absence, however, of any such covenant or any intention to exoner- ate any portion of the property from the debt, a right of contribution will arise in favour of the person who 348 LAW OF MORTGAGE. LECTURE has been obliged to satisfy the mortgage-debt. It is x - impossible to lay down any general rule on the subject, as the question must depend upon the language of each document. In a recent case decided by the Cal- cutta High Court (Mathura Nath Chattopadhya v. Krisna Kumar Ghose, I. L. R., IV Calc., 369), it appears that the plaintiff and the defendant respectively purchased at differ- ent dates portions of a property on which there was a mort- gage. In the deed of sale to the plaintiff, which was posterior to that of the defendant, there was an undertaking that the plaintiff would discharge all the liabilities, of the mort- gagor, including the mortgage on the property. The mort- gagee having obtained a decree against the property, the plaintiff paid off the entire debt, and brought a suit for con- tribution against the defendant who contended that, having regard to the undertaking of the plaintiff, he was not entitled to claim contribution. I may here mention that it was found as a fact, that the defendant was not aware of the mort- gage, and that he had paid a large sum of money for the property which he would not have done if he thought that he was only buying the equity of redemption. But the Court, notwithstanding, gave judgment for the plain- tiff upon the ground that there was nothing in the defend- ant's deed of sale to show any intention of the parties to exonerate the defendant from any liability which the law would cast upon him. The case, however, I am bound to add, seems feo be of somewhat doubtful authority. The English law on the subject is thus formulated in a well-known treatise on the law of Vendors and Purchasers. " If two estates, X and Y, are subject to a common charge, and estate X be sold to A, A will, as against the vendor and his representatives, have a primd facie equity, in the absence of express agreement, and whether or no he had notice of the charge, to throw it primarily on estate Y, in exoneration of estate X (see section 56 of the Transfer of Property Act). If, then, estate Y be subsequently sold to B, with notice of the charge and of the prior sale of X to A, B purchases with notice of A*s equity, and the entire charge must rest primarily on Y. If B, at the time of his purchase, have notice of the charge as affecting Y, but be not led to suppose that estate X is also subject to it, or if he purchase without notice of the charge, and A purchased with notice of the charge as CONTRIBUTION. 3-49 affecting Y; in either of these cases, it is conceived, B's LECTUBK equity is inferior to A's, and the entire charge must rest primarily upon Y. If B purchase with notice of the charge as affecting Y, and with notice of the sale to A, and be led to suppose that X is subject to the charge, or if both purchase without notice of the charge, B's equity would appear in either case to be equal in degree to A's, so that, either party, by taking a transfer of the charge and the securities (suppos- ing them to be such as to give the incumbrancer a claim at law against the two estates), would, it is conceived, be able to throw the charge exclusively upon the other" (d). (Darts' Vendors and Purchasers, Vol. II., pp. 1035, 1036). Questions of considerable difficulty occasionally arise in cases in which some particular property is said to be the primary security for the mortgage-debt in which case the debt will be thrown entirely on such property instead of being distributed rateably. But the intention that some particular property should be the primary security should be clearly shown. Thus where several properties are mortgaged at the same time by different deeds, the mere fact that one of the mortgages is call- ed a collateral security will not throw the mortgage-debt primarily on the other properties mortgaged to the creditor. (Early v. Early, 16 Ch. D., 214 ; In re Athill, 16 Ch. D., 211). So, again, where a debtor mortgages certain land and then mortgages other land for the same debt and further advances the whole amount will primd facie be treated as one debt, and must be borne rateably by the several properties. (Leonino v. Leonino, 10 Ch. D., 460, and the cases there cited. See also Stringer v. Harper, 26 Beav., 33 ; Evans v. Wyatt, 31 B., 217). But no doubt a person may make a mortgage of two estates in such a manner that though the incumbrancer may proceed against both or either of them yet if the equity of redemption devolves on two or more different persons the estate which was the primary security shall remain the primary security as between the persons claiming under the mortgagor. And it is scarcely neces- sary to state that the mortgagor may do this not only by (rf) Where the property is subject to a concealed incumbrance, it seems that a purchaser of part, having merely the equitable estate, may throw the entire charge upon a subsequent innocent purchaser of the equitable estate in the residue (Dart, citing Hartly v. C? Flaherty, L. &, G. temp. P., 208, 216. But see Sujjden, Ed. 13, p. GH.) 350 LAW OF MORTGAGE. LECTUBE express words but by implication ; but the implication x - in such cases must be very clear. (Marquis of Bute v. Cunningham, 2 Russ., 275) (e). I now come to the doctrine of marshalling of secu- rities, which is intimately connected with the right of subrogation, which I have already considered. Whenever a person has a lien on two properties, and another a charge only on one of such properties, the Court will com- pel the mortgagee whose debt is secured on two properties, to take his satisfaction in the first instance out of the estate not in mortgage to the other, provided that his rights are not in any way prejudiced, or his remedies im- properly controlled. The very same result is accomplished in some systems, by allowing the mortgagee who has a mortgage only upon one estate to stand in the place of the other mortgagee, if the latter shall have taken his satisfaction out of that estate (/). Marshall- The doctrine of marshalling rests upon the principle, ing of Se- that a person having two funds to resort to should not be lties ' permitted from wantonness or caprice to disappoint another who has only one fund to go upon. If, therefore, the person with a claim upon two funds elects to proceed against that to which alone the right of the other is limited, the latter will be allowed to stand in the place of the former, and to satisfy his demand out of the other fund. The result of the English and American authorities on the subject is thus stated by Story in his Equity Juris- prudence ( 633, 642, 643) : Reason of " The general principle is that where one party has a the rule. jj en on or interest in two funds for a debt, and another (e) In England owing to the distinction between real and personal estates and the somewhat artificial rules on the subject of exoneration acted upon by the Court of Chancery, the Legislature was obliged to interfere by passing several successive statutes, the first of which is known by the name of Locke King's Act (17 and 18 Viet., c. 113, 30 and 31 Viet., c. 69, 40 and 41 Viet., c. 34). As the law now stands in the absence of any expression of a contrary intention in writing, the mort- gage-debt must primarily be discharged out of the mortgaged property. I am not aware of any case in this country in which the question has been raised, but if it be ever raised, it will, I take it, be decided on the lines laid down by the English and partly adopted by the Indian Legislature. (See Section 154 of the Indian Succession Act which ap- plies to the Wills of Hindus, &c.. in the Lower Provinces of Bengal and in the Towns of Madras and Bombay). (/) As to the right of the Court to restrain a mortgagee from proceed- ing fraudulently or oppressively, in addition to the cases cited in Lec- ture IV, see Sygonatk v. Doolhun, XXIV Suth. W. R., 83 ; Krishen Pertab v. Nundcoomar, XXV Suth. W. 11., 388. MARSHALLING. 3-jl party has a lien or an interest in one only of the funds for LECTUBE another debt, the latter has a right in equity to compel x - the former to resort to the other fund in the first instance for satisfaction, if that course is necessary for the satisfac- tion of the claims of both parties, whenever it does not trench upon the rights or operate to the prejudice of the party entitled to the double fund. " " If A has a mortgage upon two different estates for the Suinmar same debt, and B has a mortgage upon only one of the of English estates for another debt, B has a right to throw A in the Ia * " the first instance for satisfaction upon the security which he, pc B, cannot touch, at least where it will not prejudice A's rights or improperly control his remedies." It is some- times said that unsecured creditors in this country have no right to compel a mortgagee to resort in the first instance to the mortgaged property so as to leave the other properties free or to allow the disappointed creditors to stand in the place of the mortgagee in the event of the mortgage being satisfied ; but as I have already pointed out, there does not appear to be any such general rule. (See Lecture IV.) The case sometimes cited in support of the proposition only lays down that the general creditors cannot compel the mortgagee of two or more estates to resort to any particular property comprised in his mort- gagee in preference to another. (Kristo v. Ram, I. L. R., VI Calc., 142. Of. Rajkishor v. Bhadu, I. L. R., 7 Calc., 78.) I need hardly point out that, ordinarily, a subsequent Rights of purchaser of one of the estates has just as strong a claim purchaser, as a mortgagee. (Rodhmal v. Ramharakh, I. L. R., VII All., 711 ; Bishonauth Mookerjee v. Kisto Mohun Mookerjee, VII W. R., 483 ; Mussamut Nowa Koowor v. Sheck Abdul Ruheem, W. R., 1864, p. 374. But see Lola Dilwar v. Bolakee Ram, I. L. R., XI Calc., 258 ((7).) There is, however, (n .although it may perhaps be doubted if the reservations by which the doctrine is qualified have been sufficiently attend- ed to in some of the reported cases on the subject. In the case of Mussamut Nowa Kowar v. Sheikh Abdul Anpiica- Rohim (Suth. W. R., 1864, p. 374), one of the estates in |( 8 . f e tlie mortgage having been sold under an execution levied by an ordinary creditor, the purchaser under the execution resisted the attempt of the mortgagee to enforce his secu- rity against the property which had been purchased by himself, without in the first instance proceeding against the properties which still belonged to the mortgagor. The defence was allowed, and the Court, in giving judgment, observed : " The sale (i.e., the execution-sale) does not release that estate from the mortgage, but it forces the plaintiff to take measures in the first place to recover the amount due to him from the remaining estates included in his mortgage-deed. If any balance remains after he has realized all which he can realize from these two remaining estates, he can then return to the third estate to recover the balance. No injustice is done to the plaintiff by requir- ing him to take satisfaction out of funds which are within his power for this purpose, and so placed by the deed ; while, on the other hand, very great injustice might be done to other parties by allowing plaintiff to proceed against the estate which has been already sold." It is probable, although the fact does not appear from the report, that the purchaser bought without notice of the mortgage, and paid, not for the equity of redemption, but for an absolute interest in the property. Even in that case, however, it is extremely doubtful, as I have already explained, if the purchaser under the execution could set up the defence of a bond jide purchase for value and without notice of the incumbrance. (Bapuji Baled v. Satyabhama Eai, I. L. R., VI Bom., 490 ; Kinderly v. Jervis, 22 Beav., 1 ; Beavan v. Earl of Oxford, 6 De G. M. & G., 507 ; Bhikaji v. Yoshvantraw, I. L. R., VIII Bom., 489 ; R. B. G., M. 23 354 LAW OF MORTGAGE. LECTURE Ramlochun v. Ramnamin, I Cal. L. Rep., 296 ; Dolphin x - v. Aylward, L. R., 4 H. L., 486.) Cases on There are other cases also in the books iu which secu- the point, rities have been marshalled, which you may usefull}' consult. (Tulsi Ram v. Munu Lall, I Suth. W. R., 353 ; consider Bissonath Mookerjee v. Kisto Mohun Mookerjec, VII Suth. W. R., 483 ; Chetoosee Churria v. Bany Madhub Dass, XII Suth. W. R., 114,) The principle of marshalling, however, as I said, cannot be exercised to the prejudice of a third party. Thus, the Court will not marshal in favour of a second against a third mortgagee. Nor it seems will there be any marshalling to the prejudice even of a person claiming under a voluntary conveyance. If, however, a person by his mort- gage takes, expressly subject to and after payment of the prior mortgagees, marshalling may be enforced as against him. (See the Cases collected in II White and Tudor's Leading Cases, pp. 111-118.) LECTURE XI. Pledge of moveables Paucity of authority Contract Act Definition of pledge Validity of hypothecation of moveables Danger of fraud Distinc- tion between a pledge and a mortgage of chattels Power of sale Pawnee's lien extends to interest and necessary expenses Extraordinary expenses Right of pawnee to tack subsequent advances Rule of English law Right of pawnee to make use of pledge Degree of diligence imposed on pawnee Differences between Indian law and English and Roman law on the point Pawnor's right to accessions Right of redemption Passes to the legal representative Possessory heirs General and special Unpaid seller's lien May be varied Uight of resale Differences between Indian and English law Lien of artificers Banker's and attorney's lien for general balance of account. I NOW propose to treat of pledges of moveable property. pi e dge of This class of securities is, by no means, unimportant, moveables. although, in a country like India, the wealth of which mainly consists in agriculture, they are not so common as in commercial countries. It is for this reason that there are so few cases on the subject in the books. Pledges, however, occupy a distinct chapter in the Contract Act ; and, although it cannot be said that the Legislature has dealt with every point in connection with the subject, it has certainly removed a good deal of that obscurity which must necessarily gather round such a topic in the absence of well-defined rules. A pledge is defined in the Act to be the "bailment of Definition goods for the payment of a debt, or performance of a pro- of P led s e - mise "(a}. But, although the bailment itself is called a pledge, the bailor and bailee are severally called pawnor and pawnee, a change of phraseology for which it is somewhat difficult to account. The property pledged may be any- tiling of a personal nature, although not goods in the ordi- () Of. sec. 58, Transfer of Property Act, where the promise must be such as to give rise to a pecuniary liability. It is said in Benjamin on Sales, p. 14, that there may be a valid pledge, although the goods remain in, or are returned to, the actual possession of the pawnor as trustee for the pawnee, and for this proposition, Martin v. Reid (C. B., N. S., 730) ; Reeves v. Capper (5 Bing. N. C., 136), and Langton v. Waring (18 C. B.. N. S., 315), are cited as authorities. (Cf. Mnjerstein v. fiarbei: L. R., 2 C, P., 52.) 356 LAW OF MORTGAGE. LECTURE XI. The Con- tract Act. nary sense. Thus, money debts, for instance, choses in action, shares in a company and even patent rights may be given in pledge. (Kemp v. Westbrook, 1 Ves., S. 278 ; Roberta v. Wyatt, 2 Taunt, 268) (6). You will have observed from the definition of a pledge, that it must be accompanied by a delivery of possession, which, it is hardly necessary to point out, may be either actual or constructive ; but a mere license to take possession will not be enough. (Ex-parte Parsons, 16, Q. B. D., 532.) The Act is silent on the subject of the hypothecation of moveables. I told you in the introductory lecture that, in most modern systems of law, the hypothecation of moveables is, either not permitted at all, or is fenced in by a multitude of rules which are absolutely necessary for the prevention of fraud (c). We do not purchase land with- out examining the title-deeds, but moveables are daily transferred from one person to another, simply on the faith of the vendor's possession ; and one of the most difficult problems which modern legislation has to solve is the reconciliation of the interests of commerce with the pre- vention of fraudulent transfers of moveables by persons in possession of them. It is, therefore, to be regretted, that the Contract Act is silent on the subject of hypothe- cation of moveables. We must not, however, infer from (&) The Contract Act contains no definition of goods in the chapter on pledges. It may be here stated that there may be a contract for a pledge of goods not in existence, (Story on Bailments, p. 270), and even at common law there may be a valid mortgage of property of a fluctuat- ing nature, as, for instance, the stock of a tradesman. (Spence Vol. II, 776.) (c) In the French law there can be no hypothecation of moveable property (Code Civil, sections 2114, 2120). In this respect it agrees with the laws of most of the Continental States of Europe and of the United States of America and also of Scotland. (Burge, Vol. 3, p. 573. Story on Bailments, pp. 265, 273.) The same rule obtained under the Coutume de Paris and the Coutumes de Normandy and still prevails in Jersey and Guernsey. {Haylcy v. Bartlett, 14 Moore, P. C., 251.) The gage of the French law like the pledge of the English law, requires that the security should be delivered to and remain in the custody of the credi- tor or of a third person appointed by the parties for the purpose. (Code Civil, sections 20742076.) An exception, however, is recognized, in favour of maritime hypothecation. According to Sir William Jones, the distinction between pledging and hypothecation was originally Attic, although according to the same authority hardly any part of the Athenian laws on this subject can be gleaned from the ancient orators except what relates to bottomry in some speeches of Demosthenes. (Collected Works of Sir William Jones, Vol. VI, p. 654.) I may mention that on the same page the learned author refers to the peculiar doctrine of the Mahomedan law in regard to the loss of pledges as affecting the rights of the pledgee. MORTGAGE OF GOODS. 357 the silence of the Legislature that such transactions are LECTURE invalid in this country, or that they may not even be en- XI - forced against bond fide purchasers without notice. In the case of Deans v. Richardson (III All. H. C. Rep., 54), the Allahabad High Court affirmed the validity of a mortgage of moveable property, although unaccompanied by delivery of possession. In giving judgment, the Court observed : "Now, without going at length into the numerous English Cases on authorities cited by the learned counsels in the course of the P int - their arguments, we may lay it down as the result of the latest rulings, that, by the common law of England, where goods are mortgaged and left in the possession of the origi- nal owner, the circumstance that they are so left is not to be held as a fraud 'per se' rendering the mortgage liable to be defeated as between the mortgagee and third parties, such as bond fide purchasers or judgment-creditors ; but when possession is left with the mortgagor, this is a cir- cumstance which warrants the Court in leaving it to the jury to determine whether or not the mortgage was frau- dulent and colourable, or otherwise. We are not aware that any difference. prevails between the law on this point, which has heretofore been accepted in this country, and the English common law. When recently the proposed Code of Contract Law was discussed in this country, the provi- sion which the Indian Law Commissioners proposed for the security of bond fide purchasers of chattels from per- sons in possession was not only denounced as at variance with the received practice of the Courts, but as undesir- able in this country. We do not feel at liberty to hold that the rule which has heretofore been accepted is so inequitable that we are at liberty to disregard it in our judgment. The circumstances of each case should be close- ly scanned ; and, where it is shown that the original deal- ing is bond fide, it should be supported, notwithstanding there has been no delivery. In the present case no fraud other than alleged legal fraud and laches is imputed to the Bank. It is not denied that the advance was made and the security bargained for ; it is only urged that the Bank should have taken possession at least when failure occur- red in payment of the loan. The Bank was not, in our judgment, bound to take possession immediately after default was made. The machines were the means whereby the debtor earned moneys ; and it may, therefore, have been imagined that, in course of time, the debtor would 358 LAW OF MORTGAGE. LECTURE be in a position to discharge his debts if indulgence were XI - shown him. The Court, after considering the arguments urged, finds that the property in suit passed to the auc- tion-purchaser, subject to the lien created in favour of the Bank ; and a decree will issue accordingly in favour of the Bank." This doctrine was adhered to iu the subsequent case of Shy am Surder v. Cheytaloll, and the mortgagee was allowed to enforce his security against a purchaser without notice. (Ill All. H. C. Rep., 71.) We must not, however, forget that there is considerable danger of fraud in such cases ; and in England the legislature has found it necessary to make stringent provisions for the protection of creditors generally in a series of Acts known as the Bills of Sale Acts. Distinction It may here be necessary to notice the distinction mortgage between a mortgage and a pledge of chattels. A mort- and pledge, gage, although it is subject to a condition, passes the whole title to the creditor, but a pledge passes only what English lawyers call a special property. " A mortgage is a pledge and more ; for it is an absolute pledge to become an absolute interest, if not redeemed at a certain time. A pledge is a deposit of personal effects, not to be taken back but on payment of a certain sum, by express stipula- tion or the course of trade to be a lien upon them." (Jones v. Smith, 2 Ves. Jun., 378. See also ex-parte Official Receiver in re Morrit, 18 Q. B. D., 222 ; Halliday v. Holgate, L. R., 3 Ex., 302 ; Donald v. Suckling, L. R., 1 Q. B., 594.) The mortgagor of chattels may, therefore, be allowed to retain possession till default, but such a proceeding is open to the same objections as a hypothecation. As a neces- sary consequence of the distinction between a pledge and a mortgage of chattels, a pledgee is only entitled to an order for sale, while a mortgagee is only entitled, in the absence of any agreement to the contrary, to an order for foreclosure. (Carter v. Wake, 4 Ch. I)., 605 ; ex-parte Offi- cial Receiver in re Morrit, 18 Q. B. D., 222.) It is scarcely necessary to state that the pledger by virtue of his general property may sell all his right in the pledge, and similarly the pledgee may assign his interest in the pawn either absolutely or conditionally by way of pledge to another person (d.) It would not, however, be always safe for him to (rf) The interest of a pledgee in redeemable pledges may be taken in execution. In re Rollason, 31 Ch. D., 495 ; Cf. Halliday v. Holgate, L. R., 3 Ex., 299 ; Mores v. Co/iham, Owen,, 123. SALE BY PLEDGEE. 359 do so without a previous demand of his money from the LECTUUE pledger. (France v. Clark, 2G Ch. Div., 830.) It seems that XI - in England the gift of a specific article in pawn is a full gift, and the executor must redeem it. (Ashburner v. Macguire, 2 Bro.,C. C., 3; Knight v. Dams, 3 My. and K., 358; Bothamby v. Sherson, L. R., 20 Eq., 304.) A different rule, however, has been laid down by the Legislature in this country. (Sec. 154- of Act X of 1865 extended to the Wills of Hin- dus, &c., in the Lower Provinces of Bengal, and in the towns of Madras and Bombay by Act XXI of 1870. sec. 2.) To return. If the pawnor makes default, the pawnee may Rj g ] lt O f sell the pledge of his own authority and without judicial sale of process. Where no time is fixed for redemption, the pledgee pz " must give notice to the pledger to redeem before he is at liberty to sell. (Pothonier v. Dawson, Holt, N. P. Rep., 383.) But he is bound in every case to give previous notice of the sale to the pawnor. If, however, there is any express agree- ment as to the mode or time of selling, it will ordinarily regulate the rights of the parties. The pawnee may also, at his option, bring an action against the pawnor, and retain the goods pledged to him as collateral security. The lien of the pawnee extends not only to the principal debt, but also to the interest whether ex-contractu or ex-mora, as well as to any necessary outlay in the preservation or custody of the pledge (e). The language of the law, however, leaves us in some uncertainty whether the right of the pawnee to interest and necessary expenses is confined to a bare right of detention, or whether he is entitled to retain the amount out of the proceeds of the pledge. The Legislature could hardly have intended to confer the somewhat precarious right of a bare lien in such cases. But it is unfortunate that it has expressed itself in language which is certainly open to misconstruction. It is hardly necessary to observe that the pawnee may Sale obtain a sale of the pledge through judicial process, and -Jj^f^ having regard to the jealousy with which a private sale process, is regarded, and the possibility of further litigation, a sale through the intervention of a Court of Justice would certainly seem to be desirable in all ordinary cases. In (e) It has been held in England, that if a person transfers shares iu a company, by way of mortgage, and the mortgagee as registered owner becomes liable for calls or other payments he cannot compel his mortgagor to indemnify him, unless he comes to redeem. (Phene v. Gil- Ian, 5 Hare, 10.) 360 LAW OF MORTGAGE. LECTUUE commercial transactions, however, this is not always either XI - practicable or convenient ; but the pawnee, as a fiduciary vendor, is bound to attend to the interests of the pawnor, and an improper sale will certainly be set aside as an abuse of the duty cast upon him. But you must remember that there is not the same danger of fraud in the sale of chattels as there is in the sale of land. Moveables may be appraised with sufficient accuracy for all practical purposes, and compensation in money may always be made, but the case is very different with landed property. Besides, the exigencies of commerce may absolutely require, in many cases, a prompt sale of goods; but I need hardly point out that the analogy cannot be safely extended to land. I have, however, dwelt at length on the subject in a preceding lecture, and if I recur to it, it is only to point out that a power of sale, which may be safely given to a pawnee, may yet be denied to a mortgagee of imrnoveable property. I ought, perhaps, to add that in most conti- nental systems as well as in Scotch Law, a pledge can only be sold under a decree of Court (Story on Bailments, p. 282.) Expenses. j omitted to mention that, extraordinary expenses for the preservation of the pledge, expenses which could not have been foreseen, may be recovered by the pawnee from the pawnor ; and this, although by some accident they might not ultimately benefit the pawnee (/). There is, however, this distinction between expenses of this class and necessary expenses. In the case of necessary expenses, the law authorizes the pawnee to retain the pledge till he is reimbursed ; while in the case of extraordinary charges, the pawnee, it 'is said, has a right of action against the pawnor for the outky, and it is not stated whether he can add it to the amount of his lien. It is, however, doubtful whether the Legislature really intended to make any such distinction, although the language of the sections might bear such a construction. In the absence of any con- tract to that effect, the pawnee may not detain the pledge for any other debt than that for which the goods were Tacking, pawned to him. The right of tacking, however, is recog- nized to a limited extent, the Court being bound to pre- sume, in the absence of any evidence to the contrary, that subsequent advances made to the pawnor were made on (/) As to expenses not necessary but merely useful, see Story on Bail- ments, pp. 27i) 319. TACKING. 3(jl the security of the pledge, and the pawnor is not entitled LECTURE to redeem, except on condition of repaying the original XI - debt, together with the subsequent advances ((/). It would seein that this qualified right of tacking may be enforced, not only against the pawnor, but also against creditors and purchasers, no distinction being apparently made by the Act in favour of the latter. The rule of the English and American law on the point is thus stated by Mr. Justice Story in his Equity Jurisprudence, 1031 : " A subsequent advance made by a mortgagee or a pledgee English of chattels would attach by tacking to the property law on the in favour of such mortgagee, when a like tacking might point ' not be allowed in cases of real estate. Thus, for instance, in the case of a mortgage of real estate, the mortgagee cannot, as we have seen, compel the mortgagor, upon an application to redeem, to pay any debts subsequently con- tracted by him with, or advances made to him by, the mortgagee, unless such new debts or advances are distinct- ly agreed to be made upon the security of the mortgaged property. But in the case of a mortgage or pledge of chattels, the general rule, or at least the general presump- tion, seems the other way. For it has been held, that, in such a case, without any distinct proof of any contract for that purpose, the pledge may be held until the subse- quent debt or advance is paid, as well as the original debt. The ground of this distinction is, that he who seeks equity must do equity ; and the plaintiff, seeking the assistance of the Court, ought to pay all the moneys due to the cre- ditor, as it is natural to presume that the pledgee would not have lent the new sum, but upon the credit of the pledge which he had in his hands before. The presump- tion may, indeed, be rebutted by circumstances ; but, unless it is rebutted, it will general!}', in favour of the lien, stand for verity against the pledger himself, although not against his creditors or against subsequent purchasers." (See Adams v. Claxton,G Ves., 226; Demandrayv. Metcalf, 2 Vern, 691 ; Vanderzee v. Willis, 3 Bro., C. 0., 21 ; Praed v. Gardiner, 2 Cox, 86. But see ex-parte Deeze, 1 Atk.,228. ) But although the right to tack may not be set up against an assignee or a creditor, it seerns that where a ((/) According to the English law if a pawnee takes a security by specialty as a bond, for instance, for the subsequent debt, it will be pre- sumed that he did not intend to rely on the pledge. (Spence, Vol. II., 773.) 362 LAW OF MORTGAGE. LECTURE pledge is made as security for a loau and afterwards the XI - pledger borrows a further sum for which a third person becomes surety, such third person will, on payment of the second debt, be entitled to have the surplus proceeds of the entire property pledged applied in reduction of the second debt even as against an assignee of the pledger. (Praed v. Gardiner, 2 Cox., 86.) Use of the A pawnee may not ordinarily use the goods pledged to him without the consent of the pawnor ; such consent, however, will be presumed, if the pledge is such that it cannot be duly preserved without being used. A horse, for instance, must be exercised, and the pawnee may ride it for that purpose. If, however, the pledge is of such a nature, that it will be the worse for use, as wearing apparel, for instance, the pawnee may not use it himself. If the use is indifferent, a moderate use is perhaps not prohibited but in no case should the pledge be exposed to extra- ordinary peril. In Coggs v. Bernard (2 Raymond, 909) Lord Holt says : " If the pawn be such as it will be worse for using, the pawnee cannot use it, as clothes, &c. But, if it be such as will never be worse, as if jewels for the purpose were pawned to a lady, she might use them. But, then, she must do it at her own peril, for whereas, if she keeps them locked up in her cabinet, if her cabinet is broken and the jewels taken from thence, she would be excused ; if she wears them abroad, and is there robbed, she will be answerable. And the reason is, because the pawn is in the nature of a deposit, and as such, is not liable to be used." (But see Jones on Bailments, 81 ; Buller's Nisi Prius, 72 ; Story on Bailments, 296298). It has been said that where the pawn is used, as if a cow is milked and a profit arises therefrom, the pawnee shall account for the profits after deducting all expenses for the keeping (Story on Bailments, 298). But the prin- ciple of this rule, which is said to carry with it ' a most persuasive equity,' would apply equally to other cases, where the pledge is used by the pawnee himself, except where the pledge will deteriorate unless it is used. The Con- On this subject the Contract Act says: "If the bailee ct Act> makes any use of the goods bailed, which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them." (Section 154.) But the foregoing rules which have been adopted in other ACCESSIONS TO PLEDGE. 3(33 systems of law may be taken to illustrate sufficiently the LECTUBE conditions under which a pledge may or may not be used XI - by the pawnee. I will next call your attention to the degree of diligence Diligence imposed by the law on the pawnee. Section 151 says : pawiiee. " In all cases of bailment, the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality and value as the goods bailed." This is a very simple rule unincumbered by the somewhat refined, if not fanciful, distinctions which we find in the Roman and English law. (See the whole subject discussed in Story on Bailments, pp. 298 306.) It is, however, necessary to observe, that the responsibility of the pawnee is greatly increased when he is in " mora," i.e., when he wrongfully withholds the pledge from the pawnor. He then becomes answerable for any loss, des- truction or deterioration from the time of such refusal. (Section 161.) Another duty of the pawnee is to render an account of the profits and advantages derived by him from the pledge in cases where there is either an agreement to that effect between the parties, or where it may be inferred from the very nature of the pledge. Thus, if cattle are pledged, the profits of their labour must be accounted for ; so also, where the subject of the pledge is a ferry boat, for instance, which the parties intend to be employed in the carriage of pas- sengers, the pledgee must account for the profits. (Story on Bailments, pp. 309-310). It is hardly necessary to add that the foregoing observations do not apply where the pro- fits are agreed to be taken in lieu of interest, or an ac- count is otherwise excluded by the agreement of the parties. I told you in a previous lecture that, as a rule, any Accession accession to the pledge, or natural increase, is considered to the to be itself pledged. A different rule might perhaps at p first sight seem to be laid down in the Contract Act, Section 163 of which says: "In the absence of any con- tract to the contrary, the bailee is bound to deliver to the bailor, or according to his directions, any increase or profit which may have accrued from the goods bailed." It is, however, probable that all that the Legislature intended to enact was, that the property, in the accession or increase, should belong to the pawnor and not to the pawnee,although 364 LAW OF MORTGAGE. LECTURE the latter might claim the same qualified right in the XI - increase as in the original pledge. I need hardly say that, in the absence of any authority, I cannot but speak with some reserve. Redemp- The pawnor may redeem the pledge at any time before it is actually sold, provided that he asserts his claim within thirty years from the date of the pawn, or of a written acknowledgment by the pawnee. (Act XV of 1877, Sch. 2, Art. 145) (h). Any agreement by which the right of re- demption was sought to be fettered, would, as in the case of a mortgage of land, be absolutely void ; and the pawnor would be let in to redeem, notwithstanding the agreement. If the pawnee should die before redemption, the right may be enforced against his representatives, and conversely the right to redeem is not confined to the pawnor during his life, but may be asserted by his legal representatives. Possessory j shall conclude thislecture with a few words on possessory liens a very imperfect class of securities when confined to a bare right of detention without the means of obtaining material satisfaction. The Contract Act, following the Eng- lish law on the subject, divides liens into two classes general and special. A special lien authorizes the holder of the goods to retain them only till the particular debt in re- spect of the goods is paid. But a general lien extends to any balance which may be due from the owner to the holder of the goods. By section 93 of the Contract Act, the seller has a lien on the goods sold by him for the un- paid price so long as they remain in his possession. As in the case of land, however, the lien may be waived, and the taking of a collateral security will probably raise the inference that the lien was intended to be abandoned. I need hardly point out that, where the goods are sold on credit, the seller has ordinarily no lien ; but the insolvency of the buyer before delivery will give the seller the right to retain the goods. The same result follows if the period for which credit is given is allowed to expire, and the goods are suffered to remain in the possession of the seller. (Sections 95 97. As for the right of stoppage in tran- situ, see sections 99 106.) (/O It is to be noticed that the period begins to run from the date of the pledge and not from the time when the pledger is entitled to redeem. In England, it seems that if no time is fixed for the redemption, the pledger having his whole life to redeem, time will not begin to run during his life. (Kemji v. Wcstlrook, 1 Ves.. S. 278.) LIENS. 365 According to the English law, as I have already ex- LECTURE plained, a possessory lien is only of value as a means of xr - compelling satisfaction. It does not, as a rule, confer a English right of sale, nor is it assignable. (Thames Iron Works law on the Co. v. Patent Derrick Co., 29 L. J., Chan., 714.) Even point ' if the possession of the goods is attended with expense, a person having a bare lien may not sell them in discharge of his debt. (Mulliner v. Florence, 3 Q. B. D., 484 ; on the unsatisfactory condition of the English law on the subject, see Pollock's Essays, pp. 68-69.) Section 107 of the Contract Act, however, contains an important improve- ment. It says : " Where the buyer of goods fails to perform his part of the contract, either by not taking the goods sold to him, or by not paying for them, the seller, having a lien on the goods or having stopped them in transit, may, after giving notice to the buyer of his inten- tion to do so, resell them after the lapse of a reasonable time, and the buyer must bear any loss, but is not entitled to any profit, which may occur on such re-sale." There are other descriptions of liens, however, which are other not accompanied by a power of sale. The lien, for in- JV 1 ^ 3 of stance, allowed to a person for labour bestowed on goods bailed to him is confined to a bare right of detention. Bankers, factors, attorneys, and others who possess a gen- eral lien, are also in the same position. (Sections 170 and 171.) They can, no doubt, put a pressure on the will of the debtor, but they may not, in any case, sell the pledge. For instance, if I give a rough diamond to a jeweller to Artificer's cut and polish, and the work is accordingly done, the jewel- Hen. ler may retain the stone as long as his services are not paid for. But he cannot sell it even after notice, and pay himself out of the proceeds. Section 171 of the Contract Act would seem at first Attorney's sight to limit the lien of an attorney only to goods bailed lien - to him, but that is not so ; as we have already seen that a more extensive lien is recognized in his favour, but the lien which attaches to the fruits of a judgment or decree is not a possessory lien, and is not therefore dealt with in the chapter on bailments. The validity of a pledge in certain cases by a person in The Con- possession although not the owner is recognized by the In- tract Act - dian Contract Act, Section 178 of which says : " A person who is in possession of any goods or of any bill-of-lading, dock warrant, warehouse keeper's certificate, wharfinger's 366 LA.W OF MORTGAGE. LECTURE certificates, or warrant, or order for delivery, or any other XI - document of title or goods, may make a valid pledge of such goods or documents, provided that the pawnee acts in good faith and under circumstances which are not such as to raise a reasonable presumption that the pawnor is acting improperly : Provided also that such goods or documents have not been obtained from their lawful owner or from any person in lawful custody of them by means of an offence or fraud." The Fact- This section is modelled on the Factor's Act, 5 and C or's Act. Yi c t } (Jap. 39^ and is an exception to the general rule that no person can give a better title to another than he himself has, and is founded on the principle that as between two innocent parties the loss ought to fall on him, who, by his carelessness, has put another in a position to commit a fraud. But it is necessary that the pawnee should act in good faith, but mere suspicion is not enough, and the ques- tion of bona fides is always a question of fact, or as English lawyers say, a question for the jury. (Gobind v. Ryan, IX Moore Ind. App., 140.) The second proviso again shows that, if the goods or documents have been obtained by means of fraud, no title whatever would pass to the pawnee (Kartick v. Gopal Kishor, I. L. R, III Calc., 264). It may be observed that the section is intended only to meet the case of an agent entrusted with goods, and that the bare custody of a servant, the goods being in the eye of law in the possession of the master, would not be sufficient to pass any rights to the pawnee. (Mahomed Elai Buksh v. Brojo Kishen Sen, I. L. R., IV Calc., 497 ; Kartick Churn Setty v. Gopal Kristo Paulit, 1. L. R, III Calc., 264 ; Lekraj v. Mahatabchand, X Ben. L. Rep., 35, P. C. As to pledge of Government notes by an agent with power to negotiate, see Raj Chunder Chatterjee v. Madhoosoodan Mookerjee, I. L. R., VIII Calc., 394. Cf. Jonmejoy v. Watson, I. L. R., X Calc., 901.) The cases I have just discussed constitute an exception to the general rule that no person can convey to another a higher title than that possessed by himself. Where, therefore, a person pledges goods in which he has only a limited interest, as, for instance, an interest for life, the pledge will be valid only to the extent of such interest. (Section 179 ; cf. Hoare v. Parker, 2 T. R, 376.) I ought to mention that, according to the English law, where MEASURE OF DAMAGES. 3(57 two or more joint-owners make a pledge, the goods cannot LEG-TURK be redeemed except with the consent of all the joint- XI - owners. A refusal by the pledgee, therefore, to restore the goods to one of them only will not bo such a conversion as to entitle the plaintiff to maintain an action of trover against the pledgee. (Harper v. Godsell, 5 L. R., Q. B., 422). It has been pointed out that the protection which is conferred by the Contract Act on bond fide purchasers is not apparently extended to bond fide pledgees, there being no section in the Act corresponding to the second exception to section 108 (Shephard and Cunningham's Contract Act, p. 395). Questions of considerable nicety occasionally arise as regards the measure of damages where a third person or the pledgee himself under colour of his interest is guilt}' of any wrongful act in respect of the pledge. A few obser- vations on this topic will not, therefore, I trust, be wholly out of place. The right of the pledgee to bring an action against a stranger for the wrongful deprivation of the use or possession of the pledge has not, so far as I am aware, been ever questioned. But it seems to have been doubtful whether the pledgee was entitled to recover the full value of the pledge or only damages to the extent of his lien (Story on Bailments, pp. 314 315). The doubt has been set at rest by the Indian Contract Act. As against a stranger, the pawnee is entitled to recover the full value of the pledge, the amount received as com- pensation being divisible between the pawnee and the Measure of pawnor according to their several interests (sections 180, damages in 181). The Act, however, lays down no measure for assess- ing the damages as between pledger and pledgee, where there is merely an irregular exercise of his power by the pledgee, as, for instance, a premature sale. The English law on the subject is in a somewhat tangled state, but the better opinion seems to be that the owner must show that he has been really damnified (see the cases cited in Pollock's Torts, p. 296. See also the subject discussed in Benjamin on Sales, pp., 772780). But an unauthor- ized sale by a person with a bare possessory lien stands upon a different footing. By parting with the possession, he loses his right, and his act being merely wrongful, he will be answerable for the full value of the property. (Mulliner v. Florence, 3 Q. B. D., 484.) The question in such cases is, was the act of the bailee entirely inconsistent 368 LAW OF MORTGAGE. LECTURE with the terms of the bailment ? As I have already stated, XI - the English law on the subject with its manifold distinc- tions is in a scarcely satisfactory state, and when any such question arises in this country, it will probably be decided on general principles which would be simpler and more equitable in their application. In conclusion, I will deal with the various methods in which the contract of pledge may be extinguished, a result which may arise in various ways. The discharge of the engagement for which the pledge was given will, of course, put an end to the rights of the pledgee. The taking of a higher or a different security without any agreement that the pledge shall continue may also be followed by the same result. The question is, however, one of intention, and a mere change in the nature of the security will not be conclusive on the point. It must be Extinction borne in mind that, as the pledge is only an accessory to of pledge. ^] ie debt, if the debt itself is extinguished, the right to the pledge will also be lost. This will not, however, be the case where the debt is not extinguished, but only the right to recover it by action is barred by reason of the operation of the statute of limitations or otherwise. In such cases the creditor may retain the pledge in order to put a pressure on the debtor, or he may convert it into money, and thus satisfy the debt (Distinguish Vitla v. Klekra, I. L, R., XI Mad., 153, where the pledgee sought to sell the security under a decree of Court). It is scarcely necessary to state that the right of the pledgee will be destroyed by any act which amounts to a release or waiver of the pledge. Transmu- I n conclusion, it is necessary to state that, although the tation of right to the pledge will manifestly be extinguished when lge ' the thing itself is destroyed, a mere transmutation, if the property itself can be traced, will not have the effect of putting an end to the pledge (Taylor v. Palmer, 3 M. & S., 562.) In some systems of law a distinction is made where there has been a permanent and essential transmutation as it is called. But the distinction is not a very satisfac- tory one and seems to savour of that overmuch refinement, with which lawyers, whether with or without just cause, are so often reproached. LECTURE XII. Extinction of securities Consolidation Merger of debt Right of prior mort- gagee how far extinguished Rule of Roman law Doctrine of English Court of Chancery Conflicting decisions in India Extinction of security by discharge of obligation Novation Substitutionary and cumulative Extinction of security by destruction or sale of pledge or prescription and renunciation Priority Generally determined by order of time How affect- ed by registration Notice immaterial Priority how far affected by posses- sion Rule of Hindu law Privileged liens Salvor's lien Tacking Extent to which recognised in Roman law Doctrine of English law Origin of doctrine Not followed in India Consolidation of securities Rule of Eng- lish law Partial recoghition by our Courts Mortgage to secure future advances How priority is forfeited Fraud, actual or constructive, of mort- gagee Laches Effect of allowing title-deeds to remain in custody of mortgagor Allowing mortgagor to receive rents after notice of incum- brance Deeds of further charge Practice in India Waiver of security not presumed Lis pendens Application of doctrine in relation to priority of securities. I PROPOSE to discuss in the present Lecture the various Extinction methods by which a security is extinguished. I will also l^ cl treat of the rules governing the priority of securities, and as intimately connected with the topic, the 'tacking' and ' consolidation ' of mortgages. The questions to which I intend to call your attention are extremely important, and deserve very careful attention. I must, however, warn you at the outset that much of this branch of the law of securities is still in a floating condition ; and I am, there- fore, obliged to speak with some reserve. A mortgage is, generally speaking, extinguished by con- Consoiida- solidation, that is, by the property in the pledge vesting tu)l1 ' in the mortgagee, or by the acquisition by the mortgagor of the rights of the mortgagee. In such case, there is, technically speaking, a complete confusion of the security. The doctrine rests upon the supposed impossibility of a man having a right of pledge over his own property, and is ana- logous to the principle by which a servitude is extinguished when the dominant and servient tenement become vested H. B. G., M. 24 370 LAW OF MORTGAGE. LECTURE in one and the same person (a). A very slight examination XII of the rule will, however, show that the doctrine must be received with some qualification, as cases may be easily put, in which the application of the rule would lead to mani- fest injustice, where, for instance, there are intervening estates. Thus, supposing the equity of redemption is purchased by the prior mortgagee, if the effect of the purchase were to extinguish the security, the result would be that the subsequent incumbrancers would be entitled to priority, and the prior mortgagee would thus be in a distinctly less favourable position than he occupied before. In such cases, the Roman law admitted an excep- tion and recognised the right of the prior mortgagee to use his mortgage as a shield against the claims of the puisne incumbrancers. It has indeed been suggested by some writers that the exception applied only to those cases in which the pledgee was either ignorant of his own right of pledge or of the subsequent incuinbrances ; but the better opinion seems to be that the exception was not hedged in by any such limitations. (See the authorities cited in Ramu Naikun v. Subarayn Mudali, VII Mad. H. C. Rep., 229 ; and the Supplement to Markby's Elements of Law, p. 43.) Rule of A different doctrine, however, prevails in the English English j aw - . () anc [ the purchaser of an equity of redemption, with () There is, however, no real incongruity where there is an inter- vening estate. See the observations of West, J., in Mulchand v. Lalln, (I. L. R., VI Bom., 412-413.) The principle of merger founded on the maxim, Omnemajus continet inse minusm&y be thus stated : " Whenever a greater estate and a less coincide and meet in one and the same person, ivithout any intermediate estate, the less is immediately anni- hilated, or in the law phrase, is said to be merged, that is, sunk or drowned, in the greater." But in equity merger may take effect not- withstanding the separation of the estates by an intervening interest (Lewin on Trusts, p. 726.) (J) I ought, perhaps, to use the past tense, for the case of Toitlmin v. Steere has been overlaid with so many qualifications and deductions that " it retains little or none of its original properties as a guide in such questions as may arise of a kindred nature." (See Gregg v. Arrot, Lloyd and Goold's Rep., temp. Sugden, 246251 ; Watts v. Symes, 1 DeG. M. and G., 240, 244 ; Walcott v. Condon, 3 Ir. Chan. Rep., 113 ; Parry v. Wright, 1 Sim. and St., 369, affirmed on appeal. 5 Russ., 142 ; Garnett v. Armstrong, 4 Dru. and War., 182 ; Hayden v. KirJtpatrick, 34 Beav., 645 ; UntJianlt v. Gabbett, Beatty, 453 : Anderson v. Pignct, Law Rep., 8 Ch., 180, 187 ; Stevens v. Mid-Hants Ry. Co., Law Rep., 8 Ch., 1064; Adams v. Angell, 5 Ch. D., 634.) On the other hand, Toulmin v. Steere seems to have been recognised as law in Squire v. Ford, 4 D. and War., 198 ; Armstrong v. Garnett, 9 Hare, 60 ; Otter v. Lord Vaux, 6 D. M. and G., 643. It seems that the rule is not peculiar to the English law. See Wilkinson v. Simson, II Moore, P.C., 275, a case under the Dutch law. MERGER. 371 notice of subsequent incumbrances, stands, in England, in LECTURE the same situation as if he himself had been the mortgagor, XI1 - and cannot set up against such subsequent incumbrancea either a prior mortgage of his own, or a mortgage which he or the mortgagor may have got in (Toulmin v. Steere, 3 Mer., 210.) The prior mortgagee, however, may protect himself from the consequences of a merger of the debt by taking distinct steps to keep his security alive. If, how- ever, the mortgage is not kept on foot as a distinct and distinguishable security, there will be complete confusion, and the mortgagee may not use it as a shield to protect himself from the claims of the puisne incumbrancers. (Watts v. Si/mes, 21 L. J. Chan., 713; Heyden v. Kirk- patrick, 34 Beav., 645.) The rule of the English law on the point will perhaps seem to most persons extremely artificial, and, on the whole, less equitable than the doctrine of the Roman law. Indeed, English lawyers themselves would seem to share the impression, and the doctrine laid down in Toulmin v. Steere has been sought to be qualified in more recent cases. (See the cases cited in foot-note (&).) It is, therefore, some- what remarkable that the doctrine should have been adopt- ed at one time without question by some of the superior Courts in India. (Gournarain v. Brojonath, XIV Suth. W. R., 491 ; Itcharam Di/aram v. Raiji Joga, XI Bom. H. C. Rep., 41.) In this country where the art of con- veyancing is in a rudimentary state, cases ought to be decided on principles of substantial justice untrammelled by the refinements and subtleties, which have been de- veloped by the ingenuity of English conveyancers, and which only too often reflect the logic of the schools, together with that love of form which is attributed to lawyers sometimes as a distinction but more frequently as a reproach. Lawyers, as a noble lord recently said, are not without their superstitions, and it will perhaps strike most persons not brought up in the chambers of an English conveyancer that the principle of merger as applied in some well known cases represents the theological rather than the positive stage of law. Indeed, the whole controversy on the subject is sensibly tinged with the strong sediment of realism which is still traceable in some portions of the English law. I do not wish to say anything which may wear the appearance of presumption or disrespect, but I trust I 372 LAW OF MORTGAGE. LECTURE may be permitted to suggest without offence that the very XII> high estimate which English lawyers almost always set on their own system is scarcely justified by a comparison with other systems of law, and more particularly Roman law (c). Madras In the case of Ramu v. Subarayn (VII Mad. H. C. Rep., case. 229), the Madras Court, after comparing the doctrine of the Roman law with that of the English law on the point under consideration, refused to follow the English authorities, the learned Judges observing that the " rule of the civil law is the true rule, and one to which the minds of English Judges are gradually tending." (Com- pare Narain Saha v. Ochut Saha, XIV Suth. W. R., 233 ; Syud Wajed Hossein v. Hafez Ahmed Reza, XVII Suth. W. R., 480.) Gcikool The matter has, however, now been set at rest by the p^oran judgment of their Lordships of the Privy Council in the case of Gokool Das v. Pooran Mai, in which it was held that where the mortgagor's right, title and interest were sold subject to a first and a second mortgage and the pur- chaser afterwards paid off the first mortgage, the latter secu- rity was not extinguished. In other words, where a property is subject to a succession of mortgages, and the owner of an ulterior interest pays off an earlier mortgage, it is not necessary to have the mortgage assigned to a trustee in order to get the benefit of it. A formal transfer is not essential for the purpose of keeping the mortgage alive, nor even the formal expression of nn intention to do so. Their Lordships, in the course of their judgment, say: - "The doctrine of Toulmin v. Steere (3 Mer. 210) is not applicable to Indian transaction, except as the law of justice, equity, and good conscience. And if it rested on any broad, intelligible principle of justice, it might pro- perly be so applied. But it rests on no such principle. If it did, it could not be excluded or defeated by declara- tion of intention or formal devices of conveyances, whereas it is so defeated every day. When an estate is burdened by a succession of mortgages, and the owner of an ulterior interest pays off an earlier mortgage, it is a matter of course to have it assigned to a trustee for his benefit as (r) As pointed out by Dr. Pollock, the merits of those who administer the English law do much to hide its real defects. The excellence of the workmen prevents us from seeing how faulty their tools are. (Pollock's Essays, p. G5.) MERGEK. 373 against intermediate mortgagees to whom he is not per- LECTURE sonally liable. " lu India the art of conveyancing has been, and is, of a very simple character. Their Lordships cannot find that a formal transfer of a mortgage is ever made, or an inten- tion to keep it alive ever formally expressed. To apply to such a practice the doctrine of Toulmin v. Steere, seems to them likely not to promote justice and equity, but to lead to confusion, to multiplication of documents, to use- less technicalities, to expense, and to litigation. "The obvious question to ask in the interests of justice, equity, and good conscience, is, what was the intention of the party paying off the charge ? He had a right to ex- tinguish it and a right to keep it alive. What was his intention? If there is no express evidence of it, what in- tention should be ascribed to him ? The ordinary rule is, that a man having a right to act in either of two ways, shall be assumed to have acted according to his interest. In the familiar instance of a tenant for life paying off a charge upon the inheritance, he is assumed, in the absence of evidence to the contrary, to have intended to keep the charge alive. It cannot signify whether the division of interest in the property is by way of life estate and re- mainder, or by way of successive charges. In each case it may be for the advantage of the owner of a partial interest to keep on foot a charge upon the corpus which he has paid." (I. L. R., X Cal., 1045 46. See also Lachmin Narain v. Kotesliar Nath, I. L. R., II All., 826 ; Gaya Prasad v. Salik Prasad, I. L. R., Ill All., 682 ; AH Hasan v. Dhirja, I. L. R., IV All, 518 ; Gangadhara v. Siva Rama, I. L. R., VIII Mad., 246; overruling Krishna Reddi v. Muttu Narayana, I. L. R., VII Mad., 127; Mul- chand Kuber v. Lallu Trikam, I. L. R., VI Bom., 404 ; Shantapa v. Balapa, I. L. R., VI Bom., 561 ; Gopal Sahoo v. Gunga Pershad, I. L. R., VIII Cal., 530; Hira Chand v. Bhaskar, II Bom. H. C. Rep., a. c. j., 198 ; Sirbadh Rai v. Raghu Nath Prasad, I. L. R., VII All., 568 ; Janki Prasad v. Srimatra Mautangini, I. L. R., VII All., 577 ; Nilo Pandurang v. Rama, I. L. R., IX Bom., 35 ; Dull Chand v. Monohur, II Cal. L. Rep., 18; Bissen Doss v. Sheo Pro- sad, V Cal. L. Rep., 29 ; Gunga Narain v. Hurish Chun- der, VI Cal. L. Rep., 336.) It is perhaps somewhat unfortunate that the question Question of of intention should be introduced into such cases, as it is intention. 374- LAW OF MORTGAGE. Intention. LECTURE likely to lead to undue refinement (d). It cannot be denied XI1 - that where there is an intervening interest, the person making the payment can have but one intention, which is that the intervening interest shall nut acquire priority to the prejudice of his own rights. It would, indeed, be a most extraordinary thing to suppose that the person who buys the equity of redemption or pays off an earlier mort- gage, could have any other object than to keep the charge alive against intermediate incumbrancers. (See the obser- vations of Jessel, M. R, Adams v. Angell, 5 Ch. D., 645.) There can, therefore, be, on principle, no merger in such cases; a more flexible rule, which would let in the ques- tion of intention, might lead to results, which could g^^eiy have been in the contemplation of the parties. (S. A. No. 1865 of 1887, Dyal v. Sukharam ; S. A. No. 1685 of 1887, Hari v. Monmoliini.} The rule laid down in some English cases is that in the absence of ex- press intention, either in the instrument or by parol, the Court looks to the benefit of the person in whom the two estates become vested (Lewin on Trusts, p. 726). To the principle thus stated, there can be no grave objection, ex- cept, perhaps, that it will have no operation at all in such cases, as it cannot surely be for the benefit of any person that he should forfeit his rights, and express intention is, of course, out of the question. The case of GokoolDas must, however, be distinguished from another case, which was also heard by the Privy Council and with which it is liable to be confounded. The question, however, in that case was one not of merger, properly speaking, but of the right of a mortgagee whoso security eventually turned out to be worthless, to avail himself of an earlier mortgage which had been paid olf with his money ; in other words, the question was one of subrogation. In the case to which I refer a person who had put himself forward as the owner of a certain estate ( DeG. Jo., 435 ; Scholefield v. Templer, 4 DeG. & J., 429.) In connection with the question of priority there is one topic, on which a few words will not perhaps be thrown away. I allude to the doctrine of Us pendens. In con- sequence of the rule pendente lite nihil innovetur, the priority of a security cannot be affected by any incum- brance created \>y the mortgagor during the pendency of a suit for foreclosure or sale. This maxim is not founded upon any technical ground as to constructive notice, but on the broad principle, that litigation would be intermin- able if any of the parties to an action could create any right in favor of a third person during the pendency of a suit. As observed by Lord Cranworth in Bellamy v. Sabine (26 L. J., Ch., 797, N. S.) : " It is scarcely correct to speak of Us pendens as affecting a purchaser through the doctrine of notice, though, undoubtedly, the language of the Courts often so describes its operation. It affects him, not because it amounts to notice, but because the law does not allow litigant parties to give to others, pending the litigation, rights to the property in dispute, so as to pre- judice the opposite party. Where a litigation is pending between a plaintiff and a defendant as to the right of a particular estate, the necessities of mankind require that the decision of the Court in the suit shall be binding, not only on the litigant parties, but also on those who derive title under them by alienations made pending the suit, whether such alienees had or had not notice of the pend- ing proceedings. If this were not so, there could be no certainty that the litigation would ever come to an end. A mortgage or sale made before final decree to a person who had no notice -of the pending proceedings, would always render a new suit necessaiy, and so interminable litigation might be the consequence." (Ballajee Gunesh v. Khushalji, XI Bom. H. C. Rep., 24 ; Gulabchand v. Dhon- die, XI Bom. H. C. Rep., 64 ; Ravji Narain v. Krishnajw Lakskman, XI Bom. H. C. Rep., 139; Pullukdharee v. Mohabir Sing, XXIII Suth. W. R., 382; see also the LIS PENDENS. 397 notes to section 52 of the Transfer of Property Act, LECTURE post.} XI1 - It is only necessary to add that, under Regulation XVIII of 1806, the application of the mortgagee for fore- closure would seem to be the commencement of the suit for the purposes of Us pendens. I had occasion to con- sider the question in a previous lecture, and need not, there- fore, repeat what I then said (See Lecture VI). It would, however, not be safe for the mortgagee to disregard the transfer altogether, and where the alienation takes place after the institution of the foreclosure proceedings, but before the commencement of the regular suit by which they are almost invariably followed in Bengal, the pur- chaser ought to be made a party defendant, as well as the original mortgagor. Here I conclude the lectures of the term. I have endeavoured to give you a short account of the law of securities in this country. A mere beadroll of cases, how- ever useful to the practitioner, would have been of doubt- ful utility to the student, and I have, therefore, attempted to explain, as fully as I could in the compass of these lectures, the principles on which the law is founded. ' He knoweth not the law who knoweth not the reason of the law ' is a saying which the student should always bear in mind, and you will pardon me if I venture to affirm what is now accepted almost as a truism that a careful study of general principles as illustrated in different systems of law, will not be wholly useless to you when you enter upon the practical duties of the profession. It may not be given to every one of us to attain high forensic skill, but depend upon it, the culture gained by the scien- tific study of law is never wholly thrown away, even though it may not in every case be crowned with pro- fessional success. NOTE A. The question whether notice is material under the Indian Registra- tion Acts has given rise to a conflict of decisions. According to the Madras High Court notice is not mateiial while a different view has been taken by the Bombay as well as by the Calcutta and Allahabad High Courts. (See, among other cases, Abool v. Raglnt Ifath.I.L. II., XIII Cal., 70 ; Ram v. Dhanaurl, I. L. B., VIII All'.. 40 ; Shivram v. Genu, I. L. R., VI Bom., 515 ; Bimaraz v. Papaya, I. L. R , III Mad., 46 ; Kondayya v. Gurui-appa. I. L. B., V Mad., 139 ; Madar Saftcbv. Subba- rayalu Nay ad v, I. L. It.. VI Mad., 88.) In this conflict of opinion I have ventured to reproduce in this note what I said in the first edition. " It is necessary to observe that, under the Indian Registration Act. 398 LAW OF MORTGAGE. LECTURE notice is immaterial. A registered instrument will be entitled to priority XII. in every case, provided that the transfer is not merely colorable, or as it is usually called a paper transaction. It is true the Act is silent as to the effect of notice, but it does not follow that the protection was intended to be confiued only to a mortgagee without notice of a prior unregister- ed security. The construction put by Lord Hardwicke on the English Act has been questioned by several eminent Judges as trenching upon the policy of the registration laws, and it would certainly require strong argument to show that the Indian Legislature intended to introduce into this country a doctrine which would have the effect of frittering away the provisions of a most beneficent enactment. The omission from the recent Acts of the clause in the second Section of Act XIX of 1843, by which notice was expressly declared to be immaterial, may perhaps lend some color to the suggestion that the old doctrine embodied in the earliest Regulation on the subject was intended to be revived. It would, however, not be safe to build any argument on such an omission. It would carry me much beyond the limits which I have proposed to myself in the present lecture to enter upon a full discussion of the question. I may, however, point out that a comparison of the succes- sive Registration Acts down to the 19th of 1843, shows that it was necessary in the last statute to provide expressly that notice was im- material in order to guard against the application of the English doctrine which had been emtodied in the original Regulation. Besides, it may fairly be asked why has not the Legislature in the later Acts expressly declared its intention to confine the protection afforded by registration only to subsequent alienees taking without notice of a prior alienation. Such an enactment was contained in the original Regulation, and, if the doctrine was intended to be revived after having been advisedly repealed by subsequent legislation, the provision would probably have been repeated in the more recent statutes. I have been induced to make the foregoing observations, because in the case of J/candass v. Framji (VII Bom. H. C. Rep., 45), the Court seems to have held that the English doctrine of notice was appli- cable to Act XVI of 1864, the provisions of which on this point are similar to those of the present statute. In that case express notice was alleged ; but if you once introduce the doctrine of notice, I do not see how questions of constructive notice can be wholly shut out, and thus the protection afforded by the Registration Act would be, in great measure, if not wholly, illusory. The doctrine, however, laid down by the Court in Kasliarjt v. Framji was not actually necessary for the deci- sion of the case, as the mortgage to the registered mortgagee was, on the face of the instrument, subject to the prior unregistered incum- brance. No question of priority, therefore, could possibly arise, as the subsequent mortgage did not purport to be a mortgage of anything more than the bare equity of redemption. (Compare Kishore Bliat v. Joralhai, VII Bom. H. C. Rep., A. J., 56.) " It seems to me almost as if there was a slight touch of sarcasm in the observation made by Lord Cairns in the well-known case of Agra Sank v. Barry (7 H. L. C. 135). In the course of his speech the noble and learned Lord said : "Any person reading over that Act of Parliament would perhaps in the first instance conclude, as has often been said, that it was an act absolutely decisive of priority tinder all circumstances, and enacting that under every circumstance that could be supposed, the deed first registered was to take precedence of a deed which, although it might be executed before, was not registered till afterwards. But by decisions which have now, as it seems to me, well established the law, and which it would not be, I think, expedient in any way now to call in question, it has been settled that, notwith- REGISTRATION. 399 standing the apparent stringency of the words contained in this Act LECTURE of Parliament, still if a person in Ireland i-egisters a deed, and if XII. at the time he registers the deed either he himself, or an ageut, whose . knowledge is the knowledge of his principal has notice of an earlier deed, which, though executed, is not registered, the registration which he actually effects will not give him priority over that earlier deed." {Agra Bank v. Harry. 1 II. L. C.. 147.) In Greaves v. Soft-Id (14 Ch. D., 578), Lord Justice Bramwell observed : ' I doubt very much whether the principle of Courts of Equity ought to be extended to cases where registration is provided for by Statute. I do not know whether I have grasped the doctrines of equity correctly in this matter, but if I have, they seem to me to be like a good many other doctrines of Courts of Equity, the result of a disregard of general principles and general rules in the endeavour to do justice more or less fanciful in certain particu- lar cases." It is not quite clear upon the authorities whether the notice in order to postpone a registered security must not be actual. According to the English cases, it seems that the notice must be actual. Mere negli- gence will not postpone a registered deed. The principle of construc- tive notice therefore has either no application or at best only a very limited application in countries where registers exist. (See Agra Sank v. Parry, 1 H. L. C.. 13o, and the cases cited in it.) I may mention that, according to the latest Registration Acts in the English Statute Book (47 & 48 Viet., c. 54 ; 48 & 49 Viet., c. 26) registra- tion is made the absolute test of priority except in cases of actual fraud, and the old equitable rule which has been adopted by the Indian Courts as based upon the rao?t unimpeachable equity, has been expressly abolished. R. B. G., T. P. A. 2 or to himself and one or more other living persons, and " to transfer property " is to perform such act (a). 6. Property of any kind may be transferred, except as what may otherwise provided by this Act or by any other law for be l r an3 ' the time being in force : (a.) The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature, cannot be transferred. (6.) A mere right of re-entry for breach of a condition subsequent cannot be transferred to any one except the owner of the property affected thereby, (c.) An easement cannot be transferred apart from the dominant heritage. (d.) An interest in property restricted in its enjoyment to the owner personally cannot be transferred by him. {e.} A mere right to sue for compensation for a fraud or for harm illegally caused cannot be transferred. (a) This section is not very happily worded, and it may be argued that the expression transfer of property does not include a mortgage, but the argument rests on the assumption that a transfer must of necessity ex- tend to the whole property or interest of the transferor in the subject- matter of the transaction. Ownership, however, is generally divisible, and the term transfer is properly applicable to any interest carved out of the aggregate known as ownership. See the Report of the Indian Law Commission, p. 32; see also the observations of Mahmood,J., in Go-pal v. Pursotam, I. L. R., V All., 121. 412 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP (/) A public office cannot be transferred, nor can the 1882, salary of a public officer, whether before or after it has EC ION become payable. (gj) Stipends allowed to military and civil pensioners of Government and political pensions cannot be transferred. (h.) No transfer can be made (1) in so far as it is opposed to the nature of the interest affected thereby, or (2) for an illegal purpose, or (3) to a person legally disqualified to be transferee. (i.) Nothing in this section shall be deemed to authorize a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue or the lessee of an estate under the management of a Court of "Wards to assign his interest as such tenant, farmer or lessee. The first clause of this section lays down the rule of the English common law that there can be no valid transfer of property which is not in existence, actual or potential. But, although, there can be no valid transfer of such property so as to confer a right in rein, there may be a valid contract to transfer such property so as to operate, to use the language of English law, as an equitable assignment. It is true such an agreement, whether by way of absolute assignment or mortgage, cannot be enforced against a purchaser for value, but it is perfectly good as against the grantor and persons claiming under him otherwise than for value. The right created by such assignments is capable of being enforced by a decree for specific performance. In the case of Holroyd v. Marshall (10 H. L. Cu., 191 ; 33 L. J. Ch., 193), in the House of Lords in 1862, Taylor, who was the occupier of a mill, covenanted that he would assign to Holroyd his landlord all machinery which might thereafter be brought by him (Taylor) into the mill. The Sheriff seized the machinery which Taylor had so brought in, and Holroyd claimed it as equitable assignee. The House of Lords held that he was entitled to it. Lord Westbury said " * * * It is quite true that a deed which professes to convey property which is not in existence at the time is, as a conveyance, void at law, simply because there is nothing to convey. So in equity a contract which engages to transfer property which is not in existence, cannot operate as an immediate alienation merely because there is nothing to transfer. But if a vendor or mortgagor agrees to sell or mortgage property, real or personal, of which he is not possessed at the time, and he receives considera- tion for the contract and afterwards becomes possessed of property answering the description in the contract, there is no doubt that a Court of Equity would compel him to perform the contract, that the contract would in equity transfer the beneficial interest to the mort- gagee immediately on the property being acquired. This of course assumes that the supposed contract is one of the class in which a Court of Equity would decree a specific performance. It follows that, immediately on the new machinery and effects being EQUITABLE ASSIGNMENT. 413 fixed or placed in the mill, they became subject to the operation ACT IV OP of contract, and passed in equity to the mortgagees, to whom Taylor 1882, was bound to imke a legal conveyance, and for whom he, in the SECTION meantime, was a trustee of the property in question." 6. It does not, however, follow that a charge on all a person's present nnd future personality will be operative as regards undefined property not belonging to the mortgagor at the date of the execution of the deed, as it might interfere with the mortgagor's power of maintain- ing himself. It would he impossible for the person either to get free or to obtain a fresh start in life. The invalidity of the charge as to after-acquired property will not, however, interfere with its validity as to the rest. There cannot, therefore, it seems, be a general mort- gage of all future chattels. (In re Count D'Epineuil, 20 Ch. D., 758 ; Belling v. Head, 11 Jur. N. S., 547.) The question was discussed by the Court of Appeal in the recent case of Coombe. v. Carter (36 Ch. D., 348), when one of the learned Judges expressed a hope that the time would come when the Court of Appeal would have to lay down some more definite rule than we can gather from the cases since Holroyd v. Marshall. In giving judgment, Lord Justice Bowen observed with reference to the con- tention, that the contract was too vague to be specifically enforced. 1 Vagueness ' is a misleading term. A contract may be so vngue in its terms that it cannot be understood, and in that case it is of no effect at law or in equity. There is another kind of vagueness which arises from the property not being ascertained at the date of the contract, but if at the time when the contract is sought to be enforced, the property has come in esse and is capable of being identified as that to which the contract refers, I cannot see why there is in it any such vagueness as to prevent a Court of Equity from enforcing the contract. Even then there may be something in the nature of the contract which will prevent its being enforced. I will not attempt to define what will have that effect. It is suggested that, as distinct from vagueness, there may be such wideness in a contract that it ought not to be enforced by a Court of Equity. Thus it is said a con- tract by a man to assign all the property that shall come to him would be too wide to be enforced. I will give no opinion on that point till it comes before us for decision. " A contract may, of course, be one of which a Court of Equity can- not decree specific performance, because it relates to nothing specific ; e.g., a contract to supply a given quantity of goods of a particular des- cription. That is a case where the subject-matter cannot be ascer- tained. And even where the subject-matter is ascertained, there may be cases where a Court of Equity will not interfere. The uncertainty of the subject-matter at the time when the contract is entered into does not seem to me an adequate ground, however, for declining to interfere if the subject-matter has become ascertained when the Court is asked to enforce the contract. I am aware that there may be an important distinction between a case where the contract is wholly exe- cutory and a case where the whole consideration has been paid. I only wish to say that in my opinion the subject is one of great diffi- culty, that it does not appear to me to have been exhaustively consider- ed, and that there is a good deal of obscurity in the language often used about it. I retain the same doubts as I expressed in Clements T. Matthews, 11 Q. 13. D., 808, 817)." 414 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP Lord Justice Fry added : " We have not to consider the cases where 1882, an assignment of future property is made effectual by what Lord SECTION Bacon calls ' novus actus interveniens\ (See Holroyd v. Marshall, 6 - 2 D. F. & J. at p. 603; Bacon's Maxims.) There is another clans of cases where an assignment of future property will have effect given to it as a contract to give a security on future property, namely, where the consideration has been received and the property has come into existence. That there are cases in which the Court will enforce such a contract is not in dispute. I think that there may be cases where the Court will not do so, owing to the nature of the subject- matter of the contract, and the authorities appear to indicate the ex- istence of such a class of cases. Belding v. Read (3 H. & C., 955) indicates it, though 1 think, that in that case the Court drew a wrong boundary line, and were in ^rror in holding that in such a case a Court of Equity would not decree specific performance. In Official Receiver v. Tailby (18 Q. B. D., 25), where' the contract was indivisi- ble, the Court held that it was one which could not be enforced, and I, considering myself bound by Belding v. Head, cuine to the same conclu- sion in In re Count D'Epineuil (20Ch. D., 7o8.) There may, I think, be contracts of such a nature thutt he Court will not decree specific performance of them. It might say that a contract by a man to assign all his future property by way of mortgage was one which ought not to be enforced, because it would deprive the assignor of the means of livelihood, and would tend to a multiplication of actions for getting in the different parts of the property, which the assignor would be bound to assign from time to time. But in the present case we have not to draw the line between contracts which the Court will enforce and contracts which it will not. The cases where the contract is wholly executory on both sides differ materially from a case like the present, where the contract on one side has been performed. Wherever the boundary line is to be drawn, I am satisfied that the present falls within the class of cases where the contract will be enforced. It is a contract relating to several subject- matters, one being all real and personal estate to which the mortgagor may become entitled under any will. I can see no reason for not speci- fically performing that contract as to any property that comes to the mortgagor under a will. He has received the consideration and ought to perform his part of the contract. Such a contract was enforced by Lord Langdale in Bennett v. Cooper (9 Beav., 252), and though we are not bound by his decision, I think it one which ought to be fol- lowed." (Cf. Bansidhar v. Sant Lai, I. L. R., X All., I 33 ; Misri Lai v. Mozhar Hossain, I. L. R., XIII Cal., 262 ; Lola Tilockdhari v. Furlong, II Ben. L. Rep. A. C., 230 ; but see Kedari v. Atmaram, HI Bom. H. C. Rep., A. C. J., 11, and the authorities cited therein.) Although a bare expectancy cannot be transferred, a person may agree to assign to his creditor any legacy or other benefits which he expects to derive either from a specified person or even from his friends generally. The contract being one for value will bind the property if, and when, it is acquired. But before it comes into exis- tence, it will remain only a contract by which the debtor is bound. (Cook v. Field, 15 Q. B., 460.) It seems that the lien of the landlord on the crops of his tenant will override the claim of a transferee from the tenant; at any rate where the rent is in arrear and the assignee has notice of the fact. (Kinlock ASSIGNMENT OF SECURITIES. 415 v. The Collector of Elawah,!. L. R., Ill All., 433, and the case cited ACT IV OF therein -Clements v. Muthews, 1 1 Q. B. D., 808, 812.) 1882, I ought to mention that even if the contract is in form an abso- SECTIONS lute assignment, yet it would merely operate as a promised assignment 7 > & until the contract attaches upon specific goods. (Collyer v. Isaacs, 19 Ch. D., 342.) A man cannot in equity any more than at law assign pro- perty which has no existence. But he may agree to assign property which is to come into existence in the future, and when such property comes into existence, equity acting upon a well-known principle fastens upon it, and the contract to assign thus becomes a complete assign- ment. (See Hives v. Burlow, 12 Q. B. D., 436; Petch v. Tutin, 15 M. & W., 110; Leathern v. Amor, 47 L. J. Q. B., 581.) The inten- tion, however, to include after-acquired property must be clear and will not be inferred from doubtful expres^us. (fappfield v. Ilellman, 6 M. & Gr., 245.) () 7. Every person competent to contract and entitled to Persons transferable property, or authorized to dispose of transfer- con >P cte t able property not his own, is competent to transfer such property either wholly or in part and either absolutely or conditionally, in the circumstances, to the extent and in the manner, allowed and prescribed by any law for the time being in force. 8. Unless a different intention is expressed or neces- Operation sarily implied, a transfer of property passes forthwith to cf transfer - the transferee all the interest which the transferor is then capable of passing in the property, and in the legal incidents thereof. Such incidents include, where the property is land, the easements annexed thereto, the rents and profits thereof ac- cruing after the transfer, and all things attached to the earth; and, where the property is machinery attached to the earth, the moveable parts thereof ; and, where the property is a house, the easements annexed thereto, the rent thereof accruing after the transfer, and the locks, keys, bars, doors, windows, and all other things provided for permanent use therewith ; and, where the property is a debt or other actionable claim, the securities therefor (except where they are also for other debts or claims not transferred to the transferee), but not arrears of interest accrued before the transfer ; and, where the property is money or other property yielding income, the interest or income thereof accruing after the transfer takes effect. This section illustrates the general rule that accessories follow the principal. An assignment of the debt generally draws after it the (a) See ante. pp. 76, 90-91, 123-24, 416 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF securities therefor, as a consequence and an appurtenance of the debt 1882, upon the rule, omne principale trahit ad se accessorinm. But nil SECTIONS assignment of the mortgage, without an assignment of the debt, is treated, 9 11. at most, as a transfer of a naked trust. (Story's Equity, section 1023, note 5 ; Cavanngh on Securities for Money, 813 ; Walker v. Jones, L. R., 1 P. C., 50.) In the case of Gunpat Roy a distinction was drawn between an assignment of the debt itself and an assignment of a judgment ob- tained on the covenant; it is, however, open to doubt whether the dis- tinction can be sustained, as the reasoning by which it is supported will apply equally whether the assignment is one of the debt or of the decree. (Ganpat llai v. Surupi, I. L. R., I All., 446.) See page 61, ante. Oraitrans- 9. A transfer of property may be made without fer> writing in every case in which a writing is not expressly required by law. As rcgaids mortgages, s^e section 59. Condition iQ Where property is transferred subject to a con- jUiena'tionf dition or limitation absolutely restraining the trans- feree or any person claiming under him from parting with or disposing of his interest in the property, the condition or limitation is void, except in the case of a lease where the condition is for the benefit of the lessor or those claiming under him : provided that property ma} 7 be transferred to or for the benefit of a woman (not being a Hindu, Muhammadan or Buddhist), so that she shall not have power during her marriage to transfer or charge the same or her beneficial interest therein. A clause against alienation is frequently to be met with in mortgage- deeds in this country. Such a covenant by itself does not operate as a mortgage, and it would seem that where there is a valid mortgage, it gives no additional security to the mortgagee, the mortgagor being entitled notwithstanding the covenant to deal with the mortgaged property in any way that he thinks proper, subject, of course, to the right of the mortgagee to realize his security. In other words, such a transfer will be binding on the mortgagor or persons claiming under a puisne title, but not on the mortgagee. (Itadha Pershad v. Alonohur, I. L R.,VICal., 317; Chunniv. Thalmr Dasx, I. L. R., I All., 126; and Editor's note 128; Mulchand v. Balgobind, I. L. R., I All., 610; Lnchmin Narain v. Koteshar, I. L. R., II All., 826; RamSaranv. Amrita, 1. L. R., Ill All., 369; Ali Husan v. Dhirya, I. L. R., IV All., 518; Venkata v. Kannam, I. L. II., V Mad., 184.) See also pp. 123-124, 155 158, ante. Restriction H- Where, on a transfer of property, an interest repugnant therein is created absolutely in favour of any person, 1 but the terms of the transfer direct that such interest shall be applied or enjoyed by him in a particular manner, TRANSFER TO A CLASS. 417 he shall be entitled to receive and dispose of such ACT IV OF interest as if there were no such direction. SECTIONS Nothing in this section shall be deemed to affect the 1216. right to restrain, for the beneficial enjoyment of one piece of immoveable property, the enjoyment of another piece of such property, or to compel the enjoyment thereof in a particular manner. 12. Where property is transferred subject to a condi- Condition tion or limitation making any interest therein, reserved ^res'ufeter". or given to or for the benefit of any person, to cease on his minabie on. becoming insolvent or endeavouring to transfer or dispose l^attem'pT- of the same, such condition or limitation is void. ed aiiena- Nothing in this section applies to a condition in a tlon * lease for the benefit of the lessor or those claiming under him. 13. Where, on a transfer of property, an interest Transfer for therein is created for the benefit of a person not in {^0* existence at the date of the transfer, subject to a prior person, interest created by the same transfer, the interest created for the benefit of such person shall not take effect, unless it extends to the whole of the remaining interest of the transfer or in the property. Illustration. A transfers property of which he is the owner to B in trust for A and his intended wife successively for their lives, and after the death of the survivor for the eldest son of the intended marriage for life, and after his death for A's second son. The interest so created for the benefit of the eldest son does not take effect, because it does not extend to the whole of A's remaining interest in the property. 14. No transfer of property can operate to create Rule an interest which is to take effect after the life-time of *| *' ^. t one or more persons living at the date of such transfer, and the minority of some person who shall be in exis- tence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong. 15. If, on a transfer of property, an interest therein Transfer to is created for the benefit of a class of persons with of* whom regard to some of whom such interest fails by reason of come under any of the rules contained in sections thirteen and ^'14! fourteen, such interest fails as regards the whole class. 16. Where an interest fails by reason of any of the Transfer to rules contained in sections thirteen, fourteen and fifteen, tek " iffect R. B. G., T. P. A. 27 418 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF auy interest created in the same transaction and intended 1882 to take effect after or upon failure of such prior interest SECTIONS i , -i 1720. a * so i ai * 8 - 17. The restrictions in sections fourteen, fifteen and on failure s i x teen shall not apply to property transferred for the transfer, benefit of the public in the advancement of religion, Transfe . rin knowledge, commerce, health, safety, or any other obi ect perpetuity . . /. . r j. i j for benefit beneficial to mankind. of public. is. Where the terms of a transfer of property direct Direction that the income arising from the property shall be accu- for accu- mulated, such direction shall be void, and the property shall be disposed of as if no accumulation had been directed. Exception. Where the property is immoveable, or where accumulation is directed to be made from the date of the transfer, the direction shall be valid in respect only of the income arising from the property within one year next following such date ; and at the end of the year such property and income shall be disposed of respectively as if the period during which the accumulation has been directed to be made had elapsed. Vested in- i9 t Where, on a transfer of property, an interest there- in is created in favour of a person without specifying the time when it is to take effect, or in terms specifying that it is to take effect forthwith or on the happening of an event which must happen, such interest is vested, unless a contrary intention appears from the terms of the transfer. A vested interest is not defeated by the death of the transferee before lie obtains possession. Explanation. An intention that an interest shall not be vested is not to be inferred merely from a provision whereby the enjoyment thereof is postponed, or whereby a prior interest in the same property is given or reserved to some other person, or whereby income arising from the property is directed to be accumulated. until the time of enjoyment arrives, or from a provision that if a particular event shall happen, the interest shall pass to another person. When 20. Where, on a transfer of property, an interest unborn therein is created for the benefit of a person not then acquires living, he acquires upon his birth, unless a contrary inten- vested in- tion appear from the terms of the transfer, a vested in- transfer'fur terest, although he may not be entitled to the enjoyment bis benefit, thereof immediately on his birth. CONDITIONAL TRANSFER. 419 21. Where, on a transfer of property, an interest there- ACT IV or in is created in favour of a person to take effect only on \ 882 the happening of a specified uncertain event, or if a 21 25. 8 specified uncertain event shall not happen, such person thereby acquires a contingent interest in the property. p onti "g ent Such interest becomes a vested interest, in the former case, on the happening of the event, in the latter, when the happening of the event becomes impossible. Exception. Where, under a transfer of property, a person becomes entitled to an interest therein upon attain- ing a particular age, and the transferor also gives to him absolutely the income to arise from such interest before he reaches that age, or directs the income or so much thereof as may be necessary to be applied for his benefit, such interest is not contingent. 22. Where, on a transfer of property, an interest there- Transfer to in is created in favour of such members only of a class as members of shall attain a particular age, such interest does not vest att^a* 110 in any member of the class who has not attained that age. particular 23. Where, on a transfer of property, an interest there- age> in is to accrue to a specified person if a specified uncer- contingent tain event shall happen, and no time is mentioned for 9" bappen- the occurrence of that event, the interest fails unless such ^ec^ua-" event happens before, or at the same time as, the inter- certain mediate or precedent interest ceases to exist. eventl 24. Where, on a transfer of property, an interest there- Transfer to in is to accrue to such of certain persons as shall be su . ch of cer - . . , . -, i , ,1 , A . j . . tain persons surviving at some period, but the exact period is not speci- n s survive fied, the interest shall go to such of them as shall be a . 1 somepe- alive when the intermediate or precedent interest ceases specified, to exist, unless a contrary intention appears from the terms of the transfer. Illustration. A transfers property to B for life, and after his death to C and D, equally to be divided between them, or to the survivor of them. C dies during the life of B. D survives B. At B's death the property passes to D. 25. An interest created on a transfer of property and Condition- dependent upon a condition fails if the fulfilment of the al transfer - condition is impossible, or is forbidden by law, or is of such a nature that, if permitted, it would defeat the pro- visions of any law, or is fraudulent, or involves or implies injury to the person or property of another, or the Couit regards it as immoral or opposed to public policy. 420 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF Illustrations. 1 882 SECTIONS ( a -) A lets a farm to B on condition that he shall walk a hundred 26, 27. miles in an hour. The lease is void. (6.) A gives Rs. 500 to B on condition that he shall marry A's daughter C. At the date of the transfer C was dead. The transfer is void. (c. ) A transfers Rs. 500 to B on condition that she shall murder C. The transfer is void. (d.) A transfers Rs. 500 to his niece C if she will desert her husband. The transfer is void. 26 - Where the terms of a transfer of property impose tion prece- a condition to be fulfilled before a person can take an dent. interest in the property, the condition shall be deemed to have been fulfilled if it has been substantially complied with. Illustrations. (a.) A transfers Rs. 5,000 to B on condition that he shall marry with the consent of C, D and E. E dies. B marries with the consent of C and D. B is deemed to have fulfilled the condition. (6.) A transfers Rs. 5,000 to B on condition that he shall marry with the consent of C, D and E. B marries without the consent of C, D and E, but obtains their consent after the marriage. B has not fulfilled the condition. Condition- 27. Where, on a transfer of property, an interest there- to one per- in is created in favour of one person, and by the same son coupled transaction an ulterior disposition of the same interest fer 'to^an- is made in favour of another, if the prior disposition other on under the transfer shall fail, the ulterior disposition shall pHoTdis- take effect upon the failure of the prior disposition, al- position. though the failure may not have occurred in the manner contemplated by the transferor. But where the intention of the parties to the transac- tion is that the ulterior disposition shall take effect only in the event of the prior disposition failing in a particular manner, the ulterior disposition shall not take effect un- less the prior disposition fails in that manner. Illustrations. (a.) A transfers Rs. 500 to B on condition that he shall execute a certain lease within three months after A's death, and if he should neglect to do so, to C. B dies in A's life-time. The disposition in favour of C takes effect. CONDITIONAL TRANSFER. 421 (&.) A transfers property to his wife; but in case she should Ac-rlVop die in his life-time, transfers to B that which he had trans- 1882 ferred to her. A and his wife perish together, under circum- Ig^gJ 18 stances which make it impossible to prove that she died before ' him. The disposition in favour of B does not take effect. 28. On a transfer of property an interest therein may ulterior be created to accrue to any person with the condition transfer superadded that in case a specified uncertain event shall oThappen- happen such interest shall pass to another person, or that ing or not in case a specified uncertain event shall not happen such |!;": ing 111 1 T 1 OptJCl" interest shall pass to another person. In each case the fied event, dispositions are subject to the rules contained in sections ten, twelve, twenty-one, twenty-two, twenty-three, twenty- four, twenty-five, and twenty-seven. 29. An ulterior disposition of the kind contemplated Fulfilment by the last preceding section cannot take effect unless the . f cond , i - j'i.' j. j.i ^ 11211 j tlon subse- condition is strictly fulfilled. quent. Illustration. A transfers Rs. 500 to B, to be paid to him on his attaining his majority or marrying, with a proviso that, if B dies a minor or marries without C's consent, the Rs. 500 shall go to D. B marries when only 17 years of age, without C's consent. The transfer to D takes effect. p rior dig _ position not 30. If the ulterior disposition is not valid, the prior affected by disposition is not affected by it. 7uSr disposition. Illustration. A transfers a farm to B for her life, and, if she do not desert her husband, to C. B is entitled to the farm during her life as if no condition had been inserted. Condition that trans- 31. Subject to the provisions of section twelve, on a ^g ha t 11 transfer of property an interest therein may be created have effect with the condition superadded that it shall cease to exist *" case spe- ./ n j. i- n i cified un- in case a specified uncertain event shall nappen,or in case certain a specified uncertain event shall not happen. event hap- pens or does not Illustrations. happeu. (a.) A transfers a farm to B for his life, with a proviso that, in case B cuts down a certain wood, the transfer shall cease to have any effect. B cuts down the wood. He loses his life interest in the farm. 422 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP (&) A transfers a farm to B, provided that, if B shall not go 1882, to England within three years after the date of the transfer, his SECTIONS interest in the farm shall cease. B does not go to England _ ' within the term prescribed. His interest in the farm ceases. Suchcondi- 32. In order that a condition that an interest shall not" be"in- cease to ex ^ ma y be valid, it is necessary that the valid. event to which it relates be one which could legally constitute the condition of the creation of an interest. Transfer 33 Where, on a transfer of property, an interest on perform- therein is created subject to a condition that the person ance of act, taking it shall perform a certain act, but no time is bein<* spe- specified for the performance of the act, the condition cified for j s broken when he renders impossible, permanently or ance? f r an indefinite period, the performance of the act. Transfer 34. Where an act is to be performed by a person conditional either as a condition to be fulfilled before an interest ancTof " 11 " created on a transfer of property is enjoyed by him, act, time or as a condition on the non-fulfilment of which the ci e fied. Spe ~ interest is to pass from him to another person, and a time is specified for the performance of the act, if such performance within the specified time is pre- vented by the fraud of a person who would be direct- ly benefited by non-fulfilment of the condition, such further time shall us against him be allowed for per- forming the act as shall be requisite to make up for the delay caused by such fraud. But if no time is specified for the performance of the act, then, if its performance is by the fraud of a person interested in the non-fulfilment of the condition rendered impos- sible or indefinitely postponed, the condition shall as against him be deemed to have been fulfilled. Election. Election 35, Where a person professes to transfer property when n< s- w ^j cn jj e nas no r ight to transfer, and as part of the same transaction confers any benefit on the owner of the property, such owner must elect either to con- firm such transfer or to dissent from it ; and in the latter case he shall relinquish the benefit so conferred, and the benefit so relinquished shall revert to the transferor or his representative as if it had not been disposed of, subject nevertheless, where the transfer is gratuitous, and the transferor ELECTION. 4,23 has, before the election, died or otherwise become incapable ACT IV OF of making a fresh transfer, and in all cases where the transfer is for con- sideration, to the charge of making good to the disappointed transferee the amount or value of the property attempt- ed to be transferred to him. Illustrations. The farm of Suit An pur is the property of C and worth Rs. 800. A by an instrument of gift professes to transfer it to B, giving by the same instrument Rs. 1,000 to C. C elects to retain the farm. He forfeits the gift of Rs. 1,000. In the same case, A dies before the election. His represent- ative must out of the Rs. 1,000 pay Rs. 800 to B. The rule in the first paragraph of this section applies whether the transferor does or does not believe that which he professes to transfer to be his own. A person taking no benefit directly under a transaction, but deriving a benefit under it indirectly, need not elect. A person who in his one capacity takes a benefit under the transaction may in another dissent therefrom. Exception to the last preceding four rules. Where a particular benefit is expressed to be conferred on the owner of the property which the transferor professes to transfer, and such benefit is expressed to be in lieu of that property, if such owner claim the property, he must relinquish the particular benefit, but he is not bound to relinquish any other benefit conferred upon him by the same transaction. Acceptance of the benefit by the person on whom it is conferred constitutes an election by him to con- firm the transfer, if he is aware of his duty to elect and of those circumstances which would influence the judgment of a reasonable man in making an election, or if he waives inquiry into the circumstances. Such knowledge or waiver shall, in the absence of evidence to the contrary, be presumed, if the person on whom the benefit has been conferred has enjoyed it for two years without doing any act to express dissent. Such knowledge or waiver may be inferred from any act of his which renders it impossible to place the persons interested in the property professed to be 424 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP transferred in the same condition as if such act had 1882, no k b een done. SECTIONS 36 > 37< Illustration. A transfers to B an estate to which C is entitled, and as part of the same transaction gives C a coal-mine. C takes possession of the mine and exhausts it. He has thereby confirmed the transfer of the estate to B. If he does not within one year after the date of the transfer signify to the transferor or his represent- atives his intention to confirm or to dissent from the transfer, the transferor or his representatives may, upon the expiration of that period, require him to make his election ; and if he does not comply with such requisition within a reasonable time after he has received it, he shall be deemed to have elected to confirm the transfer. In case of disability, the election shall be post- poned until the disability ceases, or until the election is made by some competent authority. Apportionment. Apportion- 36. In the absence of a contract or local usage to nodical pe ~ th e contrary, all rents, annuities, pensions, dividends, payments and 'other periodical payments in the nature of in- minatiorfof c o me shall, upon the transfer of the interest of the interest of person entitled to receive such payments, be deemed, tuied 11 en ~ as Between the transferor and the transferee, to accrue due from day to day, and to be apportionable accord- ingly, but to be payable on the days appointed for the payment thereof. Apportion- 37. When, in consequence of a transfer, property is nefiTo'f* ob- divided and held in several shares, and thereupon the ligation on benefit of any obligation relating to the property as a severance. W j 10 } e passes from one to several owners of the property, the corresponding duty shall, in the absence of a contract to the contrary amongst the owners, be performed in favour of each of such owners in proportion to the value of his share in the property, provided that the duty can be severed, and that the severance does not substantially increase the burden of the obligation ; but if the duty cannot be severed, or if the severance would substantially increase the burden of the obligation, the duty shall be BONA FIDE TRANSFEREES. 425 performed for the benefit of such one of the several ACT IV OF owners as they shall jointly designate for that purpose: S^CTIO^ Provided that no person on whom the burden of the 38. obligation lies shall be answerable for failure to discharge it in manner provided by this section, unless and until he has had reasonable notice of the severance. Nothing in this section applies to leases for agri- cultural purposes unless and until the Local Government by notification in the official Gazette so directs. Illustrations. (a.) A sells to B, C and D a house situate in a village and leased to E at an annual rent of Rs. 30 and delivery of one fat sheep, B having provided half the purchase-money and C and D one quarter each. E, having notice of this, must pay Rs. 15 to B, Rs. 7^ to C, and Rs. 7^ to D, and must deliver the sheep according to the joiut direction of B, C and D. (6.) In the same case, each house in the village being bound to provide ten days' labour each year on a dyke to prevent inun- dation, E had agreed as a term of his lease to perform this work for A. B, C and D severally require E to perform the ten days' work due on account of the house of each. E is not bound to do more than ten days' work in all, according to such directions as B, C and D may join in giving. This as well as the preceding section would seem to be applicable to transfers by way of mortgage. B. Transfer of Immoveable Property. 38. Where any person, authorized only under circum- Transfer stances in their nature variable to dispose of immove- authorized able property, transfers such property for consideration, only under alleging the existence of such circumstances, they shall, as certain cir ~ , & e> 1,1, cumstances between the transferee on the one part and the transferor to transfer, and other persons (if any) affected by the transfer on the other part, be deemed to have existed, if the transferee, after using reasonable care to ascertain the existence of such circumstances, has acted in good faith. Illustration. A, a Hindu widow, whose husband has left collateral heirs, alleging that the property held by her as such is insufficient for her maintenance, agrees, for purposes neither religious nor chari- table, to sell a field, part of such property, to B. B satisfies himself by reasonable inquiry that the income of the property is insufficient for A's maintenance and that the sale of the field is necessary, and, acting in good faith, buys the field from A. 426 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF As between B on the one part and A and the collateral heirs on 1882, the other part, a necessity for the sale shall be deemed to have SECTION exigted> oy Transfer 39 "Where a third person lias a right to receive main- where third . . f. , person is tenance, or a provision tor advancement or marriage, trom entitled to fc ne profits of immoveable property, and such property is nance. " transferred with the intention of defeating such right, the right may be enforced against the transferee, if he has such intention or if the transfer is gratuitous ; but not against a transferee for consideration and without notice of the right, nor against such property in his hands. Illustration. A, a Hindu, transfers Sultanpur to his sister-in-law B, in lieu of her claim against him for maintenance in virtue of his having become entitled to her deceased husband's property, and agrees with her that, if she is dispossessed of Sultanpur, A will transfer to her an equal area out of such of several other specified vil- lages in his possession as she may elect. A sells the specified villages to C, who buys in good faith without notice of the agreement, B is dispossessed of Sultanpur. She has no claim on the villages transferred to C. See ante, pp. 331-333. This section contains a very important provision applicable to a Hindu widow's claim for maintenance. It has been asked, does it constitute an equitable lien? and if so, does it bind the estate in the hands of a bond fide purchaser for value ? Would notice of the mere existence of a right to maintenance be sufficient to bind the purchaser, or must it be notice of the existence of a charge actually created and binding the estate, in other words must it be notice of a claim which has actually matured into a lien ? The whole law on this subject, which is certainly in a somewhat tangled state, is reviewed by Mr. Justice West in the case of Lakshmen v. Sattya- bhama (I. L R., II Bom., 494,) and in which the following propositions are formulated : (i.) The mere circumstance that the purchasers had notice of her claim, is not conclusive of the widow's rights against the property in their hands. (ii.) If the property were sold in order to pay debts (not incurred for immoral purposes) of her husband, or his father, or grandfather, or for the benefit of the undivided family, or to satisfy a former decree obtained by the plaintiff herself against the same defendant for maintenance, such sale would be valid against her, whether or not the purchasers had notice of her claim. (iii.) The debts of the deceased owner take precedence of the main- tenance of the widow. The estate is properly applied, in the first instance, by the sons as managers in payment of such debts. (iv.) By a sale of the property, the sons cannot evade a personal liability to provide for the widow. HINDU WIDOW. 427 (v.) If a mother, foregoing her claim to a separate provision out of the ACT IV OF paternal property, resides with her sons or step-sons, and is maintained 1882, by them, she must submit to their dealing with the estate. A SECTION fraudulent alienation for the purpose of defeating her claims, will 39. not be supported, but the particular assignee for value acquires a ~~~ complete title. (vi.) In the case of a widow of an ordinary co-parcener as against the surviving members of the joint family, her claim being strictly to maintenance only, regulated by the circumstances of the joint family, it appears that, although she may have her maintenance made a charge on the property, yet, if she should refrain from that course, she leaves to the co-parceners an unlimited estate to deal with at their discretion and in good faith. (vii.) If there is an ample estate left, out of which to provide for the widow, or if, knowing of a proposed sale, she does not take any step to secure her own interest, no imputation of bad faith, or of abetting it, can be made against the purchaser of n portion of the joint property. If the widow, on the other hand, is not accepting support from the co-parcener, if she lives apart, and if the estate is small and insufficient, it is the vendee's duty, before purchasing, to inquire into the reason for the sale, and not by a clandestine transaction to prevent the widow from asserting her right against the intending vendor. It is in this connection that the doctrine of notice becomes of importance. (viii.) The knowledge of collateral rights created by agreement, in equity frequently qualifies those acquired by a purchaser, the widow's right to maintenance is a right maintainable against the holders of the ancestral estate in virtue of their holding no less through the operation of the law than if it had been created by agreement, and so when the sale prevents its being otherwise satisfied, it accompanies the property as a burden annexed to it in the hands of a vendee with notice that it subsists, though equity as between the vendee and the vendor will make the property retained by the latter primarily answerable. (ix.) Whether such a claim by a widow against the estate of her deceased husband in the hands of a purchaser, is enforceable or not, does not depend upon whether the remainder of the estate in the hands of the heir has been exhausted. What was honestly purchased, is free from her claim for ever. What was purchased in furtherance of a fraud upon her, or with knowledge of a right which would thus be prejudiced, is liable to her claim ; from the first the relations of the parties are determined once for all at the moment of the sale. (x.) There is no authority for the doctrine which makes the claim of widows not entitled to a share of property in case of partition, a real charge on the inheritance, and ranks the claim of widows who are so entitled as a mere moral obligation. In all cases it is a claim to maintenance merely, not interfering (so long as it has not been reduced to certainty by a legal transaction) with the right of the actually participant members to deal with the property at their discretion, provided this dealing is honest and for the common benefit. (xi.) The reduction of the number of surviving co-parceners to a single person makes no difference in the widow's legal position. The rights and obligations of the original co-parceners fall at last to 428 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF the sole survivor. The widows must be maintained by him out of the 1882, property, but he may still deal with the estate at his discretion in SECTIONS the absence of actual fraud or of a decree which has converted 40 42. some widow's claim into an actual right in re. The purchaser from ~ him takes a perfectly good title, and one which, if good at the time, cannot be impaired by subsequent changes in the circumstances of the vendor's family. (Lakshman Ramchandra Josi v. Sottyabhama Mabai, I. L. R., II Bom., 494. See Mayne's Hindu Law, sees. 418 421.) The protection, it will be observed, enjoyed by a person who hns a right toTeceive maintenance or a provision for advancement or marriage is very similar to the right of a creditor to follow the assets of a deceased debtor. (Greender v. Mackintosh, I. L. R., IV Gale., 897 ; Bazayet Hossein v. Dooli, 1. L. R., IV Culc., 402.) Burden of 40. Where, for the more beneficial enjoyment of his Imposing 1 own immoveable property, a third person has, indepen- restriction dently of any interest in the immoveable property of Tand 86 f another or of any easement thereon, a right to restrain the enjoyment of the latter property or to compel its enjoyment in a particular manner, or adon bli " where a third person is entitled to the benefit of an annexed to obligation arising out of contract and annexed to the ownership, ownership of immoveable property, but not amounting but not . r J> & amounting to an interest therein or easement thereon, to interest such right or obligation may be enforced against a ment. transferee with notice thereof or a gratuitous transferee of the property affected thereby, but not against a trans- feree for consideration and without notice of the right or obligation, nor against such property in his hands. Illustration. A contracts to sell Sultaupur to B. While the contract is still in force, he sells Sultanpur to C, who has notice of the contract. B may enforce the contract against C to the same extent as against A. Transferby 41. Where with the consent, express or implied, of the P ersons interested in immoveable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorized to make it : provided that the transferee, after taking reasonable care to ascertain that the transferor had power ^ to m ake the transfer, has acted in good faith, ing author- 42. Where a person transfers any immoveable property, vokeformer ^serving power to revoke the transfer, and subsequently transfer, transfers the property for consideration to another trans- ESTOPPEL. 429 feree, such transfer operates in favour of such transferee ACTIVOP (subject to any condition attached to the exercise of the 1882 power) as a revocation of the former transfer to the E 43* 01 extent of the power. Illustration. A lets a house to B, and reserves power to revoke the lease if, in the opinion of a specified surveyor, B should make a use of it detrimental to its value. Afterwards A, thinking that such a use has been made, lets the house to C. This operates as a revocation of B's lease subject to the opinion of the surveyor as to B's use of the house having been detrimental to its value. 43. Where a person erroneously represents that he Transfer is authorized to transfer certain immoveable property, \^ or \^l^' and professes to transfer such property for consideration, person such transfer shall, at the option of the transferee, operate ^' e j^ 36 on any interest which the transferor may acquire in such acquires property, at any time during which the contract of in r l er ^ m transfer subsists. transfer- Nothing in this section shall impair the right of trans- red - ferees in good faith for consideration without notice of the existence of the said option (a). Illustration. A, a Hindu, who has separated from his father B, sells to C three fields, X, Y and Z, representing that A is authorized to transfer the same. Of these fields Z does not belong to A, it having been retained by B on the partition ; but on B's dying A as heir obtains Z. C, not having rescinded the contract of sale, may require A to deliver Z to him. This section, while substantially following the English law on the subject of title by estoppel, is free from the technicalities in which it is entangled in the English law, and which have brought upon the rule the reproach that it treats a fictitious statement as true, ' falsehood being mude to have the effect of truth.' According to the English law, the words of the covenant must be clear and unambiguous that the covenantor has the legal estate. A mere covenant that he has the power to convey will not do, and it is even doubtful whether a covenant will do at nil, and whether there must not be a positive statement. (General Finance $c. Co. v. Liberator c. Co., 10 Ch. D., 15; Heath v. Crealock, L. R., 10 Ch., 30). According to the provisions of this section, a bare representation will be sufficient to create a title by estoppel. (Radhey v. Mahesk, I. L R., VII All., 864.) Then, again, there is another very material distinction between our law and the English law. The right conferred by this section may not be enforced against bond fide purchasers for value and without notice {a) Although the section speaks of erroneous representations, it is clear that it includes fraudulent misrepresentations. 4,30 TRANSFER OF PROPERTY ACT, 1882. Transfer C "" ACT IV OF of its existence. The provisions of the Act are therefore not open to 1882, the very strong observations made by the Muster of the Rolls in the SECTIONS ease to which 1 hiive just referred. I may notice in passing that this 44, 45. section contains a legislative reversal of the decision of the Allahabad - High Court in the case of Mahomed v. Karamut (IV All. H. C. Rep., 11.) It is scarcely necessary to observe that the right of a mortgagee to treat the after-acquired property as subject to his security can be exercised only as long as the relation of mortgagor and mortgagee lasts. (See ante, pp. 100 102.) 44. Where one or two or more co-owners of im- nioveable property legally competent in that behalf trans- fers his share of such property or any interest therein, the transferee acquires, as to such share or interest, and so far as is necessary to give effect to the transfer, the transferor's right to joint possession or other common or part enjoyment of the property, and to enforce a partition of the same, but subject to the conditions and liabilities affecting, at the date of the transfer, the share or interest so transferred. Where the transferee of a share of a dwellinghouse belonging to an undivided family is not a member of the family, nothing in this section shall be deemed to entitle him to joint possession or other common or part enjoy- ment of tlie house. The provisions of this section would seem to be applicable to transfers by way of mortgage. Joint 45. Where immoveable property is transferred for forTo^ consideration to two or more persons, and such considera- sideration. tion is paid out of a fund belonging to them in common, they are, in the absence of a contract to the contrary, respectively entitled to interests in such property identical, as nearly as may be, with the interest to which they were respectively entitled in the fund ; and where such con- sideration is paid out of separate funds belonging to them respectively, they are in the absence of a contract to the contrary, respectively entitled to interests in such pro- perty in proportion to the shares of the consideration which they respectively advanced. In the absence of evidence as to the interests in the fund to which they were respectively entitled, or as to the shares which they respectively advanced, such per- sons shall be presumed to be equally interested in the property. PRIORITY. 431 46. Where immoveable property is transferred for ACT IV OF consideration by persons having distinct interests therein, ' the transferors are, in the absence of a contract to the 4643. contrary, entitled to share in the consideration equally, where their interests in the property were of equal value, and, where such interests were of unequal value, pro- sideration portionately to the value of their respective interests. bav^d" 8 Illustrations. tilict ia " terests. (a.) A, owning a moiety, and B and C, each a quarter share of mauza Sultanpur, exchange an eighth share of that mauza for a quarter share of mauza Lalpura. There being no agreement to the contrary, A is entitled to an eighth share in Lalpura, and B and C each to a sixteenth share in that mauza. (6.) A, being entitled to a life-interest in mauza Atralie and B and C to the reversion, sell the mauza for Rs. 1,000. A's life-interest is ascertained to be worth Rs. 600, the reversion Rs. 400. A is entitled to receive Rs. 600 out of the purchase- moiiey, B and C to receive Rs. 400. 47. Where several co-owners of immoveable property Transfer transfer a share therein without specifying that the trans- b - v co-own- fer is to take effect on any particular share or shares of fn^mmoa the transferors, the transfer, as among such transferors, property, takes effect on such shares equally where the shares were equal, and where they were unequal, proportionately to the extent of such shares. Illustration. A, the owner of an eight-anna share, and B and C, each the owner of a four-anna share, in mauza Sultanpur, transfer a two- anna share in the mauza to D, without specifying from which of their several shares the transfer is made. To give effect to the transfer, one-anna share is taken from the share of A, and half an anna share from each of the shares of B and C. 48. Where a person purports to create by transfer at Priority of different times rights in or over the same immoveable ^[^ by property, and such rights cannot all exist or be exercised transfer, to their full extent together, each later created right shall, in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created. This is only a paraphrase of the maxim gut prior est tempore potior est jure^ but such priority may be forfeited in various ways (section 78), while the rule itself is subject to exceptions both statutory uud otherwise (Lecture XII, ante. See also notes to sees. 78-79, pott.) 432 TRANSFER OP PROPERTY ACT, 1882. Trans- feree's right un- der policy. live title. ACT IV OF 49. Where iramoveable property is transferred for 1882, consideration, and such property or any part thereof is at kk e ^ a e Q ^ e trans er i nsure( i against loss or damage by fire, the transferee, in case of such loss or damage, may, in the absence of a contract to the contrary, require any money which the transferor actually receives under the policy, or so much thereof as may be necessary, to be applied in reinstating the property. The provisions of this section are apparently based on the judgment of Lord Justice James in Raynerv. Preston (18 Ch. D., 1.) As point- ed out by the learned Judge the proposition formulated in this section is not only bnsed on, what may be called, ' the natural equity which commends itself to the general sense of the lay world, not instructed in any legal principles,' but also on 'artificial equity ' as it is understood and administered in the English system of jurisprudence. The rights and liabilities of mortgagees in connection with insurance are dealt with in sees. 72 and 76 of the Act. Rent Una 50. No person shall be chargeable with any rents or hoider'un- profits of any immoveable property, which he has in good der defec- faith paid or delivered to any person of whom he in good faith held such property, notwithstanding it may after- wards appear that the person to whom such payment or delivery was made had no right to receive such rents or profits. Illustration. A lets a field to B at a rent of Rs. 50, and then transfers the field to C. B, having no notice of the transfer, in good faith pays the rent to A. B is not chargeable with the rent so paid. 51. When the transferee of immoveable property makes any improvement on the property, believing in good faith that he is absolutely entitled thereto, and he is subsequent- ly evicted therefrom by any person having a better title, the transferee has a right to require the person causing the eviction either to have the value of the improvement estimated and paid or secured to the transferee, or to sell his interest in the property to the transferee at the then market value thereof irrespective of the value of such improvement. The amount to be paid or secured in respect of such improvement shall be the estimated value thereof at the time of the eviction. Improve- ments made by bond fide holders under defective titles. US PENDENS. 433 When, under the circumstances aforesaid, the transferee ACT IV OP has planted or sown on the property crops which are grow- 1882 - ing when he is evicted therefrom, he is entitled to such crops s" 01 and to free ingress and egress to gather and carry them. 52. During the active prosecution in any Court having authority in British India, or established beyond the limits Transfer of British India by the Governor General in Council, of a of proper- contentious suit or proceeding in which any right to im- g^eia"-* moveable property is directly and specifically in question, ingtbere- the property cannot be transferred or otherwise dealt with to * by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose. See ante, pp. 396-97. The doctrine of Us pendens was thought at one time to rest on the principle f constructive notice, but it now rests upon a surer founda- tion. "It would be plainly impossible that any action or suit could be brought to a successful termination if alienations pendente lite were allowed to prevail. The plaintiff would be liable to be defeated in every case by the defendant's alienating before the judgment or decree, and would be driven to commence his proceedings de novo, subject again to be defeated by the same course of proceedings." (Bellamy v. Saline, 1 DeG. & J., 566.) The question in dispute must relate to an interest in land, and not merely to money secured upon it. ( Worsley v. Ld. Scarborough, 3 Atk., 392 ; cf. Jennings v. Bond, 2 Jo. & Lat., 720. See also the recent case of Price v. Price, 35 Ch. D., 297 ; cf. Wigney v. Wigney, 7 P. D., 228.) It is sometimes said that Us pendens is not in itself notice for the purpose of postponing a registered instrument, and the dictum of Sir William Grant in Wyult v. Harwell, 19 \es., 435, is cited for the purpose. (See also Wallace v. Donegal, \ Dr. & Wnl., 461.) The dictum, however, rests on the notion that lis pendens operates only by way of notice, but this has now ceased to be recognised as the true basis of the principle of lis pendens. An alienation therefore by a registered instrument pendente lite will not cany priority with it. (See Lakshman v. Dasrat, I. L. It., VI Bom., 168; and cases cited therein J It seems, however, that if the plaintiff in the action has only a defeasible estate, the defendant is at liberty to put an end to it and Uuia defeat the plaintiff's right. (Sudden's Vendors and Purchasers, 759.) It ought to be mentioned that, although a purchaser is not bound by the equities of a co-defendant to which it is not necessary to give effect f<>r the purposes of the suit, he will take subject to the interests of the defendants inter se which naturally arise out of the rights of the plaintiff. (Tyler v. Thomas, 25 Beav., 47; Bellamy v. Saline, 1 DeG. & J., 566.) In this country lis pendens takes effect from the service of the summons. (liadhasham v. Shiou, I. L. 11., XV Calc., 647) (a). It (a) As to the law in England on. the subject, see Coote's Mortgage, 864 ; Fisher, p. 550. R. B. G., T. P. A. 28 TRANSFER OF PROPERTY ACT, 1882. ACT IV OK seems that an appeal woukl be regarded as a continuation of tlie 1882. Us so as to bind a pnrclinser. In a recent case where the property SECTION W as po ld by the defendant while the action was pending in the original ^- Court, it was held that the purchaser was bound by the judgment of the Court of appeal, although the judgment of the original Court was against the plaintiff and the purchaser was not a party to the proceedings in appeal. (Govind Chunder Roy v. Gooroo Churn Kahaakar, I. L. It., XV Calc., 94.) This, however, would seem to be carrying the doctrine too far. (See the Judgment of Glover, J., in Chunder Kumar Lahiri v. Gopi Kisto Goxsamy, XX Suth. W. R., 204 ; D. N. Mitter, J., dissented, relying upon the dictum of Lord Kedesdale in Gore \. Stackpole, 1 Dew, 31 ; but see Sugden's Vendors and Purchasers, 758 ; 16 Ves., 213.) An appeal in ihig country does not operate as a stay of proceedings, and it seems to me that a judg- ment does not cense to be final, simply because if it were reversed on appeal, the successful party would be entitled to a writ of restitution. The finality of a judgment is not affected by the fact that an appeal will lie from it to a superior Court, and to hold a purchaser bound by the proceedings in appeal to which he is no party, although the judgment of the original Court was in favour of his vendor would seem to be pushing the doctrine to a point at which it ceases to be useful. The law on the subject is thus stated in Fisher's Mortgage, p. 549 : " It may be observed, with respect to appeals from the Court below, either to a superior jurisdiction there or to the House of Lords, that an order for an appeal seems not to be a continuation of the Us peiidens, because, as a general rule, the appeal puts no stop to the pro- ceedings under the decree. The lids conir.stulio is assumed to be at an end, until the decree is varied or reversed. And the same practice pre- vails in the House of Lords, which seems to be a strong argument against the continuation of the lis pendens during the appeal. Of course, if the registration be allowed to drop during the period allowed for appeal, the question will not arise." (See also Coote's Mortgage, p. 863.) It ought to be added that in England the pendancy of an appeal cannot be pleaded as a defence to an action on a judgment Bullen and Leake, Part IT, p. 233. The principle of lis pendens must be applied with the greatest caution in this country, nut only because there is no law for the registration of a lis pendens, but also because there is much danger of secret collusion. (See the observations of their Lordships of the Privy Council in Tarakantv. Puddomonry, X Moore's lud. A pp., 476.) It will be observed that the section in terms deals only with volun- tary alienations (a), but it must not be supposed that the principle is confined to such alienations. It is true that there is a conflict of opinion on the point ; but the weight of authority seems to be in favour of the extension of the dootrine to alienations in invitum. (Gobind Chunder Roy v. Gooroo Charan Karmakar, I. L. R., XV Calc., 94, and cases cited in the report; Lakshman v. Dasrat, 1. L. It., VI Bom., 168, and cases cited therein) (i). In conclusion, it is necessary to state that, an alienee is not bound by any order whatever that may be made in the suit, but only by (a) Cf. section 2, clause (cT). (&) In the case of NilaMnt v. Sliurcsh (I. L. R., XII Calc., 414), their Lordships of the Privy Council express strong doubts as to the correct- ness of confining the principle to voluntary alienations. LIS PENDENS. 435 proceedings which, from the nature of the claim and the relief prayed ACT IV OP for, he might expect would take place. (Kailu* v. Foolchand, VIII 1882. Beng. I,. Hep., 474; Kaximunnissa v. Nilrulna, 1. [,. 11., VIU Cale., SECTION 79; IXCalc. L. Hep., 173; X Cnlc. L. Hep., 113.) 53. I ought to mention that, to constitute litis pendeulia as observed by Lord Lyndhurst, L. C., in Kinsman v. Kinsman, (1 11. & M., 622), there must be litis conteslatio ; therefore if the suit be ended by decree or otherwise, there is no Us pendens to affect the hind. The matter then becomes res judicuta. In the case of a sale by a mortgagee under a decree, the proceedings for the purposes of Us pendens must, however, be taken to continue till the property is actually sold. (O. A., No. 104 of 1883, Muthurahanta Shah Chowdry v. Anund Mohun Doss, Calc., unreported.) In addition to the cases cited above, as well as at p. 396, ante, the following cases may be referred to on the question of Us pendens. {Bull v. HutcMns, 32 Beav., 615; Gonrmani v. Reed, 2 Tay. & Bell, 83; Umamayi v. Tarini, VII Suth. W. 11., 225 ; Annundmoyi v. Dhaneiidra, I Suth. VV. 11., 103 ; S.C., on appeal, XVI Suth. W. H., P. C., 19; VIII Beng. L. Hep., 122; Tranquebarsami v. Ammai, VI Mad. II. C. Kef)., 238 ; Indnrjeet v. Poitie, XIX Suth. VV. 11., 197 ; Frnoal v. Sanagapalli, VII Mad. H. C. Hep., 104; Rajkishen v. lfadkamadhot>,XXl$u&. W. H., 349; Jharoo v. Rajchundra, I. L. R., XII Gal., 299; Ali Shah v. Husain, I. L. 11., I All., 588 ; Nuffur v. liamlxl, XV Suth. W, R., 308 ; Kali Prosad v. Bull Singh, I. L. H., IV Calc., 789 ; III Calc. L. Rep., 396 ; Lain Mulji v. Knshi Bai, I. L. H., X Bom , 400 ; Balaji v. Kiixhalji, XI Bom. H. C. Hep., 24; Bazaye.t v. Dooli, I. L. H., IV Calc., 40-2 ; Sheo Ratan v. Chotay, I. L. It., Ill All., 647 ; Sum v. Ap- pundi, VI Mad. H. C. Hep., 75 ; Bissonath v. iiadha, XI Suth. W. H , 554 ; Luchmin v. Koteshar, I. L. 11., II All., 826 ; Nilnkanth v. Surexh, I. L. H., XII Gale., 418 ; Bhagwnn v. Nathn, I. L. 11., VI All., 444 ; Prmijioan v. Baju, I. L. H., IV Bom., 34 ; Chundernoth v. Nilakdnth, I. L. H., VIII Calc., 690 ; Parvali v. Kisan Singh, I. L. R., VI Bom., 567 ; Sad'isiva v. Sabdputhi, I. L. H., V Mad., 106 ; Anand v. Pttnchilul, V Beng. L. Rep., 703; Ham Chandra v. Mahnduji, I. L. H., IX Horn., 141 ; Brahannayaki v. Krishna, I. L. R., IX Mad., 92 ; Radhika v. Radhammii, I. L. R., VII Mad., 96 ; Bhnggobntty v. Shum/ichurn, I. L. R., I Calc., 337 ; Bhanoomutty v. Prem Chund, XV Beng. L. Rep., 28 ; Kondi Mnnisami v. Dakshanamurthi, I. L. H., V Mad., 371 : Rumbhnt v. Laksman, I. L. H., V Bom., 630 ; Azim-umiKSsa v. Dale, VI Mad. H. C. Rep., 455 ; Fuzeelun v. Omdah, X Suth. VV. It., 469; Digambnri v. JEshan, XV Suth. W. R., 372 ; f'uluck v. Mohabeer, XXIII Suth. W. R., 382 ; Ramlachan v. Ramnarayan, I Calc. L. Hep., 296 ; Krishnappa v. Bahiru, VIII Bom. H. C. Hep., A. C. J., 55; Guzee-ood-deen v. Bhocknn, II Agra H. C. Rep., 301 ; Ramsaran v. Omirta, I. L. H., Ill All., 369 ; Karoo v. Dataram, S. D. A., 1857, p. 953; Sheobukshv. Sheochurn, S. D. A., 1858, p. 498; Woomasnndari v. Rughonnth, II S. D. A., 1860, p. 35; Hurruck v. Mohumed, S. D. A., N. W. P., 1853, p. 372.) 53. Every transfer of immoveable property, made with Fraudulent intent to defraud prior or subsequent transferees thereof transfer * for consideration, or co-owners or other persons having an interest in such property, or to defeat or delay the creditors 436 TRANSFER OF PROPERTY ACT, 1882. 54, 55. ACT IV OP of the transferor, is voidable at the option of any person so defrauded, defeated or delayed. Where the effect of any transfer of immoveable property is to defraud, defeat or delay any such person, and such transfer is made gratuitously or for a grossly inadequate consideration, the transfer may be presumed to have been made with such intent as aforesaid. Nothing contained in this section shall impair the rights of any transferee in good faith and for con- sideration. " Sale " defined. Sale bow made. Contract for sale. Rights and liabi- lities of buyer and seller. CHAPTER III. OF SALES OF IMMOVEABLE PROPERTY. 54. "Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and part- promised. Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument (a). In the case of tangible immoveable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Deliveiy of tangible immoveable property takes place when the seller places the buyer, or such person as he directs, in possession of the property. A contract for the sale of immoveable property is a con- tract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property. 55. In the absence of a contract to the contrary, the buyer and the seller of immoveable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following, or such of them as are applicable to the property, sold : (1) The seller is bound ( o) This clause would seem to render the registration of the transfer of a mortgage of immoveable property compulsory whatever may be the value of the property or the amount of the mortgage; (distinguish Kallta v. Chandan, I. L. R., X All., 20.) DUTIES OF SELLER. 437 (a) to disclose to the buyer any material defect in the ACT IV OP property of which the seller is, and the buyer is not, g^um aware, and which the buyer could not with ordinary 55. care discover ; (b) to produce to the buyer on his request for examina- tion all documents of title relating to the property which are in the seller's possession or power ; (c) to answer to the best of his information all relevant questions put to him by the buyer in respect to the property or the title thereto ; (d) on payment or tender of the amount due in respect of the price, to execute a proper conveyance of the property when the buyer tenders it to him for execution at a proper time and place ; (e) between the date of the contract of sale and the delivery of the property, to take as much care of the property and all documents of title relating thereto which are in his possession, as an owner of ordinary prudence would take of such property and documents ; (/) to give, on being so required, the buyer, or such person as he directs, such possession of the property as its nature admits ; (g) to pay all public charges and rent accrued due in respect of the property up to the date of the sale, the interest on all incumbrances on such property due on such date, and, except where the property is sold subject to incumbrances, to discharge all incumbrances on the property then existing. (2) The seller shall be deemed to contract with the buyer that the interest which the seller professes to trans- fer to the bu} r er subsists and that he has power to transfer the same : Provided that, where the sale is made by a person in a fiduciary character, he shall be deemed to contract with the buyer that the seller has done no act whereby the property is incumbered, or whereby he is hindered from transferring it. The benefit of the contract mentioned in this rule shall be annexed to, and shall go with, the interest of the transferee as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested. (3) Where the whole of the purchase-money has been paid to the seller, he is also bound to deliver to the buyer 438 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF all documents of title relating to the property which are 1SS9 it 11 > 1TOZ - m the sellers possession or power : 5 5> ' Provided that (a), where the seller retains any part of the property comprised in such documents, he is entitled to retain them all, and (&), where the whole of such pro- perty is sold to different buyers, the buyer of the lot of greatest value is entitled to such documents. But in case (a) the seller, and in case (6) the buyer of the lot of greatest value, is bound, upon every reasonable request by the buyer, or by any of the other buyers, as the case may be, and at the cost of the person making the request, to produce the said documents and furnish such true copies thereof or extracts therefrom as he may require ; and in the meantime, the seller, or the buyer of the lot of great- est value, as the case may be, shall keep the said docu- ments safe, uncancelled and undefaced, unless prevented from so doing by fire or other inevitable accident. (4) The seller is entitled (a) to the rents and profits of the property till the ownership thereof passes to the buyer ; (6) where the ownership of the property has passed to the buyer before payment of the whole of the purchase- mone} r , to a charge upon the property in the hands of the buyer for the amount of the purchase-money, or any part thereof remaining unpaid, and for interest on such amount or part. (5) The buyer is bound (a) to disclose to the seller any fact as to the nature or extent of the seller's interest in the property of which the buyer is aware, but of which he has reason to believe that the seller is not aware, and which materially increases the value of such interest ; (6) to pay or tender, at the time and plane of com- pleting the sale, the purchase-money to the seller or such person as he directs : provided that, where the property is sold free from incumbrances, the buyer may retain out of the purchase-money the amount of any incumbrances on the property existing at the date of the sale, and shall pay the amount so retained to the persons entitled thereto ; (c) where the ownership of the property has passed to the buyer, to bear any loss arising from the destruction, injury or decrease in value of the property not caused by the seller : VKNDOB'S LIEN. 439 (tZ) where the ownership of the property has passed ACT IV OF to the buyer, as between himself and the seller, to pay all g l ^ 2 - public charges and rent which may become payable in 55. respect of the property, the principal moneys due on any incumbrances subject to which the property is sold, and the interest thereon afterwards accruing due. (6) The buyer is entitled (a) where the ownership of the property has passed to him, to the benefit of any improvement in, or increase in value of, the property, and to the rents and profits thereof ; (6) unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him with notice of the payment, to the extent of the seller's interest in the property, for the amount of any purchase-money pro- perly paid by the buyer in anticipation of the delivery and for interest on such amount ; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if ny) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission. An omission to make such disclosures as are mentioned in this section, paragraph (1), clause (a), and paragraph (5), clause (a), is fraudulent (a). See ante pp. 322325. The lien of the vendor, and the same observation applies to the lien of the vendee, is sometimes rested in English law on the ground of nn implied contract between the parties. Hut the lien may more properly be said to arise independently of contract. In the case of Krttlewell v. Watson (26 Ch. 1)., 501), where it was contended that the vendor's lien could not be enforced against a purchaser from the vendee if no memorial of the lien is registered, Lord Justice Liiulley in delivering thejudgment of the Appeal Court observed : l ' The primd facie right of an unpaid vendor of land to an equitable lien upon it for the amount of his unpaid purchase-money is too well established to be disputed. The right arises whenever there is a valid contract of sale and the time for completing that contract has arrived and the purchase-money is not duly paid. There is no necessity for the vendor to stipulate for the lien ; and although the lien arises from, and may in one sense be said to be created by, the contract of sale, still no contract conferring the lien is necessary, and in that sense the lien mny be said to arise indepen- dently of contract. No contract to confer the lien being necessary, it follows that where it is not in fact conferred by a written document, there is no instrument creating it, a memorial of which can be regis- () In addition to the cases cited in pa go 325, ante, see Ycllappa v. Mant-appi, III Bom. H. C. Hep., 102. 440 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF tered under the provisions of the statute of Anne (2 & 3 Anne, c. 4). 1882, The vendor's lien is in this respect like a deposit of deeds as a security SECTION for a loan without any memorandum or document showing the purpose 56 - of deposit. Sumpterv. Cooper (2 B. & Ad., '223) decided that the sta- tute does not apply to a security so created, and no other decision would be in accordance with the language of the Act. Such cases are not provided for by the Statute, and it is not competent, for this or indeed any Court to hold a transaction to be within the provisions of a statute, when its language clearly does not, apply to the transaction in question. We are unable, therefore, to accede to the contention that in this case the vendor's lien must be negatived simply on the ground that no memorial of it was registered. The answer to that question is, there vtas no document of which a memorial could be made." It is necessary to state that the lien may be claimed not only by the vendor, hut also by a third person advancing the purchase- money. (Driv- ing v. Frost, 3 My. & Cr., (573, where, however, there WHS a deposit, of title deeds. Meexon v. Clarkson, 4 Ha.. 97.) The lien <>f the vendee may also extend to the costs of a suit to compel specific performance of the contract. (Turner v. Marriot 1 , 3 Eq., 744.) A similar rijiht is also re- cognised in favour of a sub-purchaser upon the interest acquired by the vendee by part payment of ihe purchase-money. (Abennruin Iron Works v. Wicheiis, 4 Oh. D , 101). The pin chaser may claim a lien on the purchase-money if he is evicted from the property, but, of course, this right cannot be exercised if the money is not earmarked. I ought to mention that in one case the lien was held to extend to advances made by the vendor for improvements. (Exp. Linden, 1 M. D. & 1)., 428.) If, however, a person enters into a contract to expend a certain sum of money on land, and after spending part, of it declines to per- form the contract, he acquires no lien on the land for the money which he has expended. (Watlis v. Smith, 21 Ch. D., 243.) The lien being merely equitable will not bind a purchaser with- out notice. As the lien rests on a qunsi-contract, it may be waived by the parties either expressly or impliedly, but the lien is not lost unless there is a clear expression of the intention of the parties that it shall not subsist. But the taking a. distinct security is always prima fncie evidence of a waiver of the lien (see the notes to Machreth v. Symmons, White and Tudor's L. (3 , Vol. I., p. 379). It is needless to add that no lien will arise either in favour of the vend< r for the unpaid purchase-money or of the purchaser for his advances if the contract is not completed by reason of his own act or default. Sale of one 56. Where two properties are subject to a common f o W ti charge, and one of the properties is sold, the buj'er is, subject to as against the Sf Her, in the absence of a contract to the a common con trury, entitled to have the charge satisfyed out of the other property, so far as such property will extend (a). See ante, pp. 350353. This section which is bnsed on the English law rests on the notion that the vendor prima facie conveys to the purchaser not simply the equity of redemption but the property itself, free from any liability (#) Compare clause ( notice, declai'e the property to be freed from the incum- SECTIOU j-, rancej an( j make' any order for conveyance, or vesting order, proper for giving effect to the sale, and give direc- tions for the retention and investment of the money in Court. (c) After notice served on the persons interested in or entitled to the money or fund in Court, the Court may direct payment or transfer thereof to the persons entitled to receive or give a discharge for the same, and generally may give directions respecting the application or distri- bution of the capital or income thereof. (d) An appeal shall lie from any declaration, order or direction under this section as if the same were a decree. (e) In this section "Court " means (1) a High Court in the exercise of its ordinary or extraordinary original civil jurisdiction, (2) the Court of a District Judge within the local limits of whose jurisdiction the property or any part thereof is situate, (3) any other Court which the Local Government may, from time to time, by notification in the official Gazette, declare to be competent to exercise the jurisdiction conferred by this section. This section which is drawn on the lines of section 5 of the English Conveyancing Act, 1881, arms the Court with a power whicli it did not previously possess. As the law stood before the passing of the Act, no land subject to an incumbrance could be sold free from it without the consent of the incumbrancer. Under this Act a different form of security may be substituted for the land. A mortgagee may also, contrary to the general rule, be redeemed before the mort- gage-money is payable, but in such cases compensation will probably be allowed to the mortgagee for anticipating the payment, as also for any loss which may be sustained by him by reason of the transmu- tation of the security. Although the section allows a mortgagee to be redeemed in his absence, it can be done as a rule only in those cases where it is impossible to communicate with him. It is unfortunate that the word incumbrance is not anywhere defined in the present Act. In the corresponding English Act, it includes a mortgage in fee or for a less estate and a trust for securing money and a lien and charge of a portion annuity or other capital or annual sum. The section provides for two classes of cases, one where an annual or monthly sum is charged on a property or a capital sum is charged on a determinable interest in the property, and the other where a capital sum is charged on the property. A determinable interest in the property would seem to point to a partial interest carved out of some other estate, where the whole is sold together ; for example, in the case of a sale by a tenant for life and the remain- derman, where there is a mortgage of the life estate, the dividends DISCHARGE OP INCUMBRANCES. 443 will represent the income to which the incumbrancer of the tenant ACT IV OP for life is entitled during the Intter's life; and the investments will 1882. represent what the remainderman is entitled to after the determination SECTION of the life estate. 57. For a form of order made in case where the property was subject to an annuity, see Patching v. Bull (30 W. R., 244). For a form of order under the corresponding English section in an action to which the incumbrancer is not a party, see Dickin v. Dichin (30 \V. II., 887). It seems that the Court cannot be called on to act under this section where the incumbrance or rent-charge exceeds the value of the land. In the recent case of G. N. Ity. and Sanderson (25 Ch, D., 788\ where the question arose under the corresponding section of the English Act, Pearson, J., in giving judgment observed : " The question is, whether, under section 5 of the Conveyancing Act, I have power, or, at any rate, whether I ought, to compel the Company to take the necessary steps to release the land from the rent-charge. Section 5 is only permissive in its language. It says that ' the Court may, if it thinks fit .... direct or allow payment into Court' of the amount mentioned, ' and the Court may, if it thinks fit .... declare the land to be freed from the incumbrance.' lu the present case, the sum which would have to be paid into Court would be about 2,300. The first question is, whetlier section 5 applies at all to a case of this kind, and I am rather disposed to think that it does not. I am not asked by the vendors to make use of the power conferred by this section, but I am asked by the purchaser to say thit the vendors ought to apply to the Court to make use of that power, when the vendors do not wish that the Court should do so. I think that, when it is said that the Court may ' direct or allow payment into Court,' the word 'direct' applies to a sale by the Court, and the word ' allow ' to a sale out of Court. The rent-charge is secured on the land by an Act of Parliament, and I have great difficulty in saying that section 5 of the Conveyancing Act applies at all to such a case, so as to enable me to take away from the persons who are entitled to the rent-charge that which the other Act has given them, without their consent, and, indeed, without any notice to them. I should hesitate a long time before I could come to such a conclusion. But, supposing that, upon the application of the vendors, I could declare the land free from this rent-charge, what I have to consider is, whether, where the vendors make no such application, I ought to insist on their doing so, when they would have to pay into Court a sum very considerably in excess of the purchase-money of the land. I am not aware that the Court has ever said that a vendor is not entitled to rescind a contract, when the contract contains a provision such as that which is contained in the present contract, and when the result of his not rescinding would be to impose on him terms which he never contemplated, and never could have contemplated, and which if he was not a rich man, would inflict on him the greatest possible hardship. In my opinion, my decision ought not to depend on the length of the vendor's purse. In the case of any ordinary vendor, I think I should have declined to order him to pay into Court a sum very nearly three times the amount of his purchase-money, and the fact that the vendors are a wealthy company, ought not, in my opinion, to make any difference. I think that the Company are entitled to rescind the contract, unless the purchaser is willing to waive his requisition." 444 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF 1882, SECTION 58. "Mort- gage," " mort- gagor " and " mort- gagee " defined. OF CHAPTER IV. MORTGAGES OF IMMOVEABLE PROPERTY AND CHARGES. 58. Simpie mortgage. Mortgage by condi- tional sale, Usufruc- tuary mortgage. _ ., (a.) A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the per- formance of an engagement which may give rise to a pecuniary liability. The transferor is called a mortgagor, the transferee a mortgagee ; the principal money and interest of which payment is secured for the time being are called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed. (&.) Where, without delivering possession of the mort- gaged property, the mortgagor binds himself personally to pay the mortgage-money, and agrees, expressly or impliedly, that, in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary, in payment of the mortgage-money, the transaction is called a simple mortgage and the mortgagee a simple mortgagee. (c.) Where the mortgagor ostensibly sells the mortgaged property on condition that, on default of payment of the mort- gage-money on a certain date, the sale shall become absolute, or on condition that, on such payment being made, the sale shall become void, or on condition that, on such payment being made, the buyer shall transfer the property to the seller, the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale (a). (c.) Where the mortgagor delivers possession of the mortgaged property to the mortgagee, and authorises him to retain such possession until payment of the mortgage- money, and to receive the rents and profits accruing from the property and to appropriate them in lieu of interest, or in payment of the mortgage-money, or partly in lieu of interest and partly in payment of the mortgage-money, () Qy. Would a mortgagee under a conditional sale, containing a covenant to pay, be entitled to a decree for sale 1 MORTGAGE. 445 the transaction is called an usufructuary mortgage and the ACTIVOP mortgagee an usufructuary mortgagee. SECTIOH (e.} Where the mortgagor binds himself to re-pay the 68. mortgage-money on a certain date, and transfers the mort- ~~ gaged property absolutely to the mortgagee, but subject to u ',o?tgage. a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage (a). The words ' transfer of an interest' in the definition of n mortgage have given rise to a good deal of discussion in connection with wli.-it are called hypothecations or simple mortgages. It has been said that an essential of a mortgage, except an equitable mortgage, is that some estate in the lands shall be transferred by the mortgage to the mortgagee, and Coke on Littleton and Bacon's Abridgment have been cited for the proposition (Ratigtuami v. MuttukuHiurappa, 1. L. It., X Mad., 509). It seems to me, however, with great deference that a reference to English authorities on the point is likely to be mis- leading. The definition of the word mortgage in the English law as pointed out by Mahmood, J., has not been always accepted as applicable to pledges of land in this country ; the word mortgage being habitually used to denote equitable liens as well as mort- gages properly so called, and the Legislature in cl. b seems to use the expression in its larger sense, for it is quite clear that in a simple mortgage no estate passes to the mortgagee. He acquires only a right which has been described as a right in in re aliena. " Tiie right of sale," says Professor Holland, " is one of the component rights of ownership, and may be parted with separately in order thus to add security to a personal obligation. When so parted with it is a right of pledge, which may be denned as ' a right in rem, realisable by sale, given to a creditor by way of accessory security to a light in personam.'" Holland's Jurisprudence, p. 187. According to the theory of the EnoTish law, a power of sale is nothing but an authority to defeat the equity of redemption, and when the mortgagee sells, he transfers the legal estate not by means of a power but by virtue of his legal owner- ship (In re Harwood, 35 Oh. D., 470). In the case of a simple mortgage in this country, the practical result is the same so far as the purchaser is concerned. But it is reached by a different process. The authorities, it would seem, are also not quite consistent as to whether in order to constitute a simple mortgage, the power of sale should bo one given to the lender himself, or whether it may not be exercised by the Court on behalf of the mortgagee. (See in addition to the cases cited in Lee. IV, p. 125 ; Rangaaami v. HJulliikumaruppa, 1. L. 11., X Mad., 509 ; Aliba v. Nunu, I. L. 11., IX Mad., 218). It is (a) Where the deed contains no covenant to repay, the loan may be recovered as a simple contract-debt. (Yates v. Aston^ 4 Q. B.. 182; Mathews v. Blackmore, 1 H. & N., 762.) A covenant, however, may be sometimes implied from a mere acknowledgment of the debt in the deed. The definition would, however, seem to exclude a well-known class of securities ; I mean mortgages by trustees under a power, where there is 110 cestui que trust to euter iuto the usual covenants. 446 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP said in the latter cases that the distinction between a simple mortgage 1882. and a charge consists in this, viz., where a power of sale is conferred SECTION U p n the mortgagee to be exercised by him without the intervention 5 ^. of the Court the transaction is a mortgage, otherwise it only creates a charge. I may, however, be permitted to observe that this view of a simple mortgage is hardly consistent with the words 'cause to be sold,' or with the provisions of section 69 of the Act. It is also in- consistent with the acknowledged right of a simple mortgagee to bring an action for sale. The truth seems to be that the expression ' simple mortgage' long familiar to us in Bengal and the North-West was almost wholly unknown in other parts of the country, and the Courts there have felt a natural reluctance to extend the definition to hypothecations generally, when the result of it might be that a pledgee of land instead of only twelve years would have the somewhat unreasonably long period of sixty years to enforce his security. It has been sought to avoid this result in various ways ; for example, by borrowing the definition of a mortgage from the English law or by limiting the term ' simple mortgage ' only to those cases in which the power of sale may be exercised by the mortgagee himself, without the intervention of the Court. It has also been denied that the word ' mortgage ' has the same meaning in the Limitation Act and in the Transfer of Property Act ; while a suggestion has also been thrown out that the statutory definition does not apply to past transactions. It has also been said that the mere use of the word ' pledge' is not sufficient (a), nor even a covenant that in default of payment the property should be sold to the creditor for the amount of the debt. (Cheti v. Sundnram, II Mad. H. C. Rep., 51.) The whole difficulty, as I have already observed, has been created by including under the name of ' mortgage ' securities which although known in these parts by the name of simple mortgage' were known in Madras and other places under the classical name of 'hypothe- cation,' or the more modern English designation of equitable liens or charges. The definition contained in the Act is, however, as pointed out by Mr. Justice Straight, only a crystallisation of the principles enun- ciated in the decisions of the Calcutta, as well as of the Allahabad High Court. (See among other cases Khub v. Kalian t I. L. 11., I All., 240. Phul Kuar v. Murlidhur, I. L. R., II All., 527 ; Badri v. Daulit, I. L. R., Ill All., 706 ; Piari v. Khiali, I. L. R., Ill All., 857; Ramdin v. Kalfta, I. L. R., VII All., 502). I am, however, bound to add that simple mortgages in some at least of these cases are also spoken of as charges, and a broad line between the two has been for the first time drawn by the Transfer of Property Act. The effect of the Act, how- ever, will not be to convert a simple mortgage into a mere charge, but only to render the latter expression inapplicable to a simple mort- gage. The question whether a particular transaction amounts to a mort- gage or only to a charge has generally arisen in connection with Arts. 132 and 147 of the Statute of Limitations, but the point may also be of importance when such transactions are sought to be en- forced against bond fide purchasers without notice, as there is in (a) Although the contract may have been entered into with a knowledge of, or even with reference to, the usual practice of the Courts to direct a sale of the pledge in such cases. MORTGAGE. 447 this rcspoct an important difierence between n mortgage nixl n mere ACT IV op charge (). 1882. The words ' specific immoveable property ' in clause (a) may also SECTIOX give rise to difficulty. In the recent case of Rum Sidh v. Balgovind ^8. (I. L. R., IX All., 158), where the borrower pledged his ' wealth, and whatever property he had ' to his creditor, the Court was of opinion that the property was sufficiently specific, as it included all the property of the debtor, and in support of this view the judgment of Mr. Justice Fry in the case of Tatlmtm v. D' Epiueuil ('20 Ch. I)., 758), was cited. (Cf. In re Clarke, 35 Ch. D., 109, which, however, goes further than the judgment in the last mentioned case. See also Manickv. Heharee,ll All. H. C. Rep., 263 ) The section, however, will not prevent a transfer of after acquired estates from being treated as an agreement. Although the mortgagee acquires an interest in the property, the ownership, it must be remembered, resides in the mortgagor. In Saadut Alee Khan v. The Collector of Saron (S. D. A., 1858, p. 840,) the Court in speaking of usufructuary mortgages observed : "The right of ownership in the mortgaged property does not pass to the mortgagee, leaving only the equity of redemption to the mortgagor. The right of ownership together with the right of redemption, remained with the mortgagor, and until the property is actually foreclosed and the sale be- comes absolute, the right of ownership does not pass. The doctrine is equally applicable to conditional sales or usufructuary mortgages ; it follows that the mortgagees in the present case, who, whatever the nature of the mortgage, were in possession, were simply usufructuaries and as such enjoyed no right of ownership. Such being the case, the registration of their names incorrectly as proprietors, or the entrance of their names in the sale advertisements as such, when, in fact, and admittedly they were no such thing, cannot alter the nature of the rights or convert a lower into a higher title." (Cf. Copal v. Parsotam, I. L. II., V All., 121 ; Sheoratan v. Mohipal, I L. II., VII All., 258. Distinguish Indnr v. Naubat, I. L. R., VII All., 553.) The section speaks of ' principal money and interest.' It would, however, seem that an allowance to the mortgagee in the nature of interest for the retention of the debt would be regarded as part of the mortgage-money. As I have already stated, when a person borrows money for a certain period and agrees to pay interest at a certain rate down to the day named, no contract for payment of interest at such rate after the day named, or indeed for the payment of any interest at all will be implied. The creditor, however, may claim compensation, and, as a rule, the amount of damages for the non-payment of a debt is regulated by the usual commercial value of money. In England, five per cent, is generally allowed, while in this country, six per cent, is not unfrequently awarded ; although it is notorious that the value of money is higher. (In addition to the cases cited at pp. 126-127, anie, see Mansub Ali v. Gulub Cfiaiid, I. L. R., X All., 85; followed in S. A. No. 1292 of 1887, Calcutta. Deen Doyal v. Ret Nurain, (a) It seems, however, that a hypothecation may be enforced in Madras even, against a purchaser without notice (Golla v. Kali, IV Mad. H. C. Rep., 431 ; Sadayopal v. Ruthna, V Mad. H. C. Rep.. 457 ; Cf. Anna v. Narran, I Mad.'ll. C. Rep., 114; Chetti v. Simdar, II Mad. H. C. Rep., 51.) 448 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF I. L. II., IE Gale., 41 ; In re Roberts, 14 Ch. D., 49; in which case, 1882. however, Lord Justice Cotton suggests that there may be a distinction SECTION between a suit for redemption and an action brought for breach ** of covenant to pay the money on a given day.) It is scarcely necessary to mention that as a mortgage transfers to the mortgagee an interest in the property pledged to him, he will not, as a rule, be bound by any subsequent act of the mortgagor unless it is done by him as agent for the mortgagee ; and it is upon this principle hat it has been held that the mortgagee is not estopped by a judg- ment against the mortgagor. (Krishnuji v. Sitarain, I. L. 11., V Bom.. 496. Cf. II Agra H. C. Rep., 117.) It must, however, be added that in both these cases there were strong grounds for suspecting collusion. In the case of Poresh Nath v. Anathnnth, (I. L. 11., IX Calc., 265) their Lordships of the Privy Council held the mortgagee bound by an estop- pel arising out of the mortgagor's conduct Hut it appeal's that the mortgage was created after the disclaimer which gave rise to the estop- pel (a). There being nothing in this Act corresponding to sec. 61 of the English Statute, where money is advanced on a joint account the survivors alone cannot give a valid receipt for the mortgage-money. (See sec. 45 of the Contract Act.) Mortgage 59. Where the principal money secured is one hundred r- rupees or upwards, a mortgage can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses. Where the principal money secured is less than one hundred rupees, a mortgage may be effected either by an instrument signed and attested as aforesaid, or (except in the case of a simple mortgage) by delivery of the property. Nothing in this section shall be deemed to render invalid mortgages made in the towns of Calcutta, Madras, Bombay, Karachi, and Rangoon, by delivery to a creditor or his agent of documents of title to immoveable property, with intent to create a security thereon. Equitable mortgages are recognised only to a very limited extent by the present Act. Such mortgages are opposed to the policy of the registration law and are at variance Avith the principle of making the transfer of immoveable property as far as possible a sys- tem of public transfer as on the continent. Equitable mortgages are allowed in the towns named above, because the practice has been long established in those towns, and could not be disturbed without creat- ing much inconvenience. It is necessary to bear in mind that the (a) It may be noticed in passing that although Richards v. Johnston (4 H. & N.. 660) was cited before their Lordships, they declined to make any distinction as regards the operation of estoppels in favour of execu- tion-purchasers, a distinction of extremely doubtful propriety. But see Parbhv v. Mylne (I. L. K., XIV Calc., 401.) REGISTRATION. 449 sitmition of the property is immaterial, as the law only requires tliatAcrlVop the mortgage should be made in some one of the places in the section 1882. mentioned. SECTION There must be an actual deposit of the title-deeds either with the 5fl - creditor or his agent, and there can be no equitable mortgage if they are suffered to remain with the debtor, even if he should deliver a memorandum to that effect to the creditor. (Exp. Coining, 9 Ves., 115.) It is, however, not necessary that all the title-deeds should be delivered, and a deposit of part of the deeds only may be sufficient to create an equitable mortgage. If the title deeds are deposited partly with one and partly with another creditor, priority in time will confer priority, in the absence, of course, of any circumstances to take the case out of the general i-ule. It is hardly necessary to state that the deposit may be a security, as well for debts actually due as for future advances. It ought to be observed that in an equitable mortgage by deposit the deeds themselves* are not pledged to the creditor. They are held by the mortgagee merely as incident to the charge on the land. In cases governed by the English law, therefore, the equitable estate or charge will not be transferred by the mere delivery of the deeds by the creditor to a third person. (In re Richardson, 30 Ch. IX, 396.) It would seem that, as in tke English law, equitable securities cannot be enforced against purchasers for value and without notice. (Dayal v. Jivraj, I. L. It., I Bom., 237.) The Act is silent as to the remedy to which an equitable mortgagee is entitled. In the absence of any express pro- vision on the point, the English practice will most probably be followed. The precise nature of a mortgage by deposit of title-deeds in the English law was discussed in the recent case of In re Beelhen (18 Q. U. D., 380, 766, C. A.), and it was held that where a third person already has possession of title-deeds for another purpose, an oral com- munication from a part owner of the property to which the title-deeda relate purporting to make such third person a trustee of the deeds for a creditor cannot create a good equitable mortgage in favour of that creditor. It must not, however, be supposed that an equitable mort- gage may not be created by a deposit of titlerdeeds with a trustee for the intended mortgagee, and in this country the Statute of Frauds not being in force, it seems that the creation of a mere parol trust in favour of the mortgagee may operate as a valid equitable mortgage. The law of equitable mortgages in England forms a branch of the equitable doctrine of specific performance of oral contracts relating to land based on part performance. Unless therefore there is an actual deposit of title-deeds, there is nothing in the nature of part performance to take the case out of the Statute of Frauds. I have already pointed out that where there is a memorandum in writing accompanying a deposit of title-deeds, the mortgage may be proved notwithstanding the inadaiissibility in evidence of the writing (see pp. 79-88, ante.) The reason for this is that the memorandum does not operate as a reduction into writing of the agreement between the parties with regard to the security. The question turns on the general prin- ciples of the law of evidence. Was the document intended to be the embodiment in writing of the transaction? If so, evidence of an oral agreement would be inadmissible; but if there was a complete oral con- tract before the writing was given, and the document does not express B. B. G., T. P. A, 29 450 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF and was never intended to express the whole agreement between the 1882. parties, evidence can be given of such agreement (Neivlove v. Shrews- SECTION i ury ^ 21 Q. U. D., 41, a case under the Bills of Sale Acts. Of. North 60 - Sfc. Co. v. Manchester 8fc. Co., 35 Ch. D., 191). It seems to have been decided in Ireland that an equitable mortgage by deposit unaccompanied by any memorandum in writing takes prio- rity over a purchaser for value claiming under a subsequent registered deed without notice of such deposit (In re Burhe, C. A. Ir., 9 L. 11. Ir., 24.) See pp. 89, 90, ante. Rights and Liabilities of Mortgagor. Right of 60. At any time after the principal mone} r has be- toreaeein r come pa} r able, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money to require the mortgagee (a) to deliver the mortgage-deed, if any, to the mortgagor, (6) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and (c) at the cost of the mortga- gor, either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and (where the mortgage has been effected by a registered instrument) to have registered an acknowledgment in writing that any right in derogation of his interest trans- ferred to the mortgagee has been extinguished : (a) Provided that the right conferred by this section has not been extinguished by act of the parties or by order of a Court. The right conferred by this section is called a right to redeem, and a suit to enforce it is called a suit for re- demption. Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for payment of the principal money has been allowed to pass, or no such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such money. Redemp- Nothing in this section shall entitle a person interested *i C f f por ~ in a share only of the mortgaged property to redeem his mortgaged own share only, on payment of a proportionate part of property. fa e amou nt remaining due on the mortgage, except where a mortgagee, or, if there are more mortgagees than one, all (a) The section, it may be noticed, Pays nothing as to the right of the mortgagor to get back his title-deeds. REDEMPTION. 451 such mortgagees, has or have acquired, in whole or in part, ACT IV OP the share of a mortgagor. SECTIONS Tins section says nothing about the right of the mortgngee to any interest or notice of payment after default by the mortgagor. In England the mortgagee, except wliere foreclosure proceedings have been instituted or a demand mude by him, is entitled to six months' notice or six months' interest. (/ re Alcoch, 23 Ch. IX, 372.) The last clause of the section, I may observe, is not very care- fully drawn and does not deal with the various questions which might arise in such cases and which have been discussed in Lee. VI (pp. 254260, ante.) 61. A mortgagor seeking to redeem any one mortgage Right to shall, in the absence of a contract to the contrary, be of't entitled to do so without paying any money due under any separate mortgage made by him, or by any person through whom he claims, on property other than that comprised in the mortgage which he seeks to redeem. Illustration. A, the owner of farms Z and Y, mortgages Z to B for Rs. 1,000. A afterwards mortgages Y to Bfor Us. 1,000, making no stipula- tion as to any additional charge on Z. A may institute a suit for the redemption of the mortgage on Z aloue. This section excludes the application of the principle of consoli- dation under which the mortgngee might insist that all the securities held by him should be redeemed together. It is not quite clear how cases of the class discussed in Lee. XII (pp. 386 387, ante*), will be dealt with under the present act. The section, however, does not touch the principle on which debts are tacked against the heir or devisee of the mortgagor, but not so as to give the mortgagee preference over other creditors, where the assets are insuffi- cient. (Talbot v. Frere, 9 Ch. D., 568.) It is sometimes said that if A creates a mortgage in favour of B and the mortgage being realized he has a balance in his hands, natural justice would seem to point out that he would be entitled to retain the surplus nnd apply it in payment of a general debt due to him. But there really is no equity in allowing one creditor, simply because he happens to have a mortgage, to retain the balance in favour of himself to the prejudice of the other creditors. You cannot make a property which has been pledged for the repayment of one debt liable to two debts. (In re Gregson, 36 Ch. D., 223, and cases cited therein.) 62. In the case of a usufructuary mortgage, the mort- Rigiit of gagor has a right to recover possession of the property ar^'mor't"- (a) Where the mortgagee is authorized to pay himself gagor to the mortgage-money from the rents and profits of the pro- recov s e 3 r i on perty, when such money is paid ; 452 TRANSFER OF PROPERTY ACT, 1882. ACT iv OP (ft) Where the mortgagee is authorized to pay himself SROTION ^ rom suc ^ ren ts and profits the interest of the principal c3. money, when the term (if any), prescribed for the pay- ment of the mortgage-money has expired, and the mortga- gor pays or tenders to the mortgagee the principal money or deposits it in Court as hereinafter provided. Tlie last clause of this section is not very happily worded ; it, how- ever, evidently points to cases in which there is to be no account of the rents and profits on the one side, nor of the interest on the other, the former going in lieu of the latter. Accession 63. Where mortgaged property in possession of the gaa rt pro- mortgagee has, during the continuance of the mortgage, perty. received any accession, the mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled as against the mortgagee to such accession. Accession Where such accession has been acquired at the expense vimie'ol '" f the mortgagee, and is capable of separate possession or transferred enjoyment without detriment to the principal propert}', ownership. ^ Q mor fcgagor desiring to take the accession must pay to the mortgagee the expense of acquiring it. If such se- parate possession or enjoyment is not possible, the ac- cession must be delivered with the property, the mort- gagor being liable, in the case of an acquisition necessary to preserve the property from destruction, forfeiture or sale, or made with his assent, to pay the proper cost thereof, as an addition to the principal monej'-, at the same rate of interest. In the case last mentioned the profits, if any, arising from the accession, shall be credited to the mortgagor. Where the mortgage is usufructuary, and the accession has been acquired at the expense of the mortgagee, the profits, if an} 7 , arising from the accession shall, in the absence of a contract to the contrary, be set off against interest, if any, payable on the money so expended. The section would at first sight seem to recognise the right of the mortgagor to all accessions, however made, to the mortgaged property, during the continuance of the mortgage and not simply to those ac- quired by the mortgagee by availing himself in any way of his rights us mortgagee. But the first clause may be read as applying to natur- al accessions only, while the first part of the second clause would seem only to make it obligatory on the mortgngor to pay the mort- gagee the expense of acquiring the accession, without saying that he is entitled to it in all cases. This construction would render the section consistent with principle as well as authority. (Sec pp. 94* 104, ante.') LIABILITIES OF MORTGAGOR. 453 64. Where the mortgaged property is a lease for term of years, and the mortgagee obtains a renewal of SECTIO^K the lease, the mortgagor, upon redemption, shall, iu the 64, 65. absence of a contract by him to the contrary, have the - benefit of the new lease. 255 Icusc This section lays down a more stringent rule than the correspond- ing section in the Indian Trust's Act, or that which obtains in the English law, according to which the rule applies only when the mortgagee obtains a renewal behind the back of the mortgagor, or where there is u tenant right of renewal. (Nesbitt v. Tredinnick, 1 Ha. & Be., 29. But see Clegg v. Edmondson, 8 DeG. M. & G., 787, a partnership case.) See also illustration (d) to sec. 3 of the Specific Act. 65. In the absence of a contract to the contrary, the implied mortgagor shall be deemed to contract with the mortgagee; (.) that the interest which the mortgagor professes to transfer to the mortgagee subsists, and that the mortgagor has power to transfer the same ; (6) that the mortgagor will defend, or, if the mortgagee be in possession of the mortgaged property, enable him to defend, the mortgagor's title thereto ; (c) that the mortgagor will, so long as the mortgagee is not in possession of the mortgaged property, pay all public charges accruing due in respect of the property ; ((.I) and, where the mortgaged property is a lease for a term of years, that the rent payable under the lease, the conditions contained therein, and the contracts binding on the lessee have been paid, performed and observed down to the commencement of the mortgage ; and that the mortgagor will, so long as the security exists, and the mortgagee is not in possession of the mortgaged property, pay the rent reserved by the lease, or, if the lease be renewed, the renewed lease, perform the conditions con- tained therein, and observe the contracts binding on the lessee, and indemnify the mortgagee against all claims sustained by reason of the non-payment of the said rent or the non-performance or non-observance of the said con- ditions and contracts (a) ; () Mortgages of permanent tenures are left unprovided for probably because the draftsman copied the section from the English Act. (See sub-sec. D., sec. 7 of the Conveyancing Act of 1881.) It seems that the land revenue will be regarded as a public charge within the meaning of cl. (<) (Cf. sec. 76, cl. r.) Where a leasehold property is mortgaged the mortgagee ought to give notice to the lessor of his mortgage, as he would otherwise expose himself to the risk of losing hia security. ( (fallraith v. Covper, 8 H. L. C.. 315.) 454 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP (e) and, where the mortgage is a second or subsequent SECTION incumbrance on the property, that the mortgagor will pay 66. the interest from time to time accruing due on each prior - incumbrance as and when it becomes due, and will at the proper time discharge the principal money due on such prior incumbrance. Nothing in clause (c), or in clause (d), so far as it relates to the payment of future rent, applies in the case of an usufructuary mortgage (). The benefit of the contracts mentioned in this section shall be annexed to and shall go with the interest of the mortgagee as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested. This section is modelled on the provisions of the Conveyancing Act, 1881 (see sec. 7, els. c, d, f,) ; cl. (/;) of the present section, however, is an innovation, although scarcely an improvement. It is evidently a crystallisation of two old cases in the Sadder Dewany Adalat, and will probably be found difficult to apply in practice. (See p. 277, ante.') The last clause only lays down the rule that tlie covenants run with the land. I may here mention that, according to the English cases, there is no difference in principle between a covenant against incnmbrnnces and a covenant to pay them off. The American rule, however, is different; the plaintiff being only entitled to nominal damages, unless he has paid something to the discharge of the incumbrances. (lYIayne on Damages, pp. 204-205.) wste by 66. A mortgagor in possession of the mortgaged pro- P er ty * s no ^ liable to the mortgagee for allowing the pro- perty to deteriorate; but he must not commit any act which is destructive or permanently injurious thereto, if the security is insufficient, or will be rendered insufficient by such act. Explanation. A security is insufficient within the meaning of this section, unless the value of the mortgaged property exceeds by one-third, or if consisting of build- ings, exceeds by one-half, the amount for the time being due on the mortgage. This section imposes upon the mortgagor the duty of abstaining from committing voluntary waste in cases in which the rights of the mortgagee may be prejudiced. If the Court be satisfied that the secu- rity is insufficient, it will interfere to prevent waste by injunction. () As to the liability of a mortgagee of leasehold for rent, see Mactiaghtoi, v. JBheekarce (II Calc. L. Rep., 32:3). Mavnaffhtcii v. JJtica (III Calc. L. Rep., 235). WASTE. 455 (Coote, 770.) It seems that the onus of proof that the security is in- ACT IV OF sufficient will lie on the mortgagee seeking to restrain the mortgagor. 1882. The explanation embodies the ordinary rule acted upon by trustees not SECTION to lend more than two- thin Is of the value on land or more than a half 67. on house property. Properly speaking, however, a security is insufficient when it being worth so much more thau the money advanced, the act complained of is likely to impair the value which was the basis of the contract. (King v. Smith, 2 Ha., 243.) It seems that n mortgagor who has conveyed the equity of redemption without taking any security as an indemnity against his bond cannot have an injunction against the purchaser to stay waste on the ground that the land may not be suffi- cient to satisfy the mortgage. (Kerr on Injunctions, 85, citing Brnmley v. Fanning, 1 Johns.) As to the right of a mortgagor to fell timber the following English cases may be referred to : Farrunt v. Lovel (3 Atk., 723); Humphreys v. Harrison (I Jac. & \V., 581); King v. Smith (2 Hare, 239); Hampton v. Hodges (8 Ves., 105) ; Hippesley v. Spencer (5 Mad., 422.) It seems that the Act contains an absolute prohibition as regards waste by the mortgagee (cl. (e), sec. 76). The English practice which is somewhat less stringent is thus stated in Kerr on Injunctions (p. 83.) " A mortgagee in possession with a sufficient security may not commit waste, and he is bound to do necessary repairs. If, how* ever, the security is insufficient, he is entitled, so long as he is acting bond fide, to make the most of the property for the purpose of dis- charging what is due to him. He may cut timber, and open mines or quarries, but he does so at his own risk and peril. If he incurs a loss, he cannot charge it against the mortgagor, and if he obtains a profit, the whole of that profit must go in discharge of the mortgage-debt. If the security is sufficient, and he has no authority from the mort- gagor, he will under similar circumstances be charged with his receipts and disallowed his expenses. If the mortgage be of an open mine, the mortgagee is entitled to work it as a prudent owner would do, aud he is not bound to advance money for speculative improvements." Rights and Liabilities of Mortgagee. C7. In the absence of a contract to the contrary, the Right to mortgagee has, at any time after the mortgage-money has foreclosure become payable to him, and before a decree has been made r for the redemption of the mortgaged property, or the mortgage-money has been paid or deposited as hereinafter provided, a right to obtain from the Court an order that the mortgagor shall be absolutely debarred of his right to redeem the property, or an order that the property be sold. A suit to obtain an order that a mortgagor shall be absolutely debarred of his right to redeem the mortgaged property is called a suit for foreclosure. Nothing in this section shall be deemed (ct) to authorize a simple mortgagee as such to institute a suit for foreclosure, or an usufructuary mortgagee as such 456 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF to institute a suit for foreclosure or sale, or a mortgagee by SECTION conditional sale as such to institute a suit for sale ; or 67. (&) to authorize a mortgagor who holds the mortgagee's rights as his trustee or legal representative, and who may sue for a sale of the property, to institute a suit for fore- closure; or (c) to authorize the mortgagee of a railway, canal or other work in the maintenance of which the public are interested, to institute a suit for foreclosure or sale ; or (d) to authorize a person interested in part only of the mortgage-money to institute a suit relating only to a corresponding part of the mortgaged property, unless the mortgagees have, with the consent of the mortgagor, severed their interests under the mortgage. Clauses (b) and (c) are based on tlie practice of the English Court of Chancery. Clause (i) assumes that the rights of the parties are best worked out by a decree for sale, and not by a decree for foreclosure, while cl. (c) is founded upon the inconvenience to the public generally if undertakings of the character mentioned in it were liable to be fore- closed or sold. In such cases the proper course for the mortgagee would be to apply for the appointment of a Receiver. (In re Herne frc. Co., 10 Ch. D., 42.) Clause (d) in terms applies only to suits relating to a part only of the mortgaged property; but, as we have already seen, a mortgagee interested in part only of the mortgage-money, can- not, as a rule, sue even in respect of the whole without joining his fellow mortgagees. (See Parsotam v. Muln, I. L. li., IX All., 68; and cases cited therein. Cf. Palmer v. Earl of Carlisle, 1 S. & IS., 423.) The right of an usufructuary mortgagee to institute a suit for sale was discussed in a very recent case in the Madras High Court (Venknfa Sami v. Subramanyn, I. L. II., XI Mad., 88.) In giving judgment the Court observed : " Whether the mortgagee is at liberty to claim fore- closure as of right will depend upon the terms of the particular contract, but the contract as defined by the Act does not imply an intention that the mortgagee may at his option insist upon either remedy as in the case of an English mortgage. Section 67, cl. (), provides that the usufructuary mortgagee is not entitled as such, iit the absence of an express contract to the contrary, to institute a suit for foreclosure or sale. It implies that he can sue only for the one or for the other, and not for tlie one or the other in the alternative. That this is the true construction is clear from sees. 86 89, the language of which and, in particular, the words in sec. 86, ' shall transfer the property to the defendant, and shall, if necessary, put the defendant into possession of the property,' include usufructuary mortgages among transactions upon which the mortgagee may institute a suit for foreclosure or a suit for sale. "It is important to bear in mind the distinction that exists between the power of the Court to decree a sale in a suit for foreclosure, and the right of the usufructuary mortgagee as founded on the contract. The second paragraph of sec, 88 deals with such power and is taken from 44 RIGHTS OF MORTGAGEE. 457 n IK! 45 Viet., c. 41, s. 25. It was a power constantly exercised by ACT IV OP Courts of Equity in England, nnd it may be that it is inserted in this 1882. act with reference to a notion which was commonly held in this country, SECTION that a mortgage was intended to be only a security nnd to be always *>8. redeemable. In exercising this power the Court is authorized to impose such terms as it thinks fit to prevent injustice or unfairness to the mortgagee." G8. The mortgagee has a right to sue the mortgagor for Ri B iit to the mortgage-money in the following cases only : 8UC f or / / 111 ol't LTp the sale. (Jagjivan v. Shridhar, I. L. K., II Bom., 252. Of. Adams v. Scott, 7 W. 11., 213.) A sale by the mortgagee in order to pass an indefeasible estate must be in pursuance of the power to sell. Where, therefore, the deed was in the form followed when a mortgagor is the vendor and the mort- gagees join in the conveyance, but the words of conveyance were by the mortgagees alone anil without any confirmation by the mortgagor, it was held that the purchaser did not, by the deed, acquire an in- defeasible estate. (Dovcett v. Wise, III Suth. W. K., 157.) 70. If, after the date of a mortgage, any accession is Accession made to the mortgaged property, the mortgagee, in the to mort- absence of a contract to the contrary, shall, for the pur- pem-. p poses of the security, be entitled to such accession. Illustrations. (a.) A mortgages to B a certain field bordering on a river. The field is increased by alluvion. For the purposes of his secu- rity, B is entitled to the increase. (6.) A mortgages a certain plot of building land to B and afterwards erects a house on the plot. For the purposes of his security, B is entitled to the house as well as the plot. This section is silent as to the right of a mortgagee to enforce bis security as against a bond fide purchaser, without notice, of the accre- tion. It would, however, seem that the mortgagee cannot reduce the security by alienating it. (Doe d. Gibbons v. Pott, 2 Dougl., 709.) It has been held in England that a mortgagee of a lease-hold messuage will comprise the good-will of the business carried on there. (Chissum v. Dewes, 5 lluss., 29 ; Cf. Pile v. Pile, 3 Ch. D., 36.) 71. When the mortgaged property is a lease for a term Renewal of of years, and the mortgagor obtains a renewal of the lease, the mortgagee, in the absence of a contract to the contrary, shall, for the purposes of the security, be entitled to the new lease. It seems that the renewal need not be in accordance with a covenant to renew. It is scarcely necessary to point out that if the mortgagor renders the renewal impossible by purchasing the reversion, the estate so acquired will be subject to the mortgage. (Coote, 268.) 72. When, during the continuance of the mortgage, Rights of the mortgagee takes possession of the mortgaged property, j 01 ,,^^ he may spend such money as is necessary sion. (a.) for the clue management of the property and the collection of the rents and profits thereof; 462 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP (6) for its preservation from destruction, forfeiture or 18S2 - sale- SECTION * , ' - .. ,1 , ,.,i , ,, 72. (c) 'or supporting the mortgagors title to the pro- perty ; (d) for making his own title thereto good against the mortgagor ; and (e) when the mortgaged property is a renewable lease- hold, for the renewal of the lease ; and may, in the absence of a contract to the contrary, add such money to tho principal money, at the rate ot' interest payable on the principal, and, where no such rate is fixed, at the rate of nine per cent, per annum. Where the property is by its nature insurable, the mort- gagee may also, in tho absence of a contract to the con- trary, insure and keep insured against loss or damage by fire the whole or any part of such property ; and the premiums paid for any such insurance shall be a charge on the mortgaged propert} 7 ", in addition to the principal money, with the same priority and with interest at the same rate. But the amount of such insurance shall not exceed the amount specified in this behalf in the mortgage- deed, or (if no such amount is therein specified) two-thirds of the amount that would be required in case of total destruction to reinstate the property insured. Nothing in this section shall be deemed to authorize the mortgagee to insure when an insurance of the property is kept up by or on behalf of the mortgagor to the amount in which the mortgagee is hereby authorized to insure. The Act is silent with regard to the right of the mortgagee to take possession of tlie mortgaged premises. In the case of English mort- gages the law is thus summarised in Bullen and Leake's Precedents of Pleadings: "Where the mortgage-deed contains no proviso or stipulation amounting in law to a redemise, and the mortgagor remains in possession after the execution of the deed, the mortgagee may bring an action against the mortgagor for possession of the premises, unless a tenancy, other than one of sufferance, has been created between them. (Doe d. Roy lance v. Lightfoot, 8 M. & W., 553 ; Doe d. Parsley v. Day, 2 Q. B., 147.) Where no tenancy other than a tenancy by sufferance has been created, it is unnecessary for the mortgagee before bringing such action to give any notice to quit or to make any demand of possession. (Doe d. Roby v. Maisey, 8 B. & C., 767 ; Doe d. Fisher v. Giles, 5 Bing., 421.) " If the deed contains any proviso or stipulation that the mortgagor may remain in possession until a certain day or until default in pay- ment of a certain sum at a particular time, and it is executed by the mortgagee, it in general amounts in law to a redemise; and no. action for the recovery of the premises can be maintained until after such RIGHTS OF MORTGAGEE. 463 day or default. (Wilkinson v. Hall, 3 Bing. N. C., 508 ; Deo d. Lyster ACT IV OP v. Ooldicin, 2 Q. B., 143.) In some cases, however, the proviso or 1882. stipulation may amount only to a covenant. See Shep. Touch. 272 ; SECTION Doe d. Purxley v. Day, supra; Cole on Ejectment, p. 464 et seq. ^2. "Where the mortgage-deed stipulates for payment of a certain sum on a particular day, and the mortgagor makes default in payment and remains in possession of the premises after such default, an action may, in the absence of any new tenancy, be brought against him by the mortgagee for recovery of the premises without any previous notice to quit, or demand of possession. (Doe d. Fisher v. Giles, supra; Doe d. Itoby v. Maisey, supra.) See further, Cole on Eject- ment, p. 462 et seq. " Where the mortgagor has no title to possession, the mortgagee may, without giving notice to quit, recover possession of the mortgaged premises against a tenant who claims under a lease from the mort- gagor granted after the mortgage without the privity or consent of the mortgagee, unless such tenant has become tenant to the mortgagee, or unless the lease is one made under 44 & 45 Viet., c. 41, sec. 18. (Keech v. Hall, 1 Doug., 2-2; 1 Smith, L. D., 18th Ed., p. 574; Lows v. Telford, 1 App. Cas., 414,425.) A mere notice by the mortgagee to the tenant to pay rent to him, not assented to by the tenant, will not create a new tenancy ; but a notice assented to by payment of rent, or otherwise, is evidence from which a jury may infer a new contract of tenancy from year to year as between the mortgagee, and the tenant in possession. (Brown v. Storey, 1 M.&G. 117; Rogers v. Humphreys,^ A. & E. 299, 313 ; Doe d. Higginbotham v. Barton, 11 A.& E. 307) (a). " In the case of a tenancy created before the mortgage, the tenant will be entitled to possession until the tenancy has been determined by notice to quit, or otherwise. " Where a person was in possession before the mortgage adversely to the mortgagor, the plaintiff must rely upon the title conferred upon him by the mortgage-deed, and must proceed against him as in ordin- ary cases between strangers. See further, Cole on Ejectment, pp. 473, 475 et seq." Bullen and Leake's Precedents, Part I, pp. 503505. It seems that an advance payment of rent to the mortgagor, though made in ignorance of the mortgage, will not be good against the mort- gagee. (DeNicholls v. Sai*nders, 5 C. P., 589.) A mortgagee in possession labours under various disadvantages ; and he has been rightly described as a bailiff without any salary. But the tendency in modern times has been towards leniency. In this coun- try, although he is allowed the salary of agents for the purpose of collecting the rents, no allowance is made for his personal trouble, and although allowance is made in respect of actual outgoings, he must be prepared, if challenged, to justify every item of his expendi- ture. The Act does not deal with the power of the mortgagee to appoint a Receiver of the income of the mortgaged property (cf. 44 & 45 Viet., c. 41, sec. 19, sub-sec. 3). But of course under sec. 503 of the Civil Procedure Code a Receiver may be appointed where an action is pending. (As to the practice in England, see Kerr on Receivers, pp. 2939, see also Act 28 of J866.) It ought to be noted that under the Judicature Act a legal mortgagee may apply for the appoint, ment of a Receiver. (Tillet v. Nixon, 25 Ch. D., 238.) (a) See also Underltay v. Read (20 Q. B. D., 209), 464 TRANSFER OF PROPERTY ACT, 1882. ACT IV op The word "sale 1 ' in cl. (i) must perhaps be understood ejusdem 1882. generis with destruction and forfeiture. SECTIONS The mortgagee will be entitled to expenses incurred in doing 7:> To. w liut is essential to protect the mortgagor's title (Sandon v. Hooper, 6 Beav., '246), as well as in making his own title good against the mortgagor, but not, it seems, in defending his title to the mortgage against a third person. (Purker v. Wuthins, 2 Johns, 133.) The mode in which the insurance money is to be applied is dealt with in sec. 76. It is necessary to observe that if the security is in the form of a conditional sale or an English mortgage, and the mortgagor elects to be foreclosed, he may not be personally sued by the mortgagee for his outlay. (Ex parie Fewings, 25 Ch. D., 338.) A properly drawn mortgage-deed should, therefore, contain a covenant on the part of the mortgagor to pay all such moneys. It will be noticed that a distinction is made by the Act between premiums paid for insurance and other kinds of outlay by the mortgagee. Charge on 73. Where mortgaged property is sold through failure proceeds of p a y arreai - s O f revenue or rent due in respect thereof, sale. the mortgagee has a charge on the surplus, if any, of the proceeds, after payment thereout of the said arrears, for the amount remaining due on the mortgage, unless the sale has been occasioned by some default on his part. This section, although not very carefully worded, is evidently in- tended to deal with cases in which the sale has the effect of setting the property free from incnmbrances. (Premchand v. Purnima, I. L. R., XV Calc., 546.) I may here add that in Madras a sale for arrears of rent does not pass the property to the purchaser free from incumbrances. (Padn~ hannaya v. fiarasimma, I. L. 11., X Mad., 266.) Right of 74. Any second or other subsequent mortgagee ma} 7 , subsequent at any time after the amount due on the next prior mort- to payoff gage has become payable, tender such amount to the next prior mort- prior mortgagee, and such mortgagee is bound to accept such tender and to give a receipt for such amount ; and (subject to the provisions of the law for the time being in force regulating the registration of documents), the subse- quent mortgagee shall, on obtaining such receipt, acquire, in respect of the property, all the rights and powers of the mortgagee, as such, to whom he has made such tender. Rights of 7o. Every second or other subsequent mortgagee has, mor"*a"ec so ^ ar as re g ar ^ s redemption, foreclosure and sale of the against" ' mortgaged property, the same rights against the prior subse "lent mol 'kg a g ee ol> mortgagees as his mortgagor has against niortga- such prior mortgagee or mortgagees, and the same rights gees. against the subsequent mortgagees (if any) as he has against his mortgagor. LIABILITIES OF MORTGAGEE. 4G5 76. When, during the continuance of the mortgage, ACT Iv 0*" the mortgagee takes possession of the mortgaged proper- SECTION ty, 76. (a) he must manage the property as a person of ordinary . ; prudence would manage it if it were his own ; of'mortga 3 - (6) he must use hia best endeavours to collect the rents gee in pos- and profits thereof; (c) he must, in the absence of a contract to the contrary, out of the income of the property, pay the Government- revenue, all other charges of a public nature accruing due in respect thereof during such possession and any arrears of rent in default of payment of which the property may bo summarily sold ; (cZ) lie must, in the absence of a contract to the contrary, make such necessary repairs of the property as he can pay for out of the rents and profits thereof, after deducting from such rents and profits the payments mentioned in clause (c) and the interest on the principal money ; (e) he must not commit any act which is destructive or permanently injurious to the property ; (/) where he has insured the whole or any part of the property against loss or damage, by fire, he must in case of such loss or damage apply any money which he actually receives under the policy, or so much thereof as may be necessary in reinstating the property, or, if the mortgagor so directs, in reduction or discharge of the mortgage-money ; (g) he must keep clear, full and accurate accounts of all sums received and spent by him as mortgagee, and, at any time during the continuance of the mortgage, give the mortgagor, at his request and cost, true copies of such accounts and of the vouchers by which they are supported ; (A) his receipts from the mortgaged property, or, where such property is personally occupied by him, a fair occupa- tion-rent in respect thereof shall, after deducting the ex- penses mentioned in clauses (c) and (d), and interest thereon, be debited against him in reduction of the amount (if any) from time to time due to him on account of interest on the mortgage-money and, so far as such re- ceipts exceed any interest due, in reduction or discharge of the mortgage-money ; the surplus, if any, shall be paid to the mortgagor ; (i) when the mortgagor tenders, or deposits in manner hereinafter provided, the amount for the time being due R. B. G., T. P. A. 30 466 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP on the mortgage, the mortgagee must, notwithstanding the 1882. provisions iu the other clauses of this section, account for 76. his gross receipts from the mortgaged property from the date of the tender or from the earliest time when he could take such amount out of Court, as the case may be. loss occa- jf the mortgagee fail to perform any of the duties LiTdefauit. imposed upon him by this section, he ma} 7 , when accounts are taken in pursuance of a decree made under this chap- ter, be debited with the loss, if any, occasioned by such failure. (See pp. 287312, ante.) Questions sometimes arise as to what acts on the part of (he mort- gagee amount to taking possession. In England it has been held that the mere fact of insuring the property by the mortgagee or his asking for rent, if he does not obtain it, is not sufficient to render jLijm liable to account as mortgagee in possession. A mortgagee, howVver, who gives notice to the tenants not to pay their rents to the mortgagor, must answer for any loss arising from his conduct if he abstains from taking possession. A mortgagee is not bound to take possession of the whole of the mortgaged property. He may, if he likes, take possession of only a part. In India, attormnent clauses are not very common. As a rule, their effect is to put the mortgagee in the position of a mortgagee in possession, as between himself and a subse- quent mortgagee, but not as regards the mortgagor. (Harrison Exp. t 18 Ch. D., 127.) The Court requires the mortgagee to be diligent in realising his security, and although he is not bound to make the most of another man's property, he will be charged for wilful default. He is not, how- ever, bound to account according to the actual value of the land ; and if he enters into the receipt of rents he is only charged at the rate of rents reserved. If the security consists of a lesise at a rent to be retained by the mortgagee in discharge of his debt, the account will be taken only on the footing of such rent. The general rule on the subject is thus stated in Coote on Mortgage, p. 1202 : " The mortgagee is liable if he refuse or remove a sufficient tenant ; but the evidence must be distinct, and the mortgagee will not be subject to minute inquiries whether he could have got more rent, and the like, and he may be excused for not accepting a higher offer, if the tenant is in arrear and by removing him the arrear might have been lost ; and it is the duty of the mortgagor to give notice to the mortgagee, that the estate may be made more productive ; and if the mortgagor omit to do so, or is party to any act to prevent the let- ting, he cannot charge the mortgagee with mismanagement. " The mortgagee accounts for rent according to the rate which has been reserved, and the rate at which the premises were let when he took possession will be taken to be the rate at which it was let during the whole time of his possession, unless the contrary is shown ; and where a lease by the mortgagor to the mortgagee is set aside, the mortgagee will not be charged with more than the rent reserved in the lease, unless it is proved that a higher rent could have been obtained; and the rate reserved will be continued until the first pay- LIABILITIES OF MORTGAGEE. 4C7 ment after action brought, from which time a fair rent will be fixed ACT IV OF by the Court; and generally the mortgagee cannot usually be charged 1882. with more than he has received, or according to the actual value of SECTION the land, unless it can be proved that, but for his gross default, mis- ^>. management, or fraud, he might have received more." In this country the practice seems to be in some Courts to accept the jamdbundi papers as prima facie evidence of the profits of the estate, it being open to the mortgagee in possession to show that the amounts entered in them could not with due diligence be collected. (Deo Narain Sing v. Naek Pershad, II All. II. 0'. Rep., 217.) The burden of proof is thus thrown on the mortgagee. Bat if the mortgagee enters upon possession in the honest belief that he has an absolute title to the property, he will be only bound to account for what he has actually received. (Parkinson v. Hanbury, L. R., 2. H. L., 1.) As a rule, it is not the practice in equity to direct an account with wilful default except against bailiffs or in cases of fraud or breach of trust. The case of the mortgagee would seem to be an, exception. to this rule, probably, because he is regarded as in the nature of*a bailiff, though an unpaid bailiff to the mortgagor. (See the observations of Lord Westbury in the case cited above.) In this country, it has been held that if the mortgagee continues in possession not in the character of mortgagee, but under a different title, he will not be liable to account as mortgagee in possession. (N.-W. P., 1852, p. 7, where the Court considered the mortgage to have been in abeyance during the term of a farming lease held by the mortgagee under Government.) But if, on the other hand, the mortgagee fraudulently denies his character as such, he cannot afterwards turn round and claim the privileges of a mortgagee. In the Incorporated Society v. Richards, (1 Drury and Wan-ens, 334), the Lord Chancellor said : " This is a peculiar case, and cannot be treated as the ordinary case between mortgagee and mortgagor. Here yon set up a title adverse to the owner ; and when a creditor denies his character as such, and claims as owner, I cannot allow him to fall back on his original character of creditor, as if he had never departed from it. I will never allow a party, who h:is put the owner at arm's length, to turn round, when defeated, and claim all the benefits attached to the character of a fair creditor.'' A mortgagee in possession does not render annual accounts, but he may be called on for a final adjustment when the mortgage- debt is satisfied, or the mortgagor wishes to redeem. Clause (h) makes a distinction between possession and occupation. A man may be iu possession of an estate without bein<* in occupation of any part of it. Any one is in possession of an estate who receives rent from the tenants who occupy it. But, except in the case of joint tenants or tenants in common, it is impossible for a man to be in occupation if somebody else is in occupation. Although the clause speaks of personal occupation, it is evident- ly not intended to exclude occupation by a servant. Where, however, the mortgagee is not in occupation himself, it must be shown that the person in actual occupation was let in under such circumstances as would place him in the legal relation of a servant to the mortgagee, and it would not be sufficient to show that he was let in merely as a licensee. It does not, however, follow that the mortgagee mi^ht not be liable as for wilful default. (Shepard v. Junes, 21 Ch. D., 469.) 468 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF In India, as a rule, the account is taken with annual rests, and in the 1882. case ofJmjit v. Govind (I. L. R., VI All., 303), the rest was made at the SECTIONS time at which the Government-revenue became payable. In England 77, 78. a res t ; s made, when the account is taken with rests, as soon as the mort- gsigee has received a sura exceeding the amount of interest due to him, and the annual rests are thenceforth computed from that time. (As to the mode of taking accounts, see Juijit v. Govind, cited above) (a). If the mortgagee fails to perform any of the duties imposed upon him, or makes an unjust defence, not only will he be debited with the loss sustained by the mortgagor, but he might also forfeit his right to costs. (Kullyim v. Sheo Nundun, XVIII Suth. W. R., 65 ; Tusadukv. Seni, XIII Ualc. L. Rep., 128; Mukhnn v. Sree Kishen, XII Moore's Ind. App., 157. Of. Axhworlh v. Lord, 36 Cli. D , 545.) The last clause contains a legislative reversal of the decision of the Allahabad High Court in the case of Rnghu v. Ashruff (I. L. R., II All., 252), Receipts 77. Nothing in section seventy-six, clauses (6), (<7), (g) interest? 1 an ^ (^) applies to cases where there is a contract between the mortgagee and the mortgagor that the receipts from the mortgaged property shall, so long as the mortgagee is in possession of the property, be taken in lieu of interest on the principal money, or in lieu of such interest and defined portions of the principal. Priority. postpone- 78. Where, through the fraud, misrepresentation or prior mort- gross neglect of a prior mortgagee, another person has gagee. been induced to advance money on the security of the mortgaged property, the prior mortgagee shall be postponed to the subsequent mortgagee. Fraud and misrepresentation have been defined in the Contract Act (see sees. 17 and 18). The words "gross neglect " are not susceptible of any precise definition. In several English cases we come across such expressions as " negligence amounting to fraud " or " gros and wil- ful negligence," which is evidence of fraud. But these expressions are wanting in precision. Gross neglect or carelessness, therefore, may be sufficient to postpone a mortgagee, although he may be perfectly innocent of any intention to mislead another to his prejudice. In England, owing to the historical distinction between legal and equita- ble titles and the sanctity which hedges in the former, a legal title cannot be displaced merely on the ground of carelessness or negligence, however gross (b). In order to have that effect there must be fraud. (a) In Ireland half-yearly rests are made without special direction {Graham v. Walker, 11 Ir- R. Eq., 415). As to the practice in England, see L. R., 10 Eq., 497. (J) The superior efficacy of a legal title is well illustrated by the rule that a legal estate created by a trustee would defeat the rights of the cestui que trust, whereas a merely equitable estate created by the trustee would have no such effect. (Newton v, Newton, 6 L. R., Eq., 135 ; 4 L. R., Ch. App., 143.) PRIORITY. 469 (Northern Counties E. F. 1. Co. v. Whipp, 26 Ch. D., 482 ; In re ACT IV OF Vernon Ew ens and Company, 32 Ch. D., 165.) But this rule does not 1882. hold good as between two competing equitable titles, and circum- SECTION stances which would not justify the Court in depriving a legal mort- giigee of the benefit of the legal estate may yet, as between two equities, give priority to the one over the other. (National P. Bunk v. Jackson, 33 Ch. D., 1.) The language of the present section shows that mere neglect, if it is gross, may deprive a mortgagee of his priority. The negligence of the mortgagee muy not only have the effect of postponing his security to that of a person not guilty of such negligence, but also to those of others advancing money upon the fnith that such per- son was the only prior mortgagee. In Clarke v. Palmer ,21 Ch. D., 124^, it appears that P. mortgaged certain estates to M., and was allowed to retain possession of the title-deeds. He subsequently mort- gaged one of the estates to A. B., who obtained possession of the deeds, and all the estates to C., who advanced his monies after ascertaining the position of the deeds, and upon the faith that A. li. was the only prior mortgagee. It was held, that M ., by not obtaining possession of the deeds, enabled P. to deul with his estates as an un- encumbered owner ; that A. B., having been diligent ia obtaining the deeds acquired priority, and that C. also having been diligent in ascertaining that A. B. had the deeds, apparently as first mortgagee, the same principle extended to him, and he also had priority over M. The English cases on the effect of negligence in postponing the prior incumbrancer are thus summarised in Dart's Vendors and Purchasers, pp. 952, 953 : " First. Where the prior interest is legal, and the other equitable. In this case the prior legal estate will not be postponed to the subsequent equitable estate ' on the ground of any mere carelessness, or want of prudence on the pnrt of the legal owner.' Eat the Court will postpone the prior legal estate to a subsequent equitable estate : " (I) Where the owner of the legal estate has either wittingly or unwittingly ' assisted in or connived at the fraud which has led to the creation of the subsequent equitable estate without notice of the prior legal estate' ; and evidence of sucli innocent assistance or connivance m.iy be afforded by the absence of ordinary care in inquiring for or keeping title-deeds, and such conduct, if not satisfactorily explained, will be sufficient to postpone the legal estate. " (II) Where the owner of the legal estate has constituted the mort- gagor his agent to raise money, and has for the purpose either left the deeds in his custody, or returned them to him, and the mortgagor has, by means of the possession of the deeds, cteated the equitable estate without notice of the prior legal estate, even although the principal had no intention that his agent should commit a fraud, or knowledge that he was doing so. ' Secondly. Where the prior interests are both equitable, although it would seem that a less degree of negligence on the part of the prior equitable incumbrancer is necessary in order to postpone him than will suffice to postpone the owner of a prior legal estate, yet here, too, there must be something done, or omitted to be done, by the prior incumbrancer, which arms the owner of the estate with the power of going into the world under false colours. Thus, where B., the solicitor of A., a second mortgagee, put up the property for sale by 470 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP auction, and professing to have bought it, induced A. to execute a 1882. conveyance of the property by which A. purported to convey it to B. SECTION under hia power of sale : and B. afterwards made au equitable mort- ** gage of the estate to C., representing it to be his own and unincum- bered ; it was held that A. had by executing the conveyance enabled 7?. to commit the fraud on C., and must be postponed to him ; and, on the same principle, a vendor with an equitable lien for unpaid pur- chase-money will be postponed to a mortgagee from the purchaser who has been allowed to carry away the title-deeds and conveyance. But the mere fact that a subsequent incumbrancer has got the title-deeds does not entitle him to priority, unless there has been some active omission or negligence of the kind above described ; and where a person has in good faith relied on a positive statement by the mortgagor that the latter is depositing all the necessary deeds, without any examination into the truth of it, he will not be postponed to a later equitable mortgagee, who has got important title-deeds which the mortgagor had in fact kept back." (See also Lewin on Trusts, pp. 714717.) to secure 6 ^' ^ a mor ^o a o e made to secure future advances, uncertain the performance of an engagement or the balance of a amount running account, expresses the maximum to be secured iinum is thereby, a subsequent mortgage of the same property shall, expressed, jf ma de with notice of the prior mortgage, be postponed to the prior mortgage in respect of all advances or debits not exceeding the maximum, though made or allowed with notice of the subsequent mortgage. Illustration. A mortgages Sultanpur to his bankers, B & Co., to secure the balance of his account with them to the extent of Rs. 10,000. A then mortgages Sultaupur to C, to secure Rs. 10,000, C having notice of the mortgage to B & Co. and C gives notice to B & Co. of the second mortgage. At the date of the second mortgage, the balance due to B & Co. does not exceed Rs. 5,000. B & Co. subsequently advance to A sums making the balance of the account against him exceed the sum of Rs. 10,000. B. & Co. are entitled, to the extent of Rs. 10.000, to priority over C. The law here laid down is different from the rule which obtains in England, where the right of the first mortgagee to priority depends upon whether he had or had not notice of the second mortgage when the subsequent advances were made. It is not clear from the section whether the rule applies only to cases in which the mortgagee is bound to make the advance. Unless the application of the section is limited in this manner, it would unfairly cripple the powers of the mortgagor in dealing with his property. As observed by Lord Camp- bell, although the mortgagor has parted with the legal interest, he remains the equitable owner of all his interest not transferred benefici- ally to the mortgagee, and he may still deal with his property in any way consistent with the rights of the mortgagee. How is the first mort- gagee, then, injured by the second mortgage being executed, although the first mortgagee having notice of the mortgage, the second mortgagee TACKING. 471 should be preferred to him as to subsequent advances? The first ACT IV OF mortgagee is secure ns to past advances, and he is not under any '82. obligation to make any further advances. He has only to bold his SECTION hand when asked for a further loan. Of course, these observations only apply where the mortgagee has the option to make further ad- vances. (Hopkitison v. Roll, 9 II. L., 522; Bradford Banking Co. v. Brings, 12 App. Gas., 29; Union B. S. v. National B. 8., 12 App. Cits., 53 ; a Scotch Appeal, the report of which contains the judg- ments of the Court of Session, in which the Scotch law of security ia reviewed.) It would seem that where no maximum amount is fixed, and the security is given on account of the general balance of a floating accomit, the provisions of the section would not be applicable. Mortgage debentures of joint-stock companies constitute in our day an important class of securities. But although they may be declared to be a first charge on the property of the company, they are only floating securities, and would therefore attach only to such assets as may be forthcoming when the charge is to be made available. Debenture-holders, therefore, would not be entitled to priority over subsequent mortgages properly created by the company. The reason for it is that the issue of debentures by a company is not intended to prevent and cannot prevent the company from carrying on its business in the usual way. If, therefore, a mortgage is afterwards made for the purpose of the business and in the ordinary course, it will not be subject to the claim of the debenture-holders. " It would be a monstrous thing to hold that the floating security prevented the making of specific charges or specific alienations of property, because it would destroy the very object for which the money was borrowed, namely, the carrying on of the business of the company. The fact is, the only way of making the thing workable is to treat it as what is sometimes called a floating mortgage or charge attaching on the property of the company in preference to its general liabilities, that is, its liabilities to creditors not secured by specific charge, at the moment the business is put an end to, either by the appointment of a Receiver in an action instituted by the debenture-holders against the company, or at the commencement of the winding-up where the company is wound up." Per Jessel, M. 11., in Ex-parte Bradshaw, (15 Ch. D., 472. Cf. Whealleij v. Silkstone, frc., Co., 29 Ch. D., 715, and cases cited therein. Distinguish In re Home and Hellard, 29 Ch. D., 736.) 80. No mortgagee paying off a prior mortgage, whether Tacking with or without notice of an intermediate mortgage, shall abollslie<1> thereby acquire any priority in respect of his original security. And, except in the case provided for by section seventy-nine, no mortgagee making a subsequent advance to the mortgagor, whether with or without notice of an intermediate mortgage, shall thereby acquire any priority in respect of his security for such subsequent advance. The necessity for this section is not quite obvious, as the doctrine known as tacking was never recognised in this country, and has been distinctly repudiated by our Courts upon the ground that it rests altogether upon an artificial foundation. 472 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP SECTION 8i. titles. Marshalling and Contribution. ^' If th e o wner f two properties mortgages them both to one person and then mortgages one of the properties to another person who has not notice of the former mortgage, *^ e second mortgagee is, in the absence of a contract to the contrary, entitled to have the debt of the first mortga- gee satisfied out of the property not mortgaged to the second mortgagee so far as such property will extend, but not so as to prejudice the rights of the first mortgagee or of any other person having acquired for valuable considera- tion an interest in either property. Tlie rule laid down in this section is narrower than the English rule, according to which it would seem to be perfectly immaterial, whether the subsequent mortgagee has or has not notice of the earlier mortgage. (Gibxon v. Siagrim, 20 Beav., 614; Tiddv. Lister, 10 Hare, 157, overruling Lanoy v. Duke of Athol, 2 Atk., 446.) The section in terms applies only to mortgages, but the principle which underlies it would seem to be equally applicable to purchasers for valuable consideration without notice of the mortgage and a fortiori if there is declaration or covenant that the estate is free from incumbrances. If a mortgagor sells a portion of his equity of redemption for valuable consideration, the entire residue, if undisposed of by him, ought to be applicable in the first instance to the discharge of the mortgage, and in ease of a bonafide purchaser; and it would be contrary to every principle of justice that a purchaser from the mortgagor should be in a better position than the mortgagor himself with respect to any of his rights. (Per Plunket, C., Plartley v. O'Flaherly, 1 LI. & G.temp. Plunket, 219.) (See notes to sec. 56.) In England marshalling takes place where one of two estates in mortgage is subject to a portion, or even is the subject-matter of a voluntary settlement. (Rancliffe v. Parkyns, 6 Dow., 216; Hales v. Cox, 32 Beav., 118.) Indeed, the principle has been extended in favour of a mortgagee of one of two estates charged with legacies and afterwards mortgaged to two different persons so as to allow the mortgagee of one estate to call upon the legatees to take so much out of the other estate as will leave a sufficiency to discharge his mortgage (Ex-parte Hartley, 2 M. & A., 406.) The principle of mar- shalling, however, as I have already said, cannot be enforced by one subsequent incumbrancer to the prejudice of another. In such cases the prior mortgage-debt will be ratahly distributed. (Barnes v. Ruc- ster, 1 Yo. & Coll. C. C., 408-9 ) For a form of decree and rule of apportionment applicable in such cases, see Gunga v. Hurish (VI Calc. L. Rep., 336.) A surety is entitled to the benefit of marshalling. But he lias no equity to prevent marshalling which will override the surety's light on payment of the debt to an assignment of the security. (Heyman v. D'ubois, 13 Eq., 159.) It ought to be noticed that if the property which is the subject of the second mortgage is exhausted by the first mortgagee, the former will be entitled to stand in the place of the latter as regards any other property comprised in the first mortgage. This principle can, of CONTRIBUTION. 473 course, hold good only where marshalling may be enforced, as, for ACT IV op instance, where the third mortgage is taken expressly subject to, and 1882. after payment of, the first and second mortgage. (/ re Mower's SECTION Trusts, SLR. Eq., 110.) The principle of marshalling is thus applicable not only before the debt has been paid, but involves the right of the disappointed creditor to stand in the place of the mortgagee having the double fund as against the other fund to the extent to which it has been satisfied out of the subsequent creditor's security. The whole doctrine rests on the ground of the insufficiency of the common fund to satisfy the whole of the claims upon it, and haa therefore, no application where the person witli the double fund offers to redeem the creditor with the single fund. (Fisher, p. 66&.) The next section deals with contribution which is only another form of marshalling. "Contribution, if it differs from marshalling, does so in specie rather than generically, in form rather than in nature. Marshalling and con- tribution are each of them between several persons of their rights respectively inter se, in respect of a charge or claim which affecting all of them, or properties belonging to all of them respectively, has been or may be enforced in a manner not unjust as far as the person is concerned by whom it was or may be enforced, but not just as between the persons or properties liable a branch of jurisprudence known to the Civil law, and which could not but belong in some form more or less extensive, to an enlightened system of laws; in ours it is well established and familiar." Per Vice-Chancellor Knight liruce, in Tombs v. Rock (2 Coll. 500.) 82. Where several properties, whether of one or several Contribu- owners, are mortgaged to secure one debt, sucli properties tion to are, in the absence of a contract to the contrary, liable to contribute rateably to the debt secured by the mortgiige, after deducting from the value of each property the amount of any other incumbrauce to which ifc is subject at the date of the mortgage. Where, of two properties belonging to the same owner, one is mortgaged to secure one debt, and then both are mortgaged to secure another debt, and the former debt is paid out of the former property, each property is, in the absence of a contract to the contrary, liable to contribute rateably to the latter debt, after deducting the amount of the former debt from the value of the property out of which it has been paid. Nothing in this section applies to a property liable under section eighty-one to the claim of the second mortgagee. This section is substantially a reproduction of the English law which is thus stated in a well-known Treatise on Mortgage : " If several estates, whether of one or of several owners, be mortgaged for or subject equally (and not one as surety or collateral 474 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP security for the other), to one debt, or if the owner of several estates, 1882. having mortgaged one of them, charges his real estate with or devises SECTION jt j n trust for payment of his debts, mid the estates descend or are ^ 2< devised to different persons (for the rule will not hold where they ciime to the same person), and though one of them pass by a specific and the other by a residuary devise, the several estates shall contri- bute rateably to the debt; being valued for that purpose, after de- ducting from each estate any other incumbrance by which it is aflect- ed ; and a vendor's lien being reckoned like any other incumbrance. The right of contribution between estates so charged is not affected by Locke King's Act, which also does not affect the liability of real and personal estate to contribute rateably, when both are included in the same security. So if one of the estates have been mortgaged for one debt, and both of them for another, though the first shall bear exclusively its own debt, both must contribute rateably to that which is later ; the amount of the first debt being deducted from the value of the estate which has paid it ; but if there are successive loans, and successive securities, and nothing to show that one estate was to be charged before another, all will be charged rateably, pro- vided there be an actual specific charge upon each estate, and not merely a general charge or liability upon one of them ; it being necessary in order to raise a case of rateable apportionment that each property shall be equally liable. The right of contribution ex- tends to sureties who are liable for the same debt, and whose liabilities are contemporaneous." (Fisher on Mortgage, pp. 659 60.) The last clause of the section is also taken from the English law by which the right of contribution is controlled by the right of marshalling. The former right cannot therefore be exercised against nn estate which is liable to the claims of other mortgagees. (Bartho- lomew v. May, 1 Atk., 487.) It is necessary to state that if a chose an action is pledged to- gether with other property, the debtor himself cannot claim a right to contribution. (Fisher on Mortgage, 661.) It must be remembered thatt he right of contribution only arises where there are two or more properties available for the debt in equal degree. In order that a right to contribution may exist, the two properties must " be equally liable." (Per Lord Eldon in Marquis of Bute v. Cunningham, 2 lluss., 275;) or as Lord St. Leonards says, there must be a common fund. (Averall v. Wade, LI. & G., 252, cited in In re Dunlop, 21 Ch. D., 583.) But it is, of course, quite compe- tent to the mortgagor where two or more properties are comprised in the same security to direct the order in which the securities are to be applied inter se so as to make one, the first, and another, the second, and so forth, available for the purposes of the charge. Again, no right to contribution will arise except where there are special charges. A mere general lieu will not, therefore, be sufficient for the purpose. (On the conflicting rights of assignees of two or more estates subject to a common charge to contribution, see Lewin on Trusts, pp. 717-720.) Questions of contribution may also arise between persons having limited interests and those entitled in remainder. A person having a limited estate is not under any obligation to pay off the principal, but only to keep down the interest. He shall therefore contribute only ia proportion to the benefit he derives from the discharge of the mort- gage-debt. If the estate is, therefore, sold to pay the incumbrance DEPOSIT. 475 the tenant for life will be entitled to take the interest of the surplus, AcxIVop while the capital will belong to the remainderman. (Spence's Equity, 1882. p. 841.) SECTIONS If. must be remembered that the rule, that the mortgagee who pnr- ^> ^ f chases a portion of the equity of redemption cannot throw the whole of the mortgage-debt on the residue, does not apply to cases in which the mortgagee purchases for value and thereby diminishes hi.s own security before the residue is transferred to third persons. They can only take subject to the mortgage and are not entitled to claim contribution. (Gaya v. Salik, I. L. 11., Ill All., 682.) Deposit in Court. 83. At any time after the principal money has become p ower to payable and before a suit for redemption of the mortgaged ^posit property is barred, the mortgagor, or any other person money doc entitled to institute such suit, may deposit, in any Court on mort- in which he might have instituted such suit, to the ac- gage ' count of the mortgagee, the amount remaining due on the mortgage. The Court shall thereupon cause written notice of the Right to deposit to be served on the mortgagee, and the mortgagee one y , 1 ,^ > OO UGDOSltGQ. may, on presenting a petition (verified in manner pre- by mort- scribed by law for the verification of plaints), stating the s a sor- amount then due on the mortgage, and his willingness to accept the money so deposited in full discharge of such amount, and on depositing in the same Court the mort- gage-deed if then in his possession or power, apply for and receive the money, and the mortgage-deed so deposited shall be delivered to the mortgagor or such other person as aforesaid. 84. When the mortgagor or such other person as afore- Cessation said has tendered or deposited in Court under section of lllterest - eighty- three the amount remaining due on the mortgage, interest on the principal money shall cease from the date of the tender or as soon as the mortgagor or such other person as aforesaid has done all that has to be done by him to enable the mortgagee to take such amount out of Court, as the case may be. Nothing in this section or in section eighty-three shall be deemed to deprive the mortgagee of his right to interest when there exists a contract that he shall be entitled to reasonable notice before payment or tender of the mort- gage-money (a). (a) See Deo Dat v, Ram Autar (I. L. E., VIII All., 502). 4)76 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP 1882. SECTION Parties to suits for redemp- tlon ' Suits for Foreclosure, Sale or Redemption. 85. Subject to the provisions of the Code of Civil Procedure, section 437, all persons having an interest in the property comprised in a mortgage must be joined as parties to any suit under this chapter relating to such mortgage : Provided that the plaintiff has notice of such interest. This section seems to require that prior mortgagees should be joined ns parties to a suit by a puisne mortgagee, but neither a surety nor a judgment-creditor need apparently be added as parties, nor the mort- gagor, in a suit between mortgagee and sub-mortgagee (a). It seems, although the section is not very clearly worded, that a person having an interest in the mortgaged property cannot be bound by a decree mnde in his absence, although not made a party to the suit by reason of the plaintiff's not having notice of the interest. But it seems that in the absence of fraud he can only unravel the accounts by proving particular errors. (Needier v. Deeble, 1 Ch. Ca., 299 ; Godfrey v. Chndwell,^. Vern., 601.) If ll necessary parties to the action are not before the Court, the objection ought to be taken at once. But even if no such objection is taken, and the fact only comes out in the course of the hearing, the plaintiff will not be permitted to proceed. He may, however, have leave to amend, which may apparently be given at riny time before the final decree has been drawn up. (Keith v. Butcher, 25 Ch. D., 750. See also Campbell v. Holy laud, 7 Ch. D., 166. The latter case, how- ever, cannot be regarded as a precedent under this Act.) But if the action is allowed to proceed, and a decree is obtained by the plaintiff, it will be binding on those who are parties to it. In England, if the first tenant in tail of the equity of redemption be a party to the action, tiie decree will bind the remainderman, in the absence of fraud or collusion ; and the principle will probably be followed in this country in the case of a Hindu widow, where the mortgage was created by the husband. (Distinguish Nugender Ghose v, Kamini, XI Moore's Ind. App., 241 ; where the claim was in respect of a charge made by the widow. Cf. Mohimav. Ramkishore, XXIII Suth. W. 11, 174.) As to the necessity of making all persons having an interest in the mortgage security or in the equity of redemption parties to suits under this chapter, the following cases may be referred to in addition to those cited at pp. 136 140, 215217. 247249, ante. (Hughes v. Delhi and London Bank, I. L. 11., XV Ciilc., 35; Kuli/n-oaotino v. Kamini, I. L. R., IV Calc., 475 ; Daulat v. Mehr Chand, I. L. H., XV Culc., 70 ; Khub Chand v. Kalian, I. L. II.. I All., 240 ; Bishaii v. Manni, I. L. II., I All., 300 ; Ali Hasan v. Dhirja, 1. L. R., IV All., 518 ; Sila Ram v. Amir Beem, I. L. K., VIII All., 324; Kadir Bakah v. Salig Ram, I. L. 11., IX All., 474 ; Muhammad v. Man Sing, I. L. II., IX All., 125 ; Lachman v. Salig Ram, I. L. R , VIII All., 384 ; Narayan v. Pandu- (a) The section, however, may fairly be read as applying only to puisne claimants on the mortgaged premises. In England, a mort- gagee eisne is not a necessary party to a suit by mortgagee puisne, uuless the amount due to the latter cannot otherwise be ascertained. (Coote, p. 1162.) FORECLOSURE. 477 rang, I. L.'R., V Bom., 685 ; Ragho v. Balkrishna, I. L. II., IX Bom., ACT IV OP 128; Nanjandepa v. Gurulingapa, I. L. K., IX Bom., 10; Dullabhag 1882. v. Lakshmandas, I . L. K.. X Bom., 88; Naro Hari v. VHhulbJiat, SECTION I. L. K., X Horn., 648 ; Mohan Manor v. Togu Uka, I. L. R., X Horn., 224; Bhaudin v. Shnkh lxma.il, I. L. II., XI Horn., 425; Ram Baksh v. Mohunt, XXI Suth. W. 11., 428; Anundo Moyee v. Dhonendro, XIV Moore's Ind. App.. 101 ; Brnja Nath v. Khilat Chandra, Vllt Beng. L Rep., 104; Ariynputri v. Alamelit, I. L. R., XI Mad., 304; Gansaomit v. Naraynn, I. L. 11., VII Bom., 467; 1'unchan v. Mvngle, II Agra II. C. Rep., 207 ; Bhoop v. Nursing, III Agra H. C. Rep., 144 ; Hurdeo v. Guneshee, I Agra H. C. Hep., 36 ; Rumbnhsh v. ftum Z//, XXI Suth. W. R., 428; Mahomed v. Dhundur, XXV Sutli. W. H., 39 ; Blaqniere v. Ramdhone, Bourke, O. C., 319; Doo lay v. Goo/am, II All. H. C. Hep., 72; Damodhar v. Kahan Da.ts, VIII Bom. II. C. Rep., 1 ; Krishna v. Hurry, XXV Suth. W. R., 60 ; Mujeed v. Dildar, XIV Suili. W. R., 216. ) It ought to be mentioned that a defendant to a foreclosure action, although properly made a party in the first instance, will be entitled to his costs which may have been incurred by him after a proper offer to disclaim and to be dismissed from the suit. In the case of Greene v. Forster (22 Uh. D., 566), where the right of a puisne mortgagee to his costs was disputed on the ground that thti plaintiff was entitled to the delivery up of deeds of subsequent date to his own mortgage, and which dealt only with the title to the equity of redemption, the Court refused to depart from the ordinary rule ou the ground that the pluiutiff wus not entitled to any such order. Foreclosure and Sale. 86. In a suit for foreclosure, if the plaintiff succeeds, the Court shall make a decree, ordering that an account be taken of what will be due to the plaintiff for principal and interest on the mortgage, and for his costs of the suit, if any, awarded to him, on the day next hereinafter referred to, or declaring the amount so due at the date of such decree, and ordering that, upon the defendant paying to the plaintiff or into Court the amount so due, on a day within six months from the date of declaring in Court the amount so due, to be fixed by the Court, the plaintiff shall deliver up to the defendant, or to such person as he ap- points, all documents in his possession or power relating to the mortgaged property, and shall transfer the property to the defendant free from all incumbrances created by the plaintiff or any person claiming under him, or, where the plaintiff claims by derived title, by those under whom he claims ; and shall, if necessary, put the defendant into possession of the property ; but that, if the pa} T ment is not made on or before the day to be fixed by the Court, the defendant shall be abso- lutely debarred of all right to redeem the property. 478 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF It is scarcely necessary to point out that there can be no foreclosure 1882. until default has been made by the mortgagor so as to entitle the SECTION mortgagee to call in the mortgage-money. If no time is fixed for &6- payment in the deed, the mortgagee may demand payment at any time, and if the debt is not then paid, may proceed to foreclose. In English mortgages, there is frequently a covenant not to cull in the money during a certain term. If the covenant is absolute, there can be no foreclosure till the term expires. But if, as is generally the case, the covenant is subject to the condition that the interest shall be regularly paid by the mortgagor, he may be foreclosed at any time after default in payment of interest (a). But the default may, of course, be waived. The same observation will apply to the other covenants of the mortgagor, if any, contained in the mortgage-deed. In other words " whenever that has occurred by reason of which the mortgagor has lost his right under the deed to call for a reconveyance of the property, and he can only get back the mortgaged premises by virtue of the right of redemption which the Court of Equity still preserves to him, then also that Court allows the mortgagee to come in and insist that the mortgagor shall elect between the exercising of this right of redemption and being foreclosed." (Per Phear, J., in Shoroshee Bala v. Nundalall, XIII Suth. W. II., 364). It seems that a covenant not to call in the money during a definite period will prevent the mortgagee during the term from suing not only in respect of the mortgage-debt, but also in respect of any claims which he may have against the mortgagor in respect of the security, as for payment of rent or any other outlay in respect of the mortgaged premises. (Fisher's Mortgage, p. 330.) It is hardly necessary to state that a mortgagee will not be prevented by an administration suit from proceeding with his remedies against the mortgaged premises. (Kristo- mohiny v. Bama Churn, I. L. It., VII Calc., 733.) I have already pointed out the mode in which accounts are taken, in an action either for foreclosure or redemption, and that neither the mortgagee nor the mortgagor is at liberty to withdraw from the takin > of accounts when they appear to be going against, him(i). This is dis- tinctly laid down in the case of Doolee v. Omda (I. L. R., VI Calc., 377\ in which it is pointed out that the essence of foreclosure and redemption suits is that each party is entitled in such suits to enforce his rights, and that if the balance is against any party, he must pay it. In the same case where the mortgagee claimed to have been in pos- session under an agreement distinct from his mortgage-title, under which he obtained a decree in May 1862, the Court, in laying down the principle on which the accounts should be taken, observed : " We are of opinion that an account should be taken half-yearly of the interest due from the mortgagor under the mortgage-deed, and that, from such half-yearly amounts of interest, should be deducted the rent payable, but unpaid by the mortgagee during such half-year under any contract for possession, separate and independent of the mortgage; and if, for any period the mortgagee was in possession, (a) As to the usual covenants in a properly drawn mortgage, see Manickya v. Baroda (I. L. R., IX Calc.. 355.) (b) Cases, however, may occur in which the Court would be justified in staying proceedings, for instance, where the accounts are asked for vexatiously and unreasonably. {Taylor v. Mostyn, 25 Ch. D., 48.) FORECLOSURE. 479 rent became due under nny such separate or independent contract, ACT IV OP during such period, he should be charged as a mortgagee in possession. 1882. The balance of interest half-yearly (if any) will not curry interest SECTION up to the date of the decree. But an account must be made up, as " - on the date of the decree of the 12th May 1862, of the principal and interest, after making such deductions as 1 have mentioned, due to the plaintiff at that time. Upon that aggregate amount interest will again he calculated at one per cent, per mensem, and against the subse- quent half-yearly accounts must be set oft the amounts payable and unpaid by the mortgagee in respect of rent under any contract for possession, separate and independent of the mortgage; and for any period uncovered by such separate and independent contract, such a sum as should be charged against a mortgagee in possession. " The accounts being so taken, the mortgagor must pay the balance, if any, found due from him on such account, to the plaintiff, the mort- gagee. On the other hand, if a balance is found due from the plaintiff, the mortgagee, to the defendant, the plaintiff must pay such balance to the defendant." (As to the circumstances under which a settled ac- count may be re-opened, see Eyre v. Hughes, 2 Ch. D., 148 ; Daniell v. Sinclair, 6 App. Cas., 181.) I ought to add that when the mortgagee has been overpaid, he may be ordered to pay the balance due from him with interest, from the date of the institution of the suit. And this is stated to be the general practice in Junoji v. Jnnoji (I. L. R., VII Bom., 185), on the authority of Seton's well-known Treatise on Decrees (). (Cf. Quarrell v. Becltford, 1 Mad., 269 ; where it is put on the ground that the demand was made at the time of the filing of the bill, and ought to have been then complied with.) In the recent case of Charles v. Jones (35 Ch. D., 544), a stricter view of the liability of the mortgagee was, however, taken by the Court. It is true that the claim in that case related to the surplus proceeds which were retained by the mortgagee after a sale under a power. But the observations of the learned Judge are very general. The mortgagee, it is said, takes his mortgage as a security for his debt, and has therefore no right to be in possession of the estate after he has paid himself what is due to him. He then holds the property for the benefit of the mortgagor. His duty is then to say, ' I have paid my debt, the surplus does not belong to me, and I wish to hand it back to the person to whom it belongs.' The Court further observed that it is the duty of the mortgagee to set apart the surplus in such a way as to be fruitful for the benefit of the person entitled to it, and to whom, to that extent at least, the mortgagee stands in a fiduciary relation. (See also Wilson v. Melcalfe, 1 Ituss., 530; Athworth v. Lord, 36 Ch. D., 545.) I have already stated that you cannot imply a contract to pay a cer- tain rate of interest as such. But a plaintiff may recover interest by way of damages, although there is no express contract to that effect. In the case of Mansab All v. Oulab Chand (I. L. 11., X All., 85), a very important distinction is drawn between the interest payable on a mort- gage as such, and damages recoverable by the plaintiff by reason of the wrongful withholding of the principal sum. I may, however, be per- mitted to observe that this distinction which may be followed by very (a) This rule, however, was not followed in the above case, which was governed by the Deccau Agriculturists' Relief Act. 480 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF serious consequences to the mortgagee, could hardly have been present 1882. to the mind of the author of this Act in which we find tlie word interest SECTION used throughout without reference to any such distinction. An ex- 86. animation of tlie English cases will iilso, I venture to think, show -- that damages payable by reason of default of payment at a fixed day nre generally known by the name of and treated as interest. In Caledonian Ry. Co. v. Carmichael (Law Hep., 2 H. L., Sc., 56, 66), Lord Westbury says : " Interest can be demanded only in virtue of a contract expressed or implied, or by virtue of the principal sum of money having been wrongfully withheld and not paid on the day when it ought to have been paid." (See also Fisher's Mortgage, pp. 879-880, and the cases cited there.) (a) Similar language has been employed by other learned Judges and adopted by the legislature in this country in Act XXXII of 1839, which is based upon the well-known English Statute (3 and 4 Will. IV, c. 42.) The only substantial difference, therefore, it seems to me between interest as such and damages in the nature of interest consists in the fact that in the one case the debtor is bound by the terms of his contract, while in the other some measure of discretion is vested in the Court. But the damages, it is submitted, ought to be regarded as part of the mortgage-debt just the same as tlie interest due to the creditor under the terms of an express agreement. (Dten Doyal v. Het Narain Singh, I. L. II., II Calc., 41.) And this brings me to another vexed question I mean the distinction between interest and a penalty, a question on which, as observed by Jessel, M. 11., it is not unlikely that learned Judges will di fit-t- in future as they have differed in times past. It is impossible to reconcile the various reported cases on the subject, as a very thin line would seem to divide the two. The only principle that can be safely deduced from the authorities is that, since the repeal of the usury laws, a person is free to contract to pay any rate of interest that he chooses upon money borrowed by him, although, even on this point, we can trace in some at least of the reported cases the influence of that half conscious repulsion to the doctrines of political economy to which Sir Henry Maine alludes. (Village Communities, p. 195, See Chukar v. Mir, I. L. 11., II All , 715 ; Kharag v. Bhola, I. L. 11., IV All., 8; Dipnarain v. Dipnn, I. L. R., VIII All., 185, which lays down that interest at an increased rate as well as compound interest cannot both be recovered; liunsi v. Buali, I. L. R., Ill AIL, 260, where Stuart, C. J., says " the condition as to interest by its very enormity writes itself down as a penalty." Cf. Venkitta v. Kumba, I. L. II., I Mad , 349. But see Chhab v. Kamla, I. L. R., VIE All., 333 ; Bwa^ Sing v. Shah Ali(l. L. R., XIV Calc., 248),how- ever, the Court refused to follow the foregoing decisions upon the ground that an agreement to pay an increased rate of interest was not regulat- ed by sec. 74 of the Contract Act, but by sec. 2 of Act XXVIII of 1855, and the decision of their Lordships of the Privy Council in Balhissen v. Run Bahadoor, (I. L. R., X Calc., 305,) was referred to in support of this view. A stipulation to pay a certain rate of interest and a higher rate in default of payment at a fixed time could not, it was pointed out, be regarded as " naming a sum " payable in case of breach, but simply amounted to fixing two different rates of interest payable under two different sets of circumstances. (Arjan v. Asgar, I. L. R., XIII Calc., 200 ; Bamvayya v. Subba, I. L. R., XI Mad., 294; Ban- wari v. Muhammad, I. L. R., IX All., 690 ; Narain v. Chail, I. L. R., (a) It is, however, worthy of notice that the distinction drawn by the Calcutta High Court is not noticed in any of the Allahabad cases. R. B. G., T. P. A. 31 482 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP VI All., 179; Bhola v. Fateth, I. L. R., VI All., 63; Kunj v. IlahL 1882. I. L. 11., VI All, 64; Arulu v. Waku, II Mad. H. C. Rep., 205). SECTION It may also be added tli.'it to apply sec. 74 to agreements to pay an 86- increased rate of interest would be scarcely consistent with a well- known canon of construction which says that special Acts are not re- pealed by general Acts. " In passing special Acts," says Wood, V. C., " the Legislature had their attention directed to the special case which the Act was meant to meet, and considered and provided for all the circumstances of that special case ; and having so done they are not to be considered by a general enactment passed subsequently, and making no mention of any such intention, to have intended to derogate from that which by their own special Act they had thus carefully supervised and regulated." (Fitzgerald v. Champneys, 2 J. & H., 54, 55.) Then, again, it seems to me that an agreement to pay an increased rate of interest if the debtor does not pay at a certain time, is substan- tially the same as an agreement to pay the higher rate reducible in the case of punctual payment to a lower rate; an agreement which seems to me perfectly unobjectionable, and against which equity ought not to relieve if the early day be suffered to pass without payment. It is true that a distinction is made by the English Court of Chancery between these two agreements ; but a very eminent Equity Judge in speaking of this practice said : "Iain sorry it was so settled, because anything more irrational than the doctrine, I think, can hardly be stated. It entirely depended on form and not on substance." (Per Jessel, M. R., in Wallis v. Smith, 21 Ch. D., 261.) As the authorities now stand, an agreement to pay a higher rate of interest will not be regarded as a penalty, merely because it is payjible from a date prior to default. It only amounts to the substitution of a higher for a lower rate of interest in a given state of circumstances. I should have thought that the judgment of their Lordships in Bal- hissen v. Run Bahadoor (I. L. R., X Gale., 305), was conclusive on the question that such an agreement was not penal ; but it has been suggested in some recent cases that there may be a distinction between an agreement to pay interest as such, and one to pay compensation or damages for the non-payment of the principal or interest as the case may be at the appointed time. (Banwari v. Muhammed, I. L. R., IX AIL, 690; Busavayya v. Subba Raju, I. L. R., XI Mad., 294). It seems to me, however, with the greatest respect, that this distinction by introducing the element of reasonableness in such cases is open to the objection which has been made to Judges putting a different meaning on a contract from that expressed by the parties them- selves. I ought to mention that it has been suggested that the Court may properly regard an agreement as penal, although it provides for the payment of interest, if the clause was intended not to regulate the terms on which the loan was to continue, but only to prevent its continuance by imposing a penalty for the default. The proposition may be sound in principle, but I fear it cannot be applied in practice without arming the Court indirectly with a power to regulate the terms on which money should be lent. It is necessary to state that the rule of Hindu Law known in Bombay as the rule of Damdupat as a part of the Hindu Law of Contract, is the law as between Hindus in the High Court in its ordi- nary original civil jurisdiction. (Nobinv. liomesh, I. L. R., XIV Calc., FORECLOSURE. 483 781.) () But the rule will not be applied in the case of a mortgagee in ACT IV OP possession when the account is taken on both sides, the mortgagee being 1882. debited with the rents and profits. (Nathu Bhaiv. Mulchand, V Bom. SECTION H. C. Hep., 196.) But no exception will be made when the account is ordered against a person not as mortgagee in possession, but by way of mesne profits as against a wrong-doer. The only other point in connection with the question of interest, it is necessary to state, is that, although ordinarily notwithstanding a covenant to pay interest at a certain rate so long as the principal or any part of it remains unpaid, interest at such rate can only be claimed as of right only down to the institution of the suit, it seems that in taking the accounts under this Act, the well-known practice of allowing the mortgagee interest at the stipulated rate down to the date of the final order for foreclosure or sale will be followed by the Court. (Belchaiubers's Practice of the Civil Courts, p. 333. Vithal v. Dhondi, Bom. P. J. 1884, p. 44.) It may be observed that the period of six months usually allowed to the mortgagor to redeem may be curtailed if the mortgagor is willing to ex- ercise his rijjht at an earlier period in order to avoid the payment, of in- terest for the intervening period to the mortgagee. (Nazir v. Alehidi, VII Calc. L. Rep., 206 ; Chotoolill v. Miller, VII U.lc. L. Rep., 267.) Neither this section nor the other sections in the Act relating to suits for sale or redemption deal with the case of several successive mort- gages. In such cases, the second mortgagee has the first right to redeem and is liable to be foreclosed in default of payment. The second mort- gagee being thus removed out of the way, an account is taken of the subsequent interest and costs due to the first mortgagee, the third mort- gagee being entitled to redeem on payment, of such interest and costs together with the amount originally certified to be due to the first mortgagee. In default, he is in his turn liable to be foreclosed, and the same process is followed in respect of the other mortgagees until the mortgagor himself is reached, when he will have the option of redeeming the mortgage or will be foreclosed, the estate in the latter case being vested in the mortgagee free from all incumbrances (6). 1 ought to state that in the event of a puisne mortgagee redeeming an earlier mortgage, a subsequent mortgagee will be entitled to redeem only on payment of the debt due to the mortgagee who redeems the property on his own security, together with the money paid by him as the price of redemption. It is scarcely necessary to add that the debt due to the mortgagee will include payments which the mortgagee has a right to treat as part of the mortgage-debt. (a) In this case the rule of Hindu Law was applied, although it was clear from the directions given by the learned Judge by whom the accounts were ordered, that the question was not present to his mind. (Z) As to the mode of computing interest in such cases, see Elton v. Curteis (19 Ch. D., 49.) I ought to mention here that the present tendency of the Court is to give but one time to redeem. (Smith v. Olding, 25 Ch. D., 462 ; Mutual Sfc. Society v. Langlcy, 26 Ch. D., 686 ; Platt v. Mendel, 27 Ch. D., 246 ; Dolle^ v. Manlcy, 28 Ch. D., 664.) As to the cir- cumstances under which an immediate decree for foreclosure may be made, see WolverJiamjrton $c. Co. v. George (24 Ch. D., 707.) For a form of decree where the action combines both a claim on the covenant and a claim for foreclosure, see Farrer v. Lacy <%' Co. (25 Ch. D., 636 ; C. A., 31 Ch. D., 42), Hunter v. Myatt (28 Ch. D., 181). 484 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF The right of a mortgagee who redeems a prior mortgage to claim 1882. from a subsequent incumbrancer not only the price of redemption, but SECTION also the amount due to himself will not, it seems, be taken away or in 86. any way qualified by the mere fact that his mortgage includes only a part of the property comprised in the prior security. The question was discussed very fully in a recent English case (Mutual 8fc. Society v. Langley, 32 Ch. D., 460). The facts were shortly these : A mortgagor who was entitled to a reversionary interest in the residuary estate of a testator and also to a life interest in certain sums of money, mortgaged both his reversionary and life interests to different persons before 1872 when he mortgaged his reversionary interest alone to the defendant Langley. The mortgagor afterwards made five subsequent mortgages of his life interest to the plaintiffs, who subsequently took a transfer of the securities prior to the defendant's mortgage of 1872. An action having been brought for foreclosure of the reversionary and life interest, it was held that, although the defendant's mortgage included only one property, he was entitled, on paying off the mortgages which were prior to his own security, to an assignment of both the properties, and not simply of that on which the debt due to himself was secured. In giving judgment Lord Justice Cotton said : " Just let us see what the position of Mr. Langley was before the plaintiffs took their subsequent mortgages on the life interest. He had a mortgage only on the rever- sionary interest. Then he would have been foreclosed at the instance of the first mortgagees of the two classes of property, unless he paid off the entirety of their debt and, if he paid off the entirety of their debt, there being no subsequent mortgage, and the only interest being that of the mortgagor, he would have been entitled to have handed over to him the entirety of the property which was a security for those debts. It is very true that he had no interest whatever in the life estate, he had an interest only in the reversional property ; but if he wished to redeem, or wished to avoid foreclosure, he must pay off the entirety of the debt due to the prior incumbrancer upon the property mortgaged to him, and also upon the other property. It would have been the right of the first mortgagee to require this, and it would have been his right if he had wished to redeem on this footing. That being so, sub- sequently to that, the plaintiffs got a mortgage upon the life interest, and upon the life interest only. In my opinion by so dealing with the life interest, the mortgagor could not alter or vary the rights which, not by contract, but from his position, as a matter of equity arising from that position, Mr. Langley was entitled to, previously to the time when the mortgagor granted the subsequent mortgage to the plaintiffs. In my opinion it is not a question of tacking, and it could not be support- ed upon that. Nor is it a question of consolidation. It does not rest upon either of those two grounds, but upon the principle that nothing which the mortgagor could subsequently do by dealing with the equity of redemption could interfere with or prejudice his prior mortgagee, Mr. Langley. In my opinion the decision was wrong, and the proper form of decree will be upon the defendant paying whatever is due upon the previous mortgages, both of the life interest and the rever- sionary interest, he may redeem both those properties and have them assigned to him. When he has done that, so far as the plaintiffs are the next incumbrancers to him, they will be entitled to redeem him. " I do not think it is necessary to go through all the cases. The principle has been enunciated in those consolidation cases, that nothing tfOHECLOSURE. 485 which the mortgagor, the owner of the equity of redemption, may do, ACT IV OF can prejudice the position of his previous mortgagee, so as to subject 1882. him to greater responsibilities, or subject him to a greater burden SECTION than he would have had but for those dealings with the equity of 86. redemption. It is said that that is immaterial, and that Mr. Langley is getting something as to which he had no security whatever. Now he is getting it simply in this way to avoid foreclosure, and in order to redeem and to make himself first incumbrancer, he is entitled to pay off, and he may be required to pay off, not part only, but the entirety of the mortgages, and the debts due upon the previous mortgages ; and if he pays off the entirety of the debts, or can be compelled to do so, in my opinion it would be wrong to give him part only of the property upon which the debts were secured." Lord Justice Fry added : " With regard to the first point, it appears to me that the plaintiffs can obtain no better rights for their mortgage of 1876 than the mortgagor himself had at that time. Now how do the facts stand at that time ? At that time the mortgagor had not only mort- gaged to the five earlier mortgagees from whom an assignment has been taken by the plaintiffs, but he had mortgaged to the defendant Langley. He had mortgaged to Langley the reversionary property, and that placed Langley in this position. He was liable to have his interest in that property foreclosed, by the prior mortgagees, who were for the most part mortgagees not only of the reversionary interest in the property but of the life interest of the mortgagor ; and, by parity of reasoning, he had a right to redeem both those sets and take an assignment of both those properties upon paying off the prior mortgages. It appears to me that the mortgagor had no power to create any interest which would interfere with or infringe that right of Langley, and further, that if the respondents' contention were to prevail, it would follow, as they admit it does follow, that Langley would be deprived on payment off of the prior mortgages of part of the security, and he would only be entitled to take an assignment of the reversionary property ; and payment off of the prior mortgages would enure for the benefit of the subsequent mortgagee, and make him the first mort- gagee of the life interest. That would be a very startling conclusion, and I think it is only based upon a line of argument that is incon- sistent with the rights of the parties, because the mortgagor was un- able to place the plaintiffs in any better position than he himself was in. He could not interfere with Langley's right, and therefore his subsequent mortgagees cannot interfere with his right." (See also the Minutes of the Decree in the Report.) Now, although the contention of the plaintiffs that the defendant had no right to an assignment of any parts of the property on which he had no security unless he paid off the subsequent mortgages on those portions, was not wholly reasonable, it cannot be denied that the above judgment of the Court of Appeal virtually gives the mortgagee of one property only an advantage over subsequent incumbrancers which was never bargained for by him. No doubt, if there is a well- established rule to that effect, there can be no injustice in enforcing it, as the subsequent mortgagees may be presumed to have taken their securities subject to the well-known equity of the prior mortgagee to an assignment of the whole of the properties comprised in the first Security. But in the absence of any such established rule, I venture to tluuk his right to such an assignment is not so obvious. This 486 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF will appear if the rights of the parties are worked out by a decree for 1882. sale instead of foreclosure. Thus, suppose there is a first mortgage for SECTION K s . 30,000 on two properties, A. and 13., A being worth Us. 50,000 and B only Rs. 10,000. Suppose a second mortgage on B only for 11s. 30,000, and then a third mortgage on A for Rs. 25,000. According to the decision in Mutual fyc. Society v. Langley, the second mortgagee by redeeming the first would be entitled to throw both the debts on A. and B., and thus protect himself from any loss. But ex hypothesi the equity of redemption of B., which was his only security, was worth on a ratable distribution of the first mortgage-debt only Rs. 5,000, while the equity of redemption of A. was worth Us. 25,000. The result, however, is that the second mortgagee is satisfied, although his security was manifestly insufficient, while the third mortgagee notwithstanding the sufficiency of his security is 'squeezed out.' Under a decree for sale, however, the sale proceeds would be ratably distributed. The first mortgagee would get Rs. 30,000, the second Rs. 5,000 and the third Rs. 25,000. (See the Minutes of the Decree in Barnes v. Racsler, Fisher's Mortgage, p. 1006.) I may here be permitted to pbserve that in complicated cases the rights of the parties can be adequately protected only by a decree for sale; foreclosure being both a cumbrous and dilatory method of proce- dure. Indeed, it was proposed at one time to do away with foreclosure altogether, and to give the mortgagee only the right to realize his security by a sale of the pledge. But it was thought by the then Law Member of the Governor-General's Council that the amount of simplicity gained would not justify the amount of disturbance created. (Stokes's Anglo-Indian Codes, I, p. 738.) I, however, venture to doubt whether the slight disturbance created by such a law would have been too dear a price to pay for the elegance and simplicity which the measure would have given us. The gain to the community would have been sufficient compensation for any possible disturbance. The right of a mortgagee to foreclose, we should remember, naturally grew in England out of the form of an English mor.tgage, which consists of a transfer of ownership, accompanied by a condition for a re-transfer upon due pay- ment of the debt, probably the rudest method, as Professor Holland points out, in which security can be given for the fulfilment of an engagement. Both in America and in Ireland sale is regarded as the appropriate remedy on a mortgage. The same practice is followed in countries which have adopted the Roman Law as the basis of their jurisprudence. In English Law, however, the more cumbrous mode of proceeding has stood its ground down to the present day, but the assertion may be hazarded without rashness, that foreclosure with its successive periods of redemption, its liability to be re- opened, and the manifest inadequacy of the remedy in complicated cases is doomed even in England, a country, the jurisprudence of which sometimes reminds the lawyer of the words, half in playfulness, half in earnest, in which Arnold speaks of his beloved University of Oxford. The decree for foreclosure determines the respective priorities of the several incumbrancers, and may also in a proper case define the rights of persons having paramount claims on the estate (Jones v. Griffith, 2 Coll., 207). Cases of foreclosure furnish an exception to the general rule that the losing party pays the costs. In the case of incumbrancers as an ordinary rule the costs are allowed to be added to their securities, if any difficult questions arise as to priority or the FORECLOSURE. 487 like; and unless there has been something vexatious or unusual in ACT IV OF their conduct, they get their costs if the fund is sufficieut to pay them. 1882. (Johnsione v. Cox, 19 Ch. D., 17). SECTION An account, as I have already stated, is taken, where the mortgagee has been in possession, not only of the rents received by him but also of the profits which might have been received without wilful default on the part of the mortgagee. If the mortgagee was in occupation himself, he is liable to pay a fair rent. Any sums expended by the mortgagee in necessary repairs and improvements are deducted from the rents and profits, the balance being applied first in payment of the interest and then in sinking the principal. (Thomecroft v. Crockett, 2. H. L., 246.) The Act is silent as to annual rests, and I presume that the old practice will be still followed. Payments made in respect of or for the protection of the security or of the estate, will be treated as on the same footing with payments made in respect of necessary repairs. I ought to add that where one person has mortgaged his estate as a surety for another, the decree should be carefully framed for the purpose of protecting the rights of the surety. In such case, according to the practice of the English Court, the decree directs that in the event of the money being paid by the principal debtor, the estates shall be conveyed to their respective .owners. But if the money is paid by the surety, both the estates are conveyed to him, the principal debtor being, of course, at liberty to redeem that which belongs to him. If neither principal nor surety redeems the mortgage, both their estates are foreclosed. (Coote's Mortgage, 1093.) It seems that if the mortgagee intends to set up a claim for improve- ments or substantial repairs, the material facts in support of the claim should be stated in the plaint. (Sandon v. Hooper, 6 Beav., 246.) But any sums of money which may be claimed as just allowances will be allowed to the mortgagee in taking the accounts, although there may be no specific claim for such monies in the plaint nor any express direc- tion in the order directing the accounts to be taken (a). If the mortgagor seeks to charge the mortgagee with any losses sustained by him owing to the failure by the mortgagee to perform any of the duties imposed upon him by sec. 76 of this Act, he must state in his defence the material facts relied upon by him in support of his claim in order that the question may be disposed of at the trial and special directions given by the Court in the order directing an account. (Darnell's Chancery Practice, p. 1389.) 87. If payment is made of such amount and of such Procedure subsequent costs as are mentioned in section ninety-four, pa^n^cf the defendant shall (if necessary) be put into possession of amount the mortgaged property. due - If such payment is not so made, the plaintiff may apply Order abso- to the Court for an order that the defendant and all persons foreclosure. claiming through or under him be debarred absolutely of all () As to what are just allowances, see Wllkes v. Saun'um (7 Ch. D., 188) ; Tipton $c. Co. v. Tipton $c. Co. (7 Ch. D., 192,) ; 2 Seton, 1079 1081. Distinguish Recs v. Metropolitan fe. Works (14 Ch. D.,372.) 488 TRANSFER OF PROPERTY ACT, 1882. Power to enlarge time. ACT IV OF right to redeem the mortgaged property, and the Court SECTION sna ^ then pass such order, and may, if necessary, deliver 87. possession of the property to the plaintiff: Provided that the Court may, upon good cause shewn and upon such ter/ms, if any, as it thinks fit, from time to time, postpone the day appointed for such pa} r ment. On the passing of an order under the second paragraph of this section, the debt secured by the mortgage shall be deemed to be discharged. In the Code of Civil Procedure, Schedule IV, No. 129, for the words " Final decree," the words " Decree absolute" shall be substituted. It appears that under the last clause of this, section an order for foreclosure absolute operates as a discharge of the debt secured by the mortgage. A mortgagee, therefore, who obtains such an order will be precluded from bringing a second action against the mortgagor oft the covenant; a proceeding which, although allowed in the English law, is attended with the inconvenient result of re- opening the fore- closure decree. According to the English practice, the decree for foreclosure does not relate back to the judgment for an account, and the security is con- verted into land only from the date of the order absolute. (Thompson v. Grant, 4 Mad., 438.) In the case of Rahhalv. Dwarka (I. L. It., XIII Calc., 346,) however, the Calcutta High Court was of opinion that, after the passing of an order nisi, " it would be as difficult to hold that the property still belongs to the mortgagor, as it would be to hold that it is the property of the mortgagee."(a) In England, the order for foreclosure absolute is obtained on motion, of course supported by the affidavit of the plaintiff or of his solicitor of due attendance at the appointed time and place and of non-pny- ment by the mortgagor of the amount certified to be due. (Daniell's Chancery Practice, p. 1405.) In this country, the defendant has the option either of paying to the plaintiff or into Court. It seems, therefore, the attendance of the plaintiff or of his agent is not abso- lutely necessary. It has been said that the order absolute for foreclosure will operate as a discharge only of the mortgage-debt, but not of the costs, which mny be recovered by the mortgagee like other judgment-debts from the mortgagor. But however that may be, it is certainly competent to the Court under sec. 220 of the Civil Procedure Code to award the costs personally against the mortgagor, and the right of the mort- gagee to realise his costs separately will therefore depend upon the terms of the decree. (Rutnesmr v. Jusoda, I. L. R., XIV Calc., 185 ; Damodar v. Budh, I. L. It., X All., 179.) I ought to state that when a mortgagee brings an action to foreclose two mortgages of two dis- tinct estates, the costs of the action are not to be charged against eacli (a) Queers. Might not the difficulty which pressed upon the Court be met by allowing the mortgagee to use the name of the mortgagor in the proceedings on offering a proper indemnity ? FORECLOSURE. 489 estate, but should be apportioned ratably between the two. (DeCaux ACT IV OF v. Skipper, 31 Ch. D., 635.) It seems, although the authorities are not quite consistent on the SECTION point, that if the time prescribed by the Court for payment of the '* mortgage-money expires on a holiday, the mortgagor will be entitled to make the deposit on the first day that the Court re-opens. (See ante, pp. 264266. Cf. Hossein v. Dortzelle, I. L. U., V Calc., 906 ; Mayer v. Harding L. R., 2 Q. 13., 410 ; Oujadhur v. Naik, I. L. K., VIII Calc., 528.) It is scarcely necessary to point out that an appeal will lie only from a feruial adjudication by the Court, and not merely from a ministerial order. (Hulas v. Pirthi, I. L. 11., IX All., 500.) An order granting or refusing an extension of time will, however, be appealable under the Code. (I. L. .11., IX All., 502, note.) The order nisi in a foreclosure action would seem to be a decree for the purpose of an appeal from it, and not merely an interlocutory order. This practice is" followed in the Calcutta High Court and is in accordance with the rule laid down in 3mith v. Davis (31 Ch. D., 595). As to what constitutes good cause within the meaning of the piwiso to sub-sec. (1), see the judgment of Jessel, Rl. 11., in Campbell v. Holyland (7 Ch. D., 166.) 1 ought, however, to add that the practice of the English Court of Chancery upon which the judgment is based, is unduly indulgent to the mortgagor: as not only may the period for redemption be enlarged before an order for foreclosure absolute but the decree itself may be re-opened in the discretion of the Court. It seems that the present Act, while leaving to the Court a large discretion ' as regards extending the time for redemption before the mortgage is finally foreclosed, does not authorize the re-opening of the decree after an order of foreclosure absolute. The usual conditions upon which the time will be enlarged will probably be the same as those imposed on the mortgagor in England, viz., payment within a limited time of the sum due for interest and costs, and carrying on the account of subsequent interest and costs. (Daniell's Chancery Practice, p. 1406.) But if the time has to be enlarged owing to the neglect of the mortgagee to proceed under the decree, the Court will refuse to allow him interest subsequent to the original day named for payment. (See the cases cited in Belchambers, p. 339.) The time to redeem may also be enlarged on terms pending an ap- peal. (Monhhouse v. Corporation of Bedford, 17 Ves., 380. Cf. Constable v. Ilowick, 5 Jur., N. S., 331.) And the mortgagor ought to apply for such an order whenever the period is likely to expire before the appeal is heard. It is true, it has been said, that where the decree of an infeiior Court directing something to be done within a specified period is confirmed in appeal, the time is to be reckoned from the date of the appellate decree. (Dovlnf. v. Bhukundas, I. L. K., XI Bom., 172, citing Noorali v. Koni, I. L. 11., XIII Calc., 13.) But as pointed out by Mr. Justice West, the proposition presents not a little difficulty. I ought to mention that if the mortgagee receives any rents between the date of the certificate and the time appointed for the payment of the mortgage-money, a fresh account must be taken and a new day named for payment. The receipt of rents by a Receiver appointed by the Court ought not, however, to have any such effect. The reason for this distinction is that where a Receiver has been appointed, the 400 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF matter is taken out of the hands of the mortgagee, who cannot prevent 1882. the Receiver from realising the rents. It is, however, open to the SECTION mortgagor before the order absolute is made, to apply that the money 8 in the hands of the Receiver may be paid in reduction of the debt, and for liberty to redeem on payment of the balance. The mortgagee, of course, cannot claim the money in the hands of the Receiver as well ns the amount originally certified to be due to him. But the case is different where the money is received not as rents and profits, but in respect of minerals or other things which are part of the inheritance. (Coleman v. Llewellin, 34 Ch. D., 143; Webster v. 1'atteson, 25 Ch. 1)., 626 ; Hoare v. Stephens, 32 Oh. D., 194 ; Jenner-Fust v. Needham, 32 Ch. D., 582 0. A.) If the mortgagee receives any rents after the day fixed for redemption, he will be entitled to retain them, and accord- ing to the English law, it seems that over-due rents in the bands of tenants will also belong to the mortgagee if they are not actually received by him till after the day appointed for redemption. (Con- stable v. Howick, 5 Jur. N. S., 331 ; Jenner-Fust v. Needham, 31 Ch. D., 500.) It seems, having regard to the language of the second paragraph of sec. 87, that it is not absolutely necessary to ask for possession iu au action of foreclosure. It would, however, be prudent for the mortgagee to join a claim for possession with a prayer for fore- closure, (a) The section, however, does not apparently preclude an action of ejectment against a defendant who refuses to deliver up possession after a decree for foreclosure. In such cases, it seems, the mortgagee will have a fresh period under the Statute of Limitations, as he becomes the owner only when the order absolute for foreclosure is made. (Heath v. Pugh, 7 App. Cas., 235 ; Harlock v Ashberry, 19 Ch. D., 539.) Decree for 88. In a suit for sale, if the plaintiff succeeds, the sale. Court shall pass a decree to the effect mentioned in the first and second paragraphs of section eighty-six, and also ordering that, in default of the defendant paying as there- in mentioned, the mortgaged property or a sufficient part thereof be sold, and that the proceeds of the sale (after defraying thereout the expenses of the sale) be paid into Court and applied in payment of what is so found due to the plaintiff* and that the balance, if any, be paid to the defendant or other persons entitled to receive the same. Power to In a suit for foreclosure, if the plaintiff succeeds and the fnforecio- m oi'tgage is not a mortgage by conditional sale, the Court sure suif. may, at the instance of the plaintiff, or of any person in- terested either in the mortgage-money or in the right of redemption, if it thinks fit, pass a like decree (in lieu of a decree for foreclosure) on such terms as it thinks fit, (a) In England although a decree for foreclosure may provide for possession, it need not necessarily do so. ( Wit hall v. Nixon, 28 Ch. D., 413 ; Wood v. Wheatcr, 22 Ch. D., 281.) DECREE FOR SALE. 491 including, if it thinks fit, the deposit in Court of a reason- ACT IV OF able sum, fixed by the Court, to meet the expenses of sale, SECTION and to secure the performance of the terms. 89. The order fur sale instead of foreclosure may be made at any time before foreclosure absolute. (Union Bank v. Ingram, 20 Cli. D., 463.) Hut no sale will be directed unless the Court can com- plete it by delivering possession and insuring that the title-deeds shall be handed over. (Heath v. Crealock, L. It., 10 Cli. App , 32.) The sub-section is modelled on lo and 16 Viet , c. 86, sec. 48, now replaced by sec. 25 of the Conveyancing and Law of Pro- perly Act, 1881. The practice of the Court of Chancery under the former Act is thus stated in a well-known treatise on the subject : "A. sale was only directed where the Court was satisfied that it was for the benefit of the persons interested in the property. Thus, a sale would be directed where there was such a complication that the common decree could not be conveniently worked out ; but not where it would be oppressive : as where it would deprive the mortgagor of an old family estate. Where it was for his benefit, the sale of the estate of an infant mortgagor might be directed. A sale might be directed, though the mortgagor, or some of the incumbrancers did not consent; but was refused where the plaintiff, who was a judgment- creditor, insisted on a foreclosure. Where the mortgaged property consisted of lease-holds, a sale was ordered at the instance of first mortgagor ; the property being unproductive. A sale was directed at the instance of an equitable mortgagee by deposit of title-deeds where the deposit was accompanied by an agreement to execute a legal mortgage. The sale was usually directed to take place in the event of default being made in payment of what was found due by the Chief Clerk's certificate, within a limited time (usually six months), after the date of such certificate; but by consent, or where it was for the benefit of all parties, the sale would be directed to take place within a shorter period; or even immediately. If the sale was directed at the request of a subsequent mortgagee, or of the mortgagor, the Court could not, except by consent, dispense with a deposit, which must have been enough to cover the possible expense of a sale. Where the sale was directed at the request of a subsequent incum- brancer, or of the mortgagor, a reserved bidding was fixed of sufficient amount to cover what was due to the first mortgagee. Where a sale was directed in a suit in which a subsequent incumbrancer was plaintiff, the conduct of the sale was given to the first mortgagee." (Daniell's Chancery Practice, pp. 1409-1411.) 89. If in any case under section eighty-eight the defend- Procedure ant pays to the plaintiff or into Court on the day fixed jSSJdM as aforesaid the amount due under the mortgage, the costs, pays if any, awarded to him and such subsequent costs as are amount mentioned in section ninety-four, the defendant shall (if l necessary) be put in possession of the mortgaged property; Order ab- but if such payment is not so made, the plaintiff or the ^j^ 6 for defendant, as the case may be, may apply to the Court for an order absolute for sale of the mortgaged property ; and 492 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF th e Court shall then pass an order that such property, or a SECTIONS sufficient part thereof, be sold, and that the proceeds of 90,91. the sale be dealt with as is mentioned in section eighty- eight ; and thereupon the defendant's right to redeem and the security shall both be extinguished, (a) The section is not very artistically drawn. It seems, however, that the right of redemption will subsist till the property is actually sold ; the only right of the mortgagee being to have his debt and costs paid to him or to get the property sold. An assignee of the equity of redemption would also be entitled to protect his rights by paying the money into Court and to use, if necessary, the name of the mort- gagor for that purpose. (Behari v. Ganpat, I. L. R., X All., 1.) It is scarcely necessary to state that the validity of an order directing the sale of the mortgaged premises may not ordinarily be questioned on the ground that a transfer of the property is prohibited by statute. (Madho v. Katwari, I. L. 11., X All., 130.) It may be added that the dictum in Hart v. Taraprosonno (I. L. R., Xt Calc., 718), that when the mortgagee himself buys the property with the leave of the Court he is bound to prove that the property realised a fair amount, has been dissented from in subsequent cases. (Appeal from Order No. 155 of 1888; appeal from Order No. 367 of 1887.) Recovery 90. When the nett proceeds of any such sale are in- of balance sufficient to pay the amount due for the time being on the mortgage, mortgage, if the balance is legally recoverable from the defendant otherwise than out of the property sold, the Court may pass a decree for such sum. The order is to be made in the same suit, and it is not necessary for the mortgagee to bring a fresh action for the money. Of course, no decree can be made under this section, where the mortgagor is under no personal liability to pay the mortgage-debt, or where the right to enforce such liability has been extinguished by the operation of the Statute of Limitations. Redemption. Who may 91. Besides the mortgagor, any of the following persons sue for re- may redeem, or institute a suit for redemption of, the mort- demption. * -. gaged property : (a) any person (other than the mortgagee of the interest sought to be redeemed) having any interest in, or charge, upon the property ; (6) any person having any interest in, or charge upon, the right to redeem the property ; (c) any surety for the payment of the mortgage-debt or any part thereof ; (a) Quare. Does the mortgage- debt or costs carry any interest after the order absolute for sale ? REDEMPTION. 493 (d) the guardian of the property of a minor mortgagor ACT IV OF on behalf of such minor ; SECTION (e) the committee or other legal curator of a lunatic or 92. idiot mortgagor on behalf of such lunatic or idiot ; (/) the judgment-creditor of the mortgagor, when he has obtained execution by attachment of the mortgagor's interest in the property ; (g} a creditor of the mortgagor who has, in a suit for the administration of his estate, obtained a decree for sale of the mortgaged property. The persons entitled to redeem nre thus classified in the English law first, the mortgagor himself; second, the heir of the mort- gagor ; third, devisee ; fourth, the assignee of the equity of re- demption including subsequent mortgagees ; fifth, the trustee of a bankrupt mortgagor ; sixth, judgment-creditors who have acquired a charge on the land ; seventh, the plaintiff in a creditor's suit after a decree for sale of the real estate ; eighth, a tenant by elegit or statute and sequestrators ; ninth, the Crown on forfeiture of the equity of redemption ; tenth, the lord claiming by escheat ; eleventh, persona claiming under voluntary conveyances ; twelfth, persons claiming in default of appointment where the mortgage is made in exercise of a power ; thirteenth, dowress, a tenant by courtesy and a jointress ; fourteenth, a tenant for life or remainderman or reversioner ; fifteenth, a committee of a lunatic who may redeem for the benefit of the heir. It seems that a tenant may also redeem or procure somebody to re- deem for him, but a mere contractee for the purchase of the equity of redemption having only an inchoate estate may not redeem until the completion of his purchase. (Tusker v. Small, 3. My. & Cr. 69.) A mere legatee or creditor is not entitled to redeem except in cases of collusion. It is necessary to state that where the mortgaged property is settled, the tenant for life has the first option to redeem, and if the mortgagee purchases his interest, the remainderman cannot redeem without his consent. The equity of redemption, however, in any case, will be subject to the trusts of the settlement. (Ariyaputri v. Alamelu, I. L. R., XI Mad., 304; Coote's Mortgage, pp. 11631167.) The equity of redemption may, of course, be extinguished by the act of the parties, and a conveyance or surrender of the equity of redemption by the mortgagor will not be set aside simply on the ground of a misconception on the part of the mortgagor of his rights under the law. (Vishnu v. Kashi, I. L. R., XI Bom., 174.) 92. In a suit for redemption, if the plaintiff succeeds, Decree in the Court shall pass a decree ordering redemp- that an account be taken of what will be due to the tlon ' sulti defendant for the mortgage-money and for his costs of the suit, if any, awarded to him, on the day next hereinafter referred to, or declaring the amount so due at the date of such decree ; 494 TRANSFER OF PROPERTY ACT, 1$82. ACT IV OF that, upon the plaintiff paying to the defendant or into SECTION Court the amoun t so c ^ ue o n a day" within six.months from 92. " the' date of declaring in Court the -amount so due, to be fixed by the Court, the defendant shall deliver up to the plaintiff or to such person as he appoints, all documents in his possession or power relating to the mortgaged pro- perty, and shall retransfer it to the plaintiff free from the mortgage and from all incumbrances created by the de- fendant or any person claiming under him, or, when the defendant claims by derived title, by those under whom he claims, and shall, if necessary, put the plaintiff into possession of the mortgaged property ; and that if such payment is not made on or before the day to be fixed by the Court, the plaintiff shall (unless the mortgage be simple or usufructuary) be absolutely debarred of all right to redeem the property, or (unless the mortgage be by conditional sale) that the property be sold. Where there are several successive mortgages on the dismissal of the mortgagor's suit for redemption, the last incumbrancer takes the place of the mortgagor, the others becoming- first and subsequent iiicumbrancers according to their priorities (3. Ha., 637). The decree provides for the successive redemption of the first mortgagee by the second, and in the event of the second redeeming the first for redemp- tion by the third incumbrancer of the second on payment of the amount due to the second mortgagee, together with whatever he may have paid as the price of redemption and so on, till the last in the series of incumbrancers is reached, who must be redeemed by the mortgagor on pain of his equity of redemption being foreclosed. The right of redemption is regulated by the respective priorities of the mortgagees where there are more than one, the second being entitled to redeem the first, the third the second, and so on. In an action by a second mortgagee to redeem the first mortgagee and to foreclose the mortgagor, the proper form of judgment is that in default of the plaintiff redeeming, the action is to stand dismissed with costs. (Ballet v. Furze, 31 Ch. D., 312.) As a rule, a mortgagor will not be entitled to a decree for redemp- tion if he does not pray for it, but, on the contrary, denies the validity of the mortgage ; but where the issue is not merely mortgage or no mortgage, but whether the defendant has become the absolute owner of the property, the above rule will not be applied. (National Sank v. United Sfc. Co., 4 App. Gas., 391.) When the mortgage is redeemed, the mortgagee will be bound to deliver up all the title-deeds to the mortgagor including those that have been executed between the original mortgage and the final order for redemption. (Coote's Mortgage, 1097.) If the title-deeds cannot be produced, the mortgagee must not only pay the costs of the action, but also compensation for the damage done to the estate which may be set off against the mortgage-debt. He may also in addition be called upon to give the mortgagor a proper indemnity. (Spence, Vol. II, pp.690, 691.) REDEMPTION. 495 It is hardly necessary to observe that a purchaser of the equity of ACT IV OF redemption pendente lite, is notr entitled to maintain a fresh suit for 1882. the purpose of redeeming the mortgagee. (Ram v. Mahadaji. I. L. R., SECTIONS IX Bom., 141.) 9V94. 93. If payment is made of such amount and of such In case of subsequent costs as are mentioned in section ninety-four, tion, the plaintiff shall, if necessary, be put into possession of possession. the mortgaged property. If such payment is not so made, the defendant may in default, (unless the mortgage is simple or usufructuary) apply to f_ rec j os "re the Court for an order that the plaintiff and all persons claiming through or under him be debarred absolutely of all right to redeem, or (unless the mortgage is by condi- tional sale) for an order that the mortgaged property be sold. If he applies for the former order, the Court shall pass an order that the plaintiff and all persons claiming through or under him be absolutely debarred of all right to re- deem the mortgaged property, and may, if necessary, deliver possession of the property to the defendant. If he applies for the latter order, the Court shall pass an order that such property or a sufficient part thereof be sold, and that the proceeds of the sale (after defraying thereout the expenses of the sale) be paid into Court and applied in payment of what is found due to the defend- ant, and that the balance be paid to the plaintiff or other persons entitled to receive the same. On the passing of any order under this section, the plaintiff's right to redeem and the security shall, as regards the property affected by the order, both be extinguished : Provided that the Court may, upon good cause shown, Power to and upon such terms, if any, as it thinks fit, from time enlar ge to time, postpone the day fixed under section ninety-two for payment to the defendant. 94. In finally adjusting the amount to be paid to a Costs of mortgagee in case of a redemption or a sale by the Court mortgagee under this chapter, the Court shall, unless the conduct to ckcree" of the mortgagee has been such as to disentitle him to costs, add to the mortgage-money such costs of suit as have been properly incurred by him since the decree for foreclosure, redemption or sale up to the time of actual payment. The practice in England is to allow to the mortgagee all costs which are reasonably incurred by him in relation to the mortgage-debt. It is true that a mortgagee is a creditor and that he has also a security for the debt, but no distinction can be made between his position as a creditor and as a person holding a security. If, for instance, he 496 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP incurs any costs in enforcing bis claim against a surety who has only 1882. given a promissory-note, such costs will be chargeable against the SECTIONS mortgaged property. As pointed out by Lord Justice Fry, whether 95, 96. } ie j s trying to get his money from the mortgagor or from a surety or out of the mortgaged property, he is trying to enforce his rights as mortgagee. (National Provincial Bank v. Gamen^ 31 Ch. D., 582.) The law on the subject is thus laid down in Seton on Decrees: " Both in foreclosure and redemption actions, the mortgagee is entitled to the costs of suit, and also to all costs properly incurred by him in reference to the mortgaged property for its protection or preser- vation, recovery of the mortgage-money or otherwise relating to questions between him aud the mortgagor and to add the amount to the sum due to him on his security. " (4th Ed., p. 1059.) Charge of 95. Where one of several mortgagors redeems the one of mortgaged property and obtains possession thereof, he has co-mort- a charge on the share of each of the other co-mortgagors gagors who in the property for his proportion of the expenses pro- redeems. p er jy incurred in so redeeming and obtaining possession. This section would seem to give the mortgagor who redeems only a charge on the share of each of his co-mortgagors, which must be realised by the sale of such share whatever may have been the form of the original mortgage. (See in addition to the cases cited, ante, pp. 344, 347, Vithal v. Vishvas, I. L. R., VIII Born., 497 ; where the contest was between a purchaser under an execution of a portion of the mortgaged property, and an assignee of the mortgagor.) The words " and obtains possession thereof" are not evidently in- tended to exclude the acquisition of a charge where possession is not obtained by the mortgagor who redeems. . The mortgagor who redeems is liable in his turn to be redeemed by his co-mortgagor. It seems that such a suit would fall within article 148 of the Second Schedule of the Limitation Act. (Nura v. Jagat, I. L. 11., VIII All., 295. Distinguish Umrunnissa v. Muhummad, 1. L. R., Ill All., 24.) Even if Article 148 were inapplicable to such suits, it is clear that the possession of the mortgagor who redeems the pro- perty would not be adverse to his fellow-mortgagors. (Ram v. Sadasiv, I. L. R., XI Bom., 422.) Sale of Property subject to prior Mortgage. Sale of 96. If any property the sale of which is directed under property this chapter is subject to a prior mortgage, the Court may, subject t> Tjyith tl ie consent of the prior mortgagee, order that the mortgage, property be sold free from the same, giving to such prior mortgagee the same interest in the proceeds of the sale as he had in the property sold. This is a step, if I may venture to say so, in the right direction. As pointed out by the Honorable Mr. Evans, in his speech on the motion for passing the Transfer of Property Act : " It is by no means unusual when the same property is pledged to different creditors in different mortgage-bonds, for each creditor to hold a separate sale and leave ANOMALOUS MORTGAGES.^ 497 the purchasers to fight out in Court the question of what they have ACT IV OP bought under their respective sales. There being no machinery for 1882. bringing together into one suit the various incumbrunces on the pro- SECTIONS perty, endless confusion has been the result, and^the decisions of the ^7, 98. Courts upon the almost insoluble problems arising from this state of things have been numerous and contradictory. The result is that the mortgaged property cannot fetch anything like its value. The debtor is ruined, the honest and respectable money-lender discouraged, and a vast amount of gambling and speculative litigation fostered. It lias been one of the objects of this -chapter to remedy these and other similar evils. " I hope some day, when our registration system is improved, to see a much greater change, and to see incumbered land sold under a statu- tory title, leaving all disputed questions to be fought out over the proceeds in Court. But pending this, it is very necessary to do some* thing, and what is done by this chapter will, I expect, remedy, or at least ameliorate, many of the existing evil." This section, it may be noticed in passing, indirectly recognises the right of a puisne mortgagee to sell the mortgaged premises subject to a prior incumbrance. (llaghu v. Jurawan, I. L. R., VIII All., 105, overruling Sirbadh v. Ranhu, I. L. R., VII All., 568 ; Janki v. Mau- tangui, I. L. R., VII All., 577.) 97. Such proceeds shall be brought into Court and Appiica- applied as follows : ti ^ M of . first, in payment of all expenses incident to the sale or pl properly incurred in any attempted sale ; secondly, if the property has been sold free from any prior mortgage, in payment of whatever is due on account of such mortgage ; thirdly, in payment of all interest due on account of the mortgage in consequence whereof the sale was direct- ed, and of the costs of the suit in which the decree direct- ing the sale was made ; fourthly, in payment of the principal money due on account of that mortgage ; and lastly, the residue (if an} 7 ) shall be paid to the person proving himself to be interested in the property sold, or, if there be more such persons than one, then to such persons according to their respective interests therein or upon their joint receipt. Nothing in this section or in section ninety-six shall be deemed to affect the powers conferred by section fifty- seven. Anomalous Mortgages. 98. In the case of a mortgage not being a simple Mortgage mortgage, a mortgage by conditional sale, an usufructuary nn *' mortgage or an English mortgage, or a combination of the sec K. B. G., T. P. A. 32 498 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF fi^t and third, or the second and third, of such forms, the SECTION "gh^ 3 an ^ liabilities of the parties shall be determined 99. " by their contract as evidenced in the mortgage-deed, and, - so far as such contract does not extend, by local usage. clauses (6), (c), The Otti and Kanam of Madras are well known inst:mces of mort- (d) & (e). gages, the incidents of which are regulated by local usage. (See the provisions of Bombay Regulation V of 1827.) Attachment of Mortgaged Property. Attach- 99. Where a mortgagee in execution of a decree for mortgaged ^ ne satisfaction of any claim, whether arising under the property, mortgage or not, attaches the mortgaged property, he shall not be entitled to bring such property to sale other- wise than by instituting a suit under section sixty-seven, and he may institute such suit notwithstanding anything contained in the Code of Civil Procedure, section 43. In reference t*> the provisions of this section the Law Commissioners observe : " There is a common practice on the part of mortgagees of suing their mortgagors on the debt as such and in execution selling the mortgagors' interest in the property. This is purchased by strangers to the mortj>age, who are thus virtually defrauded by an enforcement of the security of the existence of which they were wholly ignorant." (Report of the Indian Law Commissioners, 1879, p. 35.) It may be noticed that this section does not prevent a mortgagee from suing on the covenant and levying execution on other properties belonging to the mortgager. This is a very common practice and generally resorted to with a fraudulent object. (See pp. 171 175, antp.) It seems that the principle of this section will not apply in the case of an assignee of a mere money-decree for interest due on a mortgage, the assignee not being entitled to any lien. (Sami v. Krishna, I. L. R., X Mad., 169.) The Act does not expressly deal with suits for unpaid interest, or for unpaid instalments where the mortgage-debt is payable by instal- ments. In a recent case in England, in an action by a vendor where the purchase-money was payable by instalments some of which had not fallen due, the plaintiff' was declared entitled to a lien for the whole of the unpaid purchuse-money with liberty to apply in respect of future instalments, as they should accrue due. (Nives v. Nines, 15 Ch. IX, 649.) In Indurjeet v. Brij Hilas (III Suth. W. R., 130), it is said that a mortgaged property burdened with the payment of an entire debt to two shareholders, is liable to sale at the instance of both creditors separately so long as their claims remain unsatisfied, and that the act of one of two holders of a bond cannot destroy the lien of the other on property pledged to both as security for a joint debt. The sound- ness of the proposition, however, is open to question. In Ratan v. Hanuman (I. L. R., V. All., 118), it was held that the receipt by the mortgagee of the surplus proceeds, in part satisfaction of the mortgage-debt did not preclude him from following the mortgaged property iu the hands of the purchaser. CHARGES. 499 Charges. 100. Where immoveable property of one person is by act of parties or operation of law made security for the ! payment of money to another, and the transaction does Charges, not amount to a mortgage, the latter person is said to have a charge on the property ; and all the provisions here- inbefore contained as to a mortgagor shall, so far as may be, apply to the owner of such property, and the provi- sions of sections eighty-one and eighty-two and all the provisions hereinbefore contained as to a mortgagee institut- ing a suit for the sale of the mortgaged property shall, so far as may be, apply to the person having such charge. Nothing in this section applies to the charge of a trustee on the trust-property for expenses property incurred in the execution of his trust. For cases under this see.tiou seo Madho v. Sidhbinnik (I. L. R M X1Y Uulc., 687) ; Ramsidh v. Balgobind (L L. 11., IX All., 158) ; cf. Abadi v. Asa (I. L. R., II All., 162.) A charge must be distinguished from a mortgage as defined in the Act, more especially from a simple mortgage. In every mortgage, there must be a transfer of an interest in specific immoveable property, while in the case of a mere charge, no interest is transferred, nor is it necessary that the property to which it relates, should be specific. A charge difiers from a mortgage not only in form but also in sub- stance. A plea of purchase fur value without notice, for instance, although it may be perfectly good against a charge, will be wholly unavailing against a mortgage. A charge is generally created by a settlement or will, by which the property of the settlor or testator is either expressly or construc- tively made liable or especially appropriated to the discharge of a portion, legacy, or other burden or declared to be subject to a lien for securing them. The creation of a charge, and in this respect it is un- like a mortgage, does not imply a debt. It only confers a right of realization by judicial process. (Fisher's Mortgage, 84.) It is necessary to state that a mere general covenant to charge land will not create a charge upon any specific immoveable property. If, however, there is a covenant to charge either the corpus or the income of property already in the possession of the covenantor, or even of after acquired property of a specified kind, there would be a valid charge. But a general indefinite covenant to settle lands will not be sufficient to create a charge. At any rate, it will not be enforced against a purchaser for value. (Lewin on Trusts, pp. 140141.) In the case of annuities, it is sometimes extremely difficult to say whether there is a charge on the estate itself or only on the rents and profits. No general or inflexible rule can be laid down, the question being one purely of intention to be ascertained from the language of the instrument. Charges may be created not only by act of parties, but also by opera- tion of law, an instance of which is to be found in the lien of the 500 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF trustee for expenses properly incurred by him, and which is referred 1882. to in the Last clause of the present section. SECTION Trustees, it is necessary to state, are favoured by the law, because, 01- not only do they possess a lien upon the trust property, (a) but such lien is entitled to priority over incuinbr/inces created by the cestui que trust. (Exhall Sfc. Co. Re., 35 Beav., 449.) Trustees have also a right oi'retainer by virtue of their being entitled to be indemnified out of the trust estate. (For the general law on the subject, see Lewin on Trusts, pp. 184, 356, 638, 642, 903, 910.) Extin- 101. Where the owner of a charge or other incum- oT'charges braiice on immoveable property is or becomes absolutely entitled to that property, the charge or incurabrance shall be extinguished, unless he declares, by express words or necessary implication, that it shall continue to subsist, or such continuance would be for his benefit. This section is substantially in accordance with the English law on the subject as settled by recent authorities. (Lewin on Trusts, pp. 726 733. jarman on Wills, Vol. II, pp. 692 693.) The question whether a charge has been extinguished or not principally arises in three classes of cases : first, where there are other ineumbi ances on the property for which priorities are claimed ; secondly, where the estate which is subject to the charge is conveyed to a third person, and the question arises whether the conveyance carries with it the estate free of or subject to the mortgage ; thirdly, where there is a contest between the real and personal representatives of the person by whom the charge has been paid off, or between the representatives of the tenant for life and the remainderman. I trust I shall not be accused of undue pre&umption, if I venture to suggest that some degree of confusion has arisen by reason of the same tests being applied in all these cases for the purpose of ascer- taining whether there hus been a merger or not. But a test perfectly unobjectionable when npplied to the second class of cases, becomes of questionable soundness when npplied to the first or the third class. For instance, it is said the quantity of interest owned by the person paying off the charge ought to be the chief guide, in the absence of direct evidence, in determining whether merger takes place. If he be absolutely entitled, meaning entitled in fee simple, the presumption is that he meant to free the property from the charge ; if only partially interested, the pre- sumption is that he intended to keep it on foot (Lewin on Trusts, 730). Now, this rule, although fairly applicable in a contest between the real and personal representative, is not quite so pertinent when the ques- tion is whether a later incumbrancer is entitled to priority by reason of the merger of a prior charge ; and in such cases it seems to me that it would save a great deal of litigation if the Court were to lay down a rigid rule to the effect that there should be no merger at all. Then, again, the rule would seem to be equally inapplicable or use- less where the question arises upon a conveyance or mortgage without any mention of the charge by the person who has paid it off. In such cases, the true rule seems to be that the charge cannot be set up as () See the recent case of Worcester Sfc. Co. v. Slick (22 Ch. D., 255) where the right of subrogation is also discussed. NOTICE. 501 agninst the purchaser or mortgagee, and I do not know that, it might ACT IV OP not be safer to drop the expression merger altogether. (Johnson v. 1882. Webster, 4 DeG. M. & G., 488.) SECTIONS The principle formulated in the words in the present section " or ^ 2 > 1 ^ lJ> such continuance would be for his benefit" would seem altogether to exclude the rule laid down in Toulmin v. Steere, the doctrine of which lias been crusted over with so many exceptions that it is hardly recog- nisable in its present shape. The expression "absolutely entitled," however, does not necessarily imply the absence of an intervening charge or incumbrance, but has generally reference to the nature of the estate, being used for the purpose of designating what English lawyers call the fee-simple, as opposed to a limited estate. Notice and Tender. 102. Where the person on or to whom any notice or Service or -tender is to be served or made under this chapter, does not teilder on .,.,,,.,.,. 1-1,1 or to agent- reside in the district in which the mortgaged property or some part thereof is situate, service or tender on or to an agent holding a general power-of-attorney from such per- son or otherwise duly authorized to accept such service or tender shall be deemed sufficient. Where the person or agent on whom such notice should be served cannot be found in the said district, or is un- known to the person required to serve the notice, the latter person may apply to any Court in which a suit might be brought for redemption of the mortgaged property, and such Court shall direct in what manner such notice shall be served, and any notice served in compliance with such direction shall be deemed sufficient. Where the person or agent to whom such tender should be made cannot be found within the said district, or is unknown to the person desiring to make the tender, the latter person, may deposit in such Court as last aforesaid the amount sought to be tendered, and such deposit shall have the effect of a tender of such amount. It is to be regretted that there is nothing in this Act corresponding to sec. 67, of the English Statute. 103. Where, under the provisions of this chapter, a x"otice,&c., notice is to be served on or by, or a tender or deposit made to ^J y j n _ or accepted or taken out of Court by, any person incompe- competent tent to contract, such notice may be served, or tender or to con tract, deposit made, accepted or taken, by the legal curator of the property of such person ; but where there is no such cura- tor, and it is requisite or desirable in the interests of such person that a notice should be served or a tender or deposit 502 TRANSFER OF PROPERTY ACT, 1882. Acr IV OF made under the provisions of this chapter, application may SECTIONS ^ e mac ^ e ^ an 7 Court in which a suit might be brought for 104106. the redemption of the mortgage to appoint a guardian ad litem for the purpose of serving or receiving service of such notice, or making or accepting such tender, or making or taking out of Court such deposit, and for the perfor- mance of all consequential acts which could or ought to be done by such person if he were competent to contract ; and the provisions of Chapter XXXI of the Code of Civil Pro- cedure shall, so far as may be, apply to such application and to the parties thereto and to the guardian appointed thereunder. 104. The High Court may, from time to time, make rules consistent with this Act for carrying out, in itself and in the Courts of Civil Judicature subject to its superinten- dence, the provisions contained in this chapter. For the rules made by the Calcutta High Court under this section applicable to the original side, see Macphersou's Mortgage, App. B. Power to make rules. Lease tie- lined. Lessor, lessee, pre- mium and rent de- fined. Duration of certain leases in absence of written contract or local usage. CHAPTER V. OF LEASES OF IMMOVEABLE PROPERTY. 105. A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, ser- vice or any other thing of value, to be rendered periodi- cally or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent. 106. In the absence of a contract or local law or usage to the contrary, a lease of immoveable property for agri- cultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice expiring with the end of a year of the tenancy ; and a lease of innnoveable property for any other purpose shall be deemed to be a. lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice expiring with the end of a month of the tenancy. LEASE. 503 Every notice under this section must be in writing, ACT IV OF signed by or on behalf of the person giving it, and tendered S ECTIO NS or delivered either personally to the party who is intended 107, 108. to be bound by it, or to one of his family or servants at his residence, or (if such tender or delivery is not practi- cable) affixed to a conspicuous part of the property. 107. A lease of immoveable property from year to year, Leases how or for any term exceeding one year, or reserving a yearly made< rent, can be made only by a registered instrument. All other leases of immoveable property may be made either by an instrument or by oral agreement. 108. In the absence of a contract or local usage to the Rights and contrary, the lessor and the lessee of immoveable property, oil**** as against one another, respectively, possess the rights and and lessee, are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the pro- perty leased : A. Rights and Liabilities of the Lessor. (a) The lessor is bound to disclose to the lessee any material defect in the property, with reference to its intend- ed nse, of which the former is and the latter is not aware, and which the latter could not with ordinary care discover : (ft) the lessor is bound on the lessee's request to put him in possession of the property : (c) the lessor shall be deemed to contract with the lessee that, if the latter pays the rent reserved by the lease and performs the contracts binding on the lessee, he may hold the property during the time limited by the lease without interruption. The benefit of such contract shall be annexed to and go with the lessee's interest as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested. B. Rights and Liabilities of the Lessee. (d) If during the continuance of the lease any accession is made to the property, such accession (subject to the law relating to alluvion for the time being in force) shall be deemed to be comprised in the lease : (e) if by fire, tempest or flood, or violence of an army or of a mob, or other irresistible force, any material part of the property be wholly destroyed or rendered substan- 504 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF tially and permanently unfit for the purposes for which SEC-VIOS ik was ^ et > ^ ne l ease shall, at the option of the lessee, 108. be void : Provided that, if the injury be occasioned by the wrong- ful act or default of the lessee, he shall not be entitled to avail himself of the benefit of this provision : (/) if the lessor neglects to make, within a reasonable time after notice, &i\y repairs which he is bound to make to the property, the lessee may make the same himself, and deduct the expense of such repairs with interest from the rent, or otherwise recover it from the lessor : (g} if the lessor neglects to make any payment which he is bound to make, and which, if not made by him, is recoverable from the lessee or against the property, the lessee may make such payment himself, and deduct it with interest from the rent, or otherwise recover it from tlie lessor : (h) the lessee may remove, at any time during the conti- nuance of the lease, all things which he has attached to the earth : provided he leaves the property in the state in which he received it : (i) when a lease of uncertain duration determines by any means except the fault of the lessee, he or his legal representative is entitled to all the crops planted or sown by the lessee and growing upon the property when the lease determines, and to free ingress and egress to gather and carry them : (j) the lessee may transfer absolutely or by way of mort- gage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may sigain transfer it. The lessee shall not, b}- reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease : nothing in this clause shall be deemed to authorize a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate under the management of a Court of Wards, to assign his inter- est as such tenant, farmer or lessee : (k) the lessee is bound to disclose to the lessor any fact as to the nature or extent of the interest which the lessee is about to take, of which the lessee is, and the lessor is not, aware, and which materially increases the value of such interest : LEASE. 505 (t) the lessee is bound to pay or tender, at the proper ACT iv OP time and place, the premium or rent to the lessor or his 1882. agent in this behal f : ^Si!"* (m) the lessee is bound to keep, and on the termination 1 of the lease to restore, the property in as good condition as it was in at the time when he was put in possession, sub- ject only to the changes caused by reasonable wear and tear or irresistible force, and to allow the lessor and his agents, at all reasonable times during the term, to enter upon the property and inspect the condition thereof and give or leave notice of any defect in such condition ; and, when such defect has been caused by any act or default on the part of the lessee, his servants or agents, he is bound to make it good within, three months after such notice has been given or left : (n) if the lessee becomes aware of any proceeding to recover the property or any part thereof, or of any en- croachment made upon, or any interference with, the lessor's rights concerning such property, he is bound to give, with reasonable diligence, notice thereof to the lessor : (o) the lessee may use the property and its products (if any) as a person of ordinary prudence would use them if they were his own ; but he must not use, or permit another to use, the property for a purpose other than that for whiidi it was leased, or fel timber, pull down or damage build- ings, work mines or quarries not open when the lease was granted, or commit any other act which is destructive or permanently injurious thereto F (p) he must not, without the lessor's consent, erect on the property any permanent structure, except for agricul- tural purposes : (q) on the determination of the lease, the lessee is bound to put the lessor into possession of the property. 109. If the lessor transfers the property leased, or any Rights of part thereof, or any part of his interest therein, the trans- l" feree, in the absence of a contract to the contrary, shall possess all the rights and, if the lessee so elects, be subject to all the liabilities of the lessor as to the property or part transferred so long as he is the owner of it ; but the lessor shall not, by reason only of such transfer, cease to be sub- ject to any of the liabilities imposed upon him by the lease, unless the lessee elects to treat the transferee as the person liable to him : Provided that the transferee is not entitled to arrears of 506 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP rent due before the transfer, and that, if the lessee, not SECTIONS nay i n g reason to believe that such transfer has been made, no, in. pays rent to the lessor, the lessee shall not be liable to pay such rent over again to the transferee. The lessor, the transferee, and the lessee may determine what proportion of the premium or rent reserved by the lease is payable in respect of the part so transferred, and, in case they disagree, such determination may be made by any Court having jurisdiction to entertain a suit for the possession of the property leased. Exclusion 110. Where the time limited by a lease of immoveable of , . d ? y t on property is expressed as commencing from a particular day, commen- in computing that time such day shall be excluded. Where ces - no day of commencement is named, the time so limited begins from the making of the lease. Duration Where the time so limited is a year or a number of years, of lease for in the absence of an express agreement to the contrary, the a year. j ease shall last during the whole anniversary of the day from which such time commences. Option to Where the time so limited is expressed to be terminable determine b e f ore its expiration, and the lease omits to mention at whose option it is so terminable, the lessee, and not the lessoi*, shall have such option. Determi- 111. A lease of immoveable property determines nation of t a \ by efflux O f the time limited thereby : lease. >,' J .,. ....,, T , T, -11 (o) where such time is limited conditionally on the hap- pening of some event by the happening of such event : (c) where the interest of the lessor in the property ter- minates on, or his power to dispose of the same extends only to, the happening of any event by the happening of such event : (d) in case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right : (e) by express surrender ; that is to say, in case the lessee yields up his interest under the lease to the lessor, by mutual agreement between them : (/*) by implied surrender : ( on terms and conditions substantially the same (except as regards the amount of rent) as those of the original lease : but, unless the surrender is made for the purpose of obtaining a new lease, the rent payable by, and the contracts binding on, the under-lessee shall be respectively payable to and enforceable by the lessor. The forfeiture of such a lease annuls all such under- leases, except where such forfeiture has been procured by the lessor in fraud of the under-lessees, or relief against the for- feiture is granted under section one hundred and fourteen. Effect of 116. If a lessee or under-lessee of property remains in over! ng possession thereof after the determination of the lease granted to the lessee, and the lessor or his legal representa- tive accepts rent from the lessee or under-lessee, or other- wise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in section one hundred and six. Illustrations. (a.) A lets a house to B for five years. B underlets the house to C at a monthly rent of Rs. 100. The five years expire, but C continues in possession of the house and pays the rent to A. C's lease is renewed from month to mouth. (6.) A lets a farm to B for the life of C. C dies, but B con- tinues in possession with A's assent. B's lease is renewed from year to year. Exemption 117. None of the provisions of this chapter apply to atrlcuHur- leases for agricultural purposes, except in so far as the Local ai pur- Government, with the previous sanction of the Governor poses. General in Council, may, by notification published in the local official Gazette, declare all or any of such provisions to be so applicable, together with, or subject to those of the local law, if any, for the time being in force. Such notification shall not take effect until the expiry of six months from the date of its publication. GIFTS. 509 CHAPTER VI. OF EXCHANGES. - 118. When two persons mutually transfer the ownership u of one thing for the ownership of another, neither thing c i^ e " or both things being money only, the transaction is called defined. an "exchange." A transfer of property in completion of an exchange can be made only in manner provided for the transfer of such property by sale. 119. In the absence of a contract to the contrary, the Ri e ht ot party deprived of the thing or part thereof he has receiv- prived d of ed in exchange, by reason of any defect in the title of the "'.'" re .- other party, is entitled at his option to compensation or exchange! to the return of the thing transferred by him. 120. Save as otherwise provided in this chapter, each Rights ami party has the rights and is subject to the liabilities of a liabiliti . es seller as to that which he gives, and has the rights and is subject to the liabilities of a buyer as to that which he takes. 121. On an exchange of money, each party thereby Exchange warrants the genuineness of the money given by him. of moue y- CHAPTER VII. OF GIFTS. 122. "Gift" is the transfer of certain existing move- "Gift" able or immoveable property made voluntarily and without lletiuejt consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Such acceptance must be made during the lifetime of Acceptance the donor and while he is still capable of giving. made.' If the donee dies before acceptance, the gift is void. 123. For the purpose of making a gift of immoveable Transfer property, the transfer must be effected by a registered j w effect - instrument signed by or on behalf of the donor, and attest- ed by at least two witnesses. For the purpose of making a gift of moveable property, the transfer may be effected either by a registered instru- ment signed as aforesaid or by delivery. Such delivery may be made in the same way as goods sold may be delivered. 510 TRANSFER OF PROPERTY ACT, 1882. com P l '^ s i n o both existing and future pro- SECTIONS P er ty i >s void as to the latter. 124127. 125. A gift of a thing to two or more donees, of whom ~ one does not accept it, is void as to the interest which he feting and would have taken had he accepted. future pro- 126. The donor and donee may agree that on the hap- pening of any specified event which does not depend on V " erlof V " ^ e w ^ f the donor, a gift shall be suspended or revoked ; whom one but a gift which the parties agree shall be revocable accept! ' wholly or in part at the mere will of the donor is void wholly or in part, as the case may be. When gift A gift may also be revoked in any of the cases (save pended SU <>r wan t or failure of consideration) in which, if it were a revoked, contract, it might be rescinded. Save as aforesaid, a gift cannot be revoked. Nothing contained in this section shall be deemed to affect the rights of transferees for consideration without notice. Illustrations. (a.) A gives a field to B, reserving to himself, with B's assent, the right to take back the field in case B and his descendants die before A. B dies without descendants in A's lifetime. A may take back the field. (6.) A gives a lakh of rupees to B, reserving to himself, with B's assent, the right to take back at pleasure Rs. 10,000 out of the lakh. The gift holds good as to Rs. 90,000, but is void as to Rs. 10,000, which continue to belong to A. Onerous 127. Where a gift is in the form of a single transfer gifts ' to the same person of several things of which one is, and the others are not, burdened by an obligation, the donee can take nothing by the gift unless he accepts it fully. Where a gift is in the form of two or more separate and independent transfers to the same person of several things, the donee is at liberty to accept one of them and refuse the others, although the former may be beneficial and the latter onerous. Onerous A donee not competent to contract and accepting pro- qualified*" P er ty burdened by any obligation is not bound by his person. acceptance. But if after becoming competent to contract and being aware of the obligation, he retains the property given, he becomes so bound. Illustrations. (a.) A has shares in X, a prosperous joint stock company, and also shares in Y, a joint stock company in difficulties. Heavy ACTIONABLE CLAIMS. 511 calls are expected in respect of the shares in Y. A gives B all ACT IV OP his shares in joint stock companies. B refuses to accept the 1882 ' Na shares in Y. He cannot take the shares in X. 128 131. (6.) A, having a lease for a term of years of a house at a rent which he and his representatives are bound to pay during the term, and which is more than the house can be let for, gives to B the lease, and also, as a separate and independent transaction, a sum of money. B refuses to accept the lease. He does not by this refusal forfeit the money. 128. Subject to the provisions of section one hundred Universal and twenty-seven, where a gift consists of the donor's doaee - whole property, the donee is personally liable for all the debts due by the donor at the time of the gift to the extent of the property comprised therein. 129. Nothing in this chapter relates to gifts of moveable Saving of property made in contemplation of death, or shall be deem- H^i, ed to affect any rule of Muhammadau law, or, save as pro- causdami vided by section one hundred arid twenty-three, any rule f of Hindu or Buddhist law. CHAPTER VIII. OF TRANSFERS OF ACTIONABLE CLAIMS. 130. A claim which the civil Courts recognise as afford- Actionable ing grounds for relief is actionable whether a suit for its claim> enforcement is or is not actually pending or likely to be- come necessary. 131. No transfer of any debt or any beneficial interest Transfer of in moveable property shall have any operation against the debts> debtor or against the person in whom the property is vest- ed, until express notice of the transfer is given to him, un- less he is a party to or otherwise aware of such transfer ; and every dealing by such debtor or person, not being a party to or otherwise aware of, and not having received express notice of, a transfer, with the debt or property shall be valid as against such transfer. Illustration. A owes money to B, who transfers the debt to C. B then demands the debt from A, who, having no notice of the transfer, pays B. The payment is valid, and C cannot sue A for the debt. Notice to the debtor or the person in whom the property is vested operates as an equitable assignment. A chose in action does not admit of tangible actual possession, and the nearest approach to taking such 512 TRANSFER OF PROPERTY ACT, 1882. ACT IV OF possession lies in giving notice to the debtor or legal holder of the fund. 1882. The omission to give such notice is regarded us a species of nelect SECTION similar to that of which a person is guilty who leaves goods inthe 3I - actual possession of a third party. (Mutual -c. Society v. Langlei/, 32 Ch. D., 471.) Where, therefore, there is a contest between bon&fide incnmbrancers, the one who is the first to give notice will be entitled to priority. The reason for the preference is that the assignment is perfected by notice. (See the law on the subject discussed in Lewin on Trusts, pp. 701-713. Cf. Newman v. Neivmun, 28 Uh. D., 674 ; In re Holmes, 29 Ch. D., 786 ; Mutual frc. Society v. Langley, 32 Ch. D., 460.) But this rule holds good only where the equities of the parties are in other respects equal. (Spencer v. Clarke, 9 Ch. D , 137.) It seems that in the English law notice is immaterial where the assignees are mere volunteers, and an assignee for value will be entitled to preference even without notice over a voluntary assignee. Similarly, an execution- creditor will not be entitled to preference over a prior assignee as he can only take what the judgment-debtor could honestly give. (Brade- ley v. Consolidated Bank, 34 Ch D., 536, and cases cited therein.) The case of a mortgage-debt charged on land is regarded in the English law as an exception to the rule by which priority is gained by notice. The reason which is given for the distinction is that the mort- gagee has an interest either legal or equitably in the land. But the exception is strictly confined to a charge on real estate as such, (Lee v. Howlelt, 2 K. & J., 531 ; Re Hughes' Trust, 2 H. & M., 89.) It oujrht to be observed that, although the law does sometimes take notice of fractions of a day, as a rule, where notices are given on the same day, the elder is preferred to the younger security. (Johnstnne v. Cox, 16 Ch. D., 571 ; S. C. on appeal, 19 Ch. D., 17 ; distinguish Tomlin- son v. Bullock, 4 Q, B. D., 230.) Although, generally speaking, the security is perfected by notice given to the trustees of the fund, yet such notice will not avail if the fund has been paid into Court and has ceased to be under the control of the trustees. (Pinnock v. Bailey, 23 Ch. D., 497.) It is the duty of the transferee to give notice to the debtor, and by neglecting to give such notice he runs the risk of the debtor paying the debt to the original creditor, and it seems that the mere fact of the debtor not insisting upon the delivery of the deed by which the debt is secured would not make him liable to a double payment. In a recent case Vice-Chancellor Malms said : "Every obligor or mortga- gor, in my opinion, is guilty of a certain degree of negligence, when he pays off a mortgage or a bond debt, in not requiring the instrument creating the debt to be delivered up to him. But is he bound to do so? If there is negligence, where is the negligence? The greater negligence is that of the man who takes an assignment of a choxe in action, as this is, without giving notice of it to the mortgagor. His duty, in order to protect himself, H to give notice to the mortgagor, and if he omits to do so, he exposes himself to the risk of the mortgagor paying the debt to the person originally entitled to receive it. I put this case, which may happen in the ordinary course of business, during the argument: a man borrows 10,000 on his own estate, and verbally arranges with the mortgagee that whenever he can pay him off 2,000, the mortgagee will take that on account ; having received no uolioe, that the mortgagee does not still remain the mortgagee, ACTIONABLE CLAIMS. 513 tbnt is, having no notice of an assignment, lie writes to the mort- ACT IV OP gagee and sends liim a cheque for -2,000. Is tlmt a good payment 1882. or not? Wliy should it not be ? I quite agree with what was read SECTION from the case of Jones v. Gibbons (9 Ves., 410), that it is not necessary I 31 - to give notice />(' the assignment of a mortgage ; but although it is not necessary to give notice of the assignment of a mort> obligee or mortgagee, that is a good payment against a transferee, although I adhere to what I have said, that there is a degree of negligence attaching to the mortgagor in not having the mortgage-deed produced." (/ re Lord Southampton's Estnte, 16 (Jh. D., 178.) It is frequently said that it' a person takes a transfer of a mortgage without enquiring from the mortgagor, he does so at his own risk as regards the state of the^acoount. It is also said that the transferee takes subject to all existing equities. Now boththe propositions are true only if confined to subsequent transactions, for it must not be understood that the mortgagor will be at liberty to dispute the truth of any statement made by him in the mortgage-deed as against an assignee for value without notice. In a -recent case in England where, in addition to the statement in the mortgage-deed, there was a receipt endorsed upon the document for the full amount of the consideration- money ; it was held that as against a transferee for value and who had no notice that the whole of the money had not been advanced, the account must be taken on the footing of its having been actually advanced. In giving judgment, the Court observed: "It has been argued before ns that there is a wide difference in this respect between a mortgage and an absolute conveyance, because it is said, and said truly, that, in the ordinary course of business, a prudent assignee of a mortgage, before paying his money, requires either the concurrence of the mortgagor in the assignment, or some information from him as to the state of accounts between mortgagor and mortgagee. The reason of this course of conduct is, however, in our opinion, to be found in the fact that an assignee of a mortgage is affected by all transactions which may have taken place between mortgagor and mortgagee subsequently to the mortgage, and the assignee is bound to give credit for all money received by his assignor before he has given notice of the assignment to the mortgagor. Hut, in the present case, the assignment was made very soon after the execution of the mortgage, and before the time for payment had arrived; so that, whilst it was possible, it was not probuble, that any payment would have been made either of principal or interest; and we are of opinion that if an assignee is willing to take the risk of any payment having been made after the date of the mortgage, he is not guilty of carelessness or negligence if, in the absence of any circumstances to arouse suspicion, he relies upon the solemn assurance under the hand and seal of the mortgagor as to the real bargain carried into effect by R. B, G., T. P. A. 33 514 TRANSFER OF PROPERTY ACT, 1882. ACT IV OP the mortgage-deed, U p 0n t] ie possession of tbat deed by the mortgagee 1882. and upon the receipt for the full amount of the mortgage money under SECTIONS the i mm i of the mortgagor. " (Bickerton v. Walker, 31 Ch..D., 151. 132135. B,, t see Chinnnyya v. Chidambaram, I. L. R., II Mad., 212, where the distinction between statements contained in the mortgage-deed and subsequent transactions between the parties does not seem to have been brought to the notice of the Court.) In conclusion, it is necessary to state that notice is necessary only for the protection of the assignee. The first part of the section merely fixes the time when the transfer comes into operation, while the lust clause provides for the protection of the debtor if he deals with the debt before that time. (Jugdeo v. Brij Behari, I. L. R , XII Calc., />05; Kalka v. Chandan, I. L. R., X Ail., 20.) Notice to 132. Every such notice must be in writing signed by hf 1 signed ^ ie P erson making the transfer, or by his agent duly ' authorized in this behalf. Debtor to 133. On receiving such notice, the debtor or person * n wnom tne property is vested shall give effect to the transfer unless where the debtor resides, or the property is situate, in a foreign country and the title of the person in whose favour the transfer is made is not complete ac- cording to the law of such country. Warranty 134. Where the transferor of a debt warrants the sol- of debtor 07 venc y f the debtor, the warranty, in the absence of a contract to the contrary, applies only to his solvency at the time of the transfer, and is limited, where the transfer is made for consideration, to the amount or value of such consideration. Discharge 135. Where an actionable claim is sold, he against (rf person w liom it is made is wholly discharged by paying to the whom buyer the price and incidental expenses of the sale, with claim is interest on the price from the day that the buj'er paid it. Nothing in the former part of this section applies (a} where the sale is made to the co-heir to, or corpro- prietor of, the claim sold ; (6) where it is made to a creditor in payment of what is due to him ; (c) where it is made to the possessor of a property sub- ject to the actionable claim ; (d) where the judgment of a competent Court has been delivered affirming the claim, or where the claim has been made clear by evidence and is ready for judgment. These provisions are partly borrowed from the Code Niipoleon. As the law stood before the passing of the Act, it was only persons in a fiduciary position who could not make a profit by taking an assignment. of a debt. (2 White and Tudor, L. C., 1 195, 1 197.) ACTIONABLE CLAIMS. 515 ACT IV OP 1882. SECTIONS 136139. Incapacity of officers connected with Courts of Justice. Liability of transferee of debt. 136. No judge, pleader, mulch tar, clerk, bailiff or other officer connected with Courts of justice can buy any action- able claim falling under the jurisdiction of the Court in which he exercises his functions. 137. The person to whom a debt or charge is transferred shall take it subject to all the liabilities to which the transferor was subject in respect thereof at the date of the transfer. Illustration. A debenture is issued in fraud of a public company to A. A. sells and transfers the debenture to B, who has no notice of the fraud. The debenture is invalid in the hands of B. This section seems to formulate the law laid down in several English cases (see among others Parker \. Clarke, 30 Beav., 54 ; Roll v. While, 31 Beav., 520.) But the authority of these cases seems to have been somewhat shaken by the recent case of Sicker ton v. Walker (31 Ch. D., 151.) The illustration to the section would seem to negative the dis- tinction between a void and a voidable transaction, a distinction recog- nised by the English Courts in the case of a mortgage of real property. (2 White and Tudor, L. C., 1197.) I may, however, add that the applicability of the sections contained in this chapter to debts secured by a mortgage of immoveable property is open to some doubt. 138. When a debt is transferred for the purpose of Mortgaged securing an existing or future debt, the debt so transferred, debt, if recovered by either the transferor or transferee, is appli- cable, first, in payment of the costs of such recovery ; second- ly, in or towards satisfaction of the amount for the time being secured by the transfer ; and residue, if any, belongs to the transferor. 139. Nothing in this chapter applies to negotiable in- saving of Strum ents. negotiable instru- ments. THE SCHEDULE, (a.) STATDTKS. Year and chapter. Subject. Extent of repeal. 27 Hen. VIII, c. 10 Uses The whole. 13 Eliz., c. 5 ... Fraudulent conveyances The whole. 27 Eliz., c. 4 ... Fraudulent conveyances The whole. 4 Wra. & Mary, c. 16. Clandestine mortgages ,., The whole. 516 ACT IV OF 1882. TRANSFER OF PROPERTY ACT, 1882. (b.) ACTS OF THE GOVERNOR GENERAL IN COCNCIL. Number and vear. Subject. IX of 1842 ... Lease and release XXXI of 1854... Modes of conveying land XI of 1855 ... Mesne profits and im- provements. XXVII of 1866 Indian Trustee Act IV of 1872 ... Panjub Laws Act XX of 1875 ... Central Provinces Laws Act. XVIII of 1 876... Oudh Laws Act I of 1877 ... Specific Relief (m., 312.) The assignment of a mortgage decree if the amount paid for it is one hundred rupees or upwards is compulsorily registrable. (Gopal v. Trimbak, I. L. R., I Bom., 267.) REGISTRATION ACT, 529 The question whether a receipt for sums paid in satisfaction of a APP. II. mortgage-debt is or is not a document within the meaning of section 17, has been fruitful of conflicting decisions. (Imdad v. Tasadduk. J. L. R., VI All., 335 ; Dalip v. Durya, I. L. R., I All., 442; Shid- lingapa v. Chenbasapa, T. L. R., IV Bom., 235 ; Annapn v. GanpatL I. L. R., VBom., 181 ; Gtewfur v. Mahomed, XX Suth. W. R., 334; Venhayyar v. Vcnhata, I. L. R., Ill ]\Iad., 53 ; Venkataruma v. Chin- nathambu, VII Mad. H. C. Rep., I; Soorjo v. Bhugwan, XXIV Suth. W. R., 328.) It is, however, reasonably clear that the terra consideration implies that the person himself to whom the money is paid by some act of his limits or extinguishes his interest in consi- deration of the payment, and the terra would be altogether inapplicable to a case where the limitation or extinction, if any, is merely the legal consequence of such payment. The weight of authority also is de- cidedly in support of this view, the only cases in which a contrary view has been taken being, Dalip v. Durga (I. L. R., I All., 442) ; Soorjo v. fthugwan (XXI Suth. W. R., 328), and Imdad v. Tasadduk (I. L. R., VI All., 335). But a document, although it may be called a receipt, must be regis- tered, if it is intended to be used for the purpose of proving the release of a claim secured by mortgage. (Sufdar Alt v. Lachman, I. L. R., II All., 554; Mahadaji v. Vyankaji, L L. R., I Bom., 197; Ramapa v. Umanna, I. L. R., VII Bom., 123; Basawa v. Kalhapa, 1. L. It., II Bom., 489. But see Lalun Monee v. Sona Monee, XX Suth. W. R., 334.) In the case of zuripeshgi leases granted for one year certain, but as usual containing a stipulation that in the event of the loan not being repaid, the lease shall continue in force, registration is compulsory. (Bhobani v. Shibnath, I. L. R., XIII Calc., 113.) On the question of priority among rival deeds, it is necessary to notice that it only applies where the deeds are antagonistic. Thus, if a person mortgages his property and afterwards assigns the mere equity of redemption no question of priority can arise. (Ramchandra v. Krishna, I. L. R., IX Mad., 495.) On the principle that an execu- tion-sale passes only what the debtor could honestly convey, a pur- chaser under an execution cannot claim priority merely by virtue of the registration of his sale certificate (Sobhagchand v. Bhaichand, I. L. R., VI Bom., 193; Bapuji v. Sattyabhamabai, I. L. R., VI 13om., 490; Ramaraja v. Arunachala, I. L. R., VII Mad., 248.) It ought to be added that, although as a general rule, priority is de- termined where both the rival deeds are registered by the date of execution, and not the date of registration, in Bombay, owing to the adoption of the rule of Hindu Law as to the necessity of delivery of possession qualified by the principle that registration being notice is a substitute for possession, the rights of a subsequent alienee who obtains possession can only be defeated by the registration of the first docu- ment prior to the execution of the second deed. (Lalubhai v. Bai Amrit, I. L. R., II Bom., 299 ; cf. Tukaram v. Ramchandra, I. L. R., I Bom., 314 ; Shringarpure v. Pethe, I. L. R., II Bom., 662 ; Hasha v. Hagho, I. L. R., VI Bom., 165; Lakskmandas v. Dasral, I. L. R. VI Bom., 168; Sobhagchand v. Bhaichand, I. L. R., VI Bom., 193; Bapuji v. Satyabhamabai,~L. L. R., VI Bom., 490; Vasudev v. Narayan I. L. R., VII Bom., 131.) Although in the Calcutta High Court possession is not essential to R. B, G., T, P. A, 34 530 TRANSFER OF PROPERTY ACT, 1882. APP. II. complete the title of a purchaser for value, it is still a very important element in questions of notice. ( Narain v. Dataram, I. L. R., VIII Calc., 597; S. C., Calc. Rep., 241.) It seems, however, that constructive possession, that is, possession by receipt of rents, is not such notice as would postpone a registered document. (Goonomoney v. Basanta Kumaree, S. A. No. 442 of 1888, Calcutta, unreported ; citing Barn- hart v. Greenshields, 9 Moo. P. C., 18.) Another question which has given rise to conflicting decisions is the true construction of section 50 of the present Registration Act, as regards its operation upon documents executed while the prior Regis- tration Acts were in force. The weight of authority, however, is against any retrospective effect being given to the section. (Sri Ram v. Shagirath, I. L. R., IV All., 227 ; Rupchand v. Davlalrav, I. L. R., VI Born., 495; Bhola Nath v. Baldeo, I. L. R., II All., 198; Lakshmandas v. Dasrat, I. L. R., VI Bom., 168 ; Kanitkar v. Joshi, I. L. R., V Bom., 442 ; Ichharamv. Govindram, I. L. R., V Bom., 653.) The Madras High Court at one time seems to have been inclined to take a different view. (Kallacolathuran v. Subbaroya, I. L. R., Ill Mad., 73; Kola v. Alibeg, I. L. R., VI Mad., 174; Bavaji v. Ram How, III Ind. Jur., 554.) But in a later case a more limited operation vras given to the section. (Sitaramudu v. Ramanna, V Ind. Jur., 463.) The provisions of the section, however, will apply if one of the rival deeds has been registered under the present Act. (Ganga Ram v. Bansi, I. L. R., II All., 431 ; Lachman v. Dip Chand, I. L. R., IE All., 851 ; Shib Chandra v. Johobux, 1. L. R., VII Calc., 570 ; Gangarnm v. Kalipodo, I. L. R., XI Calc., 661 ; Abdul v. Ziban, I. L. R., V All., 593 ; Junld v. Mautangui, I. L. R., VII All., 577.) On the question of priority, where a decree has been obtained by the mortgagee under an unregistered mortgage, see Baijnath v. Lachman Das (I. L. R., VII All., 888) ; Himalaya Bank v. Simla Bank (I. L. R., VIII All., 23). INDEX. ACCESSIONS TO MORTGAGED PROPERTY Generally follow the security, 94- 95. mortgagor when entitled to re- deem, under the Transfer of Property Act, 452, 94. mortgagee when entitled to, for purposes of security, under the Act, 461. doctrine, enforced in a recent English case against a purcha- ser from the mortgagor 96 98. Indian cases do not carry doc- trine to such extent, 98. examples of, 94. difference between acquisitions by mortgagor and by mortgagee, 99. mortgagor entitled to treat such acquisitions as accretions only if mortgagee has made them by reason of advantages possess- ed by him as such, 99. doctrine applies only to accretions, nnd not to property substituted for property originally pledged, 104-5. doctrine applies, where property pledged assumes a new form, 105-108. c. g. mortgaged land when converted into money by compulsory sale, under Land Acquisition Act, 165. or for arrears of Government Revenue or rent, 165. to pledge, rule about, 363. Lessee has right to enjoy, 503. ACCOUNTS mode of taking, 303-304, 478- 479. usually taken with annual rests in India, 468, 487. B. B. a., i. ACCOUNTS con/d. practice in England, 468. under Regulation XV of 1793, sec. 11. mortgagee in possession liable to account for gross re- ceipts, 287-8. gross receipts, what, 289. not extended to wasilnt when, 309. accounts must be full and complete, 292. jumma-wasil-baki papers not per se a sufficient account, 292. account must be verified by mortgagee hims.'lf or his agent, 293. adjustment of accounts, 279. mortgagee liable only for amount actually realised except in cases of fraud or wilful neglect, 290, 467. since repeal of usury laws may protect himself from accounting for actual re- ceipts by agreement, 295 8, 283. is allowed expenses of collec- tion, 291. and of management and preservation, 298. costs of necessary re- pairs, 298. of renewing leases, 302. of protecting title to mort- gaged property, 300 302. paying head-rent, 300. Government Revenue, 302. when allowed costs of im- provement, 300-301-302 not entitled to personal allow- ance, 305-6, 4G3. 35 532 INDEX. ACCOUNTS contd. mortgagee when liable only for occupation rent, 301, 465. holding under title other tban that of mortgagee, not liable to account as mort- gagee in possession, 467. Basis of, wben subsequent trans- ferees redeem purchaser under mortgage decree, to which they were not parties, 144. account of what is due to puisne mortgagee, when a party to suit by prior mortgagee not usually taken in tbe mofussil, 142. mortgagor in possession not liable to account, 239, 308. prior moitgagee must account to subsequent mortgagee?, only for sucb sums as are received either from mortgagor or mortgaged property, 104. in suits either for foreclosure or redemption, neither mortgagor nor mortgagee may withdraw from the taking of accounts when they appear to be going against him, 478. a fresh account must be taken and a new day named for payment, if mortgagee receives any rents between date of certificate and time appointed for payment, 489. but not of rents received by a re- ceiver, 489. under Transfer of Property Act, must be clear, full and accurate, 465. (See Interest.") ACCUETIONS- (See Accessions.") ACCUMULATION- direction for, when void, 418. ACKNO WLEDGM BNT of liability enlarges period of limitation, 523. of title of mortgagor prevents li- mitation, 269. must be of existing liability, 523. by one of several mortgagees does not affect others, 235, 523. ACKNOWLEDGMENT - must be by all the mortgagees when they are joint, 524. by one of several mortgagees who have no apportionable interest in the money secured by the mortgage absolutely ineffectual, 524. signature of, what amounts to, 524. whether acknowledgment must be good under Act in force when suit brought or that in force when acknowledgment made, 523, (See Limitation). ACQUISITIONS (See Accessions"). ACTIONABLE CLAIM denned, 511. transfer of, 511. notice of assignment required to complete transfer, 511-512. notice necessary only for protec- tion of assignee, 514. notice to be in writing and signed, 514. competition between assignees for value regulated by priority of notice, 512. but notice immaterial with regard to volunteers, 512. as regards mortgage debts charged on land priority governed by precedence in time and not notice, 512. debtor may pay original creditor till notice of assignment, 512. mere fact of debtor not insisting upon delivery of deed, by which debt is secured, does not make him liable to a double payment, 512-513. Transferee takes subject to state of accounts between transferor and debtor, and subject to all existing equities, 513 515. warranty by transferor of debtor's solvency applies only to time of transfer, 514. and is limited to value of consi- deration, 514. INDKX. 533 ACTIONABLE CLAIM contd. officers connected witli Courts of Justice may not take assign- ment of actionable chums full- ing under jurisdiction of such Courts, 515. ADMINISTRATION -SUIT pendency of, does not prevent mortgagee from proceeding with his remedies against mortgaged premises, 478. AGREEMENT for personal allowance to mort- gagee void, 305-6. that mortgagee in possession should not account for rents void under Bengal. Reg. XV of 1793, 2958. by creditor not to exercise power of sale valid in English Law, 23. void in later Roman Law, 810 in restraint of equity of redemp- tion inoperative, 21-22, 243 245. ought to be strictly enforced in the absence of any known rule of law, 240242. that unpaid interest will be con- verted into principal held not enforceable against mortgagor, 245. securing to creditor right of pre- emption of equity of redemp- tion regarded as valid by English Court of Chancery, 246. that, principal shall not be called in for a definite time binding upon parties, 268. meaning of, under sec. 48 of the Registration Act, 58. ALIENATION effect of clause against, in mort- gage-deed, 123-124, 155, 158, 416. mere covenant against, does not create a simple mortgage, 123 416. transfer by mortgagor in breach of condition against, valid ex- cept so far as it may encroach upon right of mortgagee to realise his security, 157, 416. condition restraining alienation, when void, 416. ALTERATION material, of instrument of mort- gage without consent of party affected renders document void, 57, note (ft.) ANOMALOUS MORTGAGES- governed by terms of mortgage- deed and local usage, 497-498. ANTICHRESIS- form of mortgage in Roman Law in which mortgagee could retain profits iu lieu of interest, 17. APPEAL- lies only from formal adjudication and not from a merely minis- terial order, 489. lies from order granting or refus- ing extension of time under sec. 87 of the Transfer of Property Act, 489. order nisi in foreclosure action is a decree for purpose of appeal, 489. APPORTIONMENT of periodical payments on deter- mination, of interest of person entitled, 424. of benefit of obligation on sever- ance, 424. ASSIGNMENT of debt draws after it securities therefor, 416. of mortgage, without assignment of debt treated at most as a transfer of a naked trust, 416. of debt, and assignment of judg- ment obtained on the covenant, distinction between, 416. necessity of registering-deed of assignment of mortgage depends not upon amount due on mort- gage, but upon amount for which assignment made, 60-61. if unregistered debt passes but not Hen, 61. Sed quaere, 16. ASSURANCE mortgage when to be by, 448 450. INDEX. ATTACHMENT of mortgaged property, 498. mortgagee must proceed under sec. 67, Transfer of Property Act, 498. not necessary under mortgage- decree, 178, note. ATTORNMENT effect of clause, in mortgage-deed, 155-186, 311. BYE-BIL-WUFA meaning of, 52, note. nature and origin of, 50 53. validity of, 52. regarded not as a snle but only as a security, 53. does not become absolute upon breach, without proceedings for foreclosure, 201 (note.) Article 147 of Schedule II, Limi- tation Act, does not apply to, 525. CHARGE what is a, 499. how created, 499. (1) by act of parties. (2) by operation of law lien of trustee for expenses ex- cepted, 499. difference between, and mortgage, 124-125, 499. does not imply a debt but only confers a right of realisation by judicial process, 499. in case of annuities, question whether there is a charge on estate itself or only on rents and profits depends on intention, 499. extinguishment of, 500-501. CODE NAPOLEON provisions of, when pledge is de- stroyed, 41. registration of legal mortgages as compulsory as registration of conventional securities, 324. examples of lien, 330. recognises a lien for sums due for seed-corn and expenses of har- vest oa value of such harvest, 333. COMMITTEE of idiot or lunatic mortgagor mny sue for redemption, 493. CONDITIONAL SALE- what is, 56, 195. definition, 444. comparison with English mortgage, 194196. in, mortgagor does not make him- self personally liable, 195, 199, 201. when action for debt may be brought, 202. distinction between, and bond fide sale with a clause for re-pur- chase, 196200. criteria for determining which it is, 200. intention of parties to be looked to, 199. implied warranty of title in, 203. remedy for breach of war- ranty, 204-205. practice of mortgagee by, agree- ing by contemporaneous verbal agreement to re-convey on re- payment, 62. but such psirol agreement cannot be received in evidence to con- trol terms of document 62. (See Parol Evidence.) Bengal Itegulation XVII of 1806. applies only to mortgages in writing, 243. under, mortgagee for the first time prevented from in- sisting on strict enforce- ment of terms of contract, 207. under sec. 8, mortgagee must take foreclosure proceed- ings, 208. application must be preceded by demand for payment, 213. Court to which application must be made, 214. mortgage must be foreclosed as a whole, 213-214. duty of Court to serve notice of application on mortga- gor or his legal representa- tive, 214218. INDIfiX. 535 CONDITIONAL SALE-confe/. provision that copy of appli- cation shall be supplied to mortgagor is mandatory and not merely directory, 220. strictly followed by Allaha- bad High Court, 220. also in Calcutta, 221, note, notice what to contain, 221. proceedings under, not judi- cial but merely ministerial, 221-222. so if mortgagee out of posses- sion he must bring regular suit to recover possession, 222. Bengal Regulation XVII of 1 806, had no retrospective operation and could not affect mortgage by conditional sale which had be- come absolute before Regulation 241. in Bengal, mortgagor entitled to redeem under, 207, 211-212. in Madras and Bombay, right to redeem introduced by judicial decisions, 207, 240. at first disallowed by the Privy Council, 240. subsequent decisions in Madras allowed equity of redemption only with regard to mortgages entered into after 1859, 242. Bombay decisions, 242. method of redemption, 260269. mortgagee may by agreement be entitled to possession on default of mortgagor, without foreclo- sure, 224. but ejectment will not be per- mitted where mortgagor has a right to relief in equity, 227. CONFLICT OF LAWS validity of mortgage of immoveable property governed by lex loci rei sitae, 60. formalities also regulated by lex sitae, 60. CONSOLIDATION OF SECU- RITIES principle of, 385. how far admitted in India, 385- 38fi, 451. CONSOLIDATION OF SECU- RITIES contd. whether unsecured debts may be consolidated, 386-387. abolished in England by sec. 17 of Conveyancing Act, 1881, 386, note. CONSTRUCTIVE NOTICE definition of, by Wigrnna, V.C., 407. doctrine of, must be applied in India with the greatest caution against a purchaser for value, 408. rigidity of doctrine of will be re- laxed in countries possessing a system of registration of assur- ances, 408-409. some specific circumstances ought to be pointed out as the starting point of mi inquiry, 409. (See Notice.) CONTINGENT INTEREST what constitutes a, 419. becomes vested, when, 41 y. persons having, not always neces- sary parties to mortgage suits, 138. CONTRIBUTION principle of, 345. general rule on the subject, 347. proviso if there is nothing to show a contrary intention, 347-350. where some particular property is said to be the primary security, 349-350. right of, when controlled by right of marshalling (sec. 82, last clause T. P. Act), 473-474. right to, when arises, 473. (1) properties of one or several owners mortgaged for one debt, 473. (2) two properties of one owner, one of them mortgaged before, being mortgaged, 473. the two properties must be equal- ly liable, 474. no right to, except where there are special charges, a mere gene- ral lien not being sufficient., 474. as between purchasers of two estates subject to a common charge, 347-49, 440-41. 536 INDKX. CONT IIIBUTION contd. cannot be claimed as against a mortgagee purchasing portion of equity of redemption, before the residue is transferred to third persons, 475. CONVERSION when mortgiiged premises convert- ed into money by compulsory gale under Land Acquisition Act, or sale for arrears of rent or revenue, purchase money is to be regarded as money or per- sonal estate, 165. it becomes subject to the lien which existed on the land 165, note. rule does not apply when conver- sion occasioned by default of mortgagee, 165, note. COSTS mortgagee ordinarily entitled to, 227, 487. except in cases of fraud or misconduct, 227, 487. mortgagee entitled to costs pro- perly incurred subsequent to decree and up to time of actual payment, 495-496. according to English decisions, mortgagee entitled not only to costs incurred in protecting title, but to all costs bond fide incur- red for purpose of realising secu- rity, 202, note. but mortgagee can not main- tain an action of debt for costs and expenses properly incurred, 202, note, right of mortgagee to realise costs separately depends upon terms of decree, 488. defendant to a foreclosure suit, although properly made a party in the first instance, is entitled to costs incurred by him after n proper ofier to disclaim and to be dismissed from the suit, 477. when mortgagee brings an action to foreclose two mortgages of two distinct estates, costs to be apportioned rateably between the two, 488-489. COURT FEES ACT provisions of, relating to mort- gages, 526528. amount of court fee where mort- gagor entitled to redeem por- tion of mortgaged property, 526. valuation of suit for possession, after decree for foreclosure, not to be made according to scale laid down in section 7 of, 526- 527. assessment of court fees in re- demption suits, 526-527. subject matter of suits for redemp- tion, how valued for purposes of jurisdiction, 528. DAMAGE mortgagee in possession liable for, when, 312. (See Waste.) DAMAGES obtainable in lieu of interest, in absence of express agreement to pay interest down to date of realisation, 126. mortgagee has a right to bring an action for damages if title of mortgagor bad, 205. measure of damages, 205-206. mortgagor liable in, for breach of covenant to repair mortgaged premises when, 240. (See Interest.) DAMDUPAT rule of, not to be applied in the c:ise of si mortgagee in posses- sion, who is debited with the rents and profits, 483. DEBENTURES holders of, of Joint Stock Com- pany not entitled to priority over subsequent mortgages properly created by the Com- pany, 471. DECREE meaning of mortgage - decree and money-decree, 127. difference between the two, as against transferees of mort- gaged property, 133. INDEX. 537 DECREE conld. purchaser at execution - snle under money-decree bas only Hume lights as ordinary exe- cution - purchasers, according to Allnhabad and Madras High Courts, 129. different view taken by Cal- cutta and Bombay High Courts, 130. execution of money - decree limited to property not com- prised in the mortgage, on the Original Side of the High Court, 146. mortgage-decree should always direct sale of mortgaged pro- perty, 127. no attachment necessary in the case of a mortgage - decree, 1 78, note, person claiming paramount-title not affected by mortgage- decree, 137. sale under decree against mort- gagor alone does not pass com- plete title, where there are others interested, 134- 135. for foreclosure determines respec- tive priorities of the several in- cumbrancers, 486. for sale or for foreclosure is a decree in rem and incapable of being made in any Court other than that within whose local limits the land is situated, 191. power of English courts to give decree for sale instead of for foreclosure extended by Con- veyancing Act, 1881, 9, 20, 226, 491. for sale may be made in suit for foreclosure, when, under the Transfer of Property, Act 490- 491. but no sale will be directed unless Court can complete it by delivering possession, and insuring that the title- deeds should be handed over, 491. Court may pass decree for balance, if legally recoverable, when pro- ceeds of sale insufficient, 492. DEPOSIT (in Court) Bengal Regulation XVII of 1806. mortgagor by conditional sale at liberty either to tender to mortgagee or deposit in Court principal or principal and interest, 260. under protest not sufficient. 262. must be strictly under terms of Regulation, 263. time within which it must be made, 264. if Court closed on day on which year of grace ex- pires, depoaitcan notproper- ly Jbe made on first day on which Court re-opens, 265. tecun, when time for payment extended beyond statutory period by agreement, 265. Transfer of Property Act (Sees. 83 and 84,) of money due on mortgage, 475. who may make, 475. Court to cause written notice of deposit to be served on mort- gagee, 475. mortgagee may apply by verified petition for, and receive such money, 475. if willing to accept it in full dis- charge and on depositing title- deed, 475. interest on mortgage-debt ceasea from date of tender or deposit, 475. (Sec. 57) of costs, &c., when Court sells land " free from incumbrances," 441443. procedure when defendant makes, of mortgage-debt and costs, 491. reasonable sum for expenses of sale may be required to be deposited, when decree for sale made in foreclosure suit, 490-491. (See Tender). DEPOSIT OF TITLE-DEEDS mortgage implied by, 73. memorandum accompanying, ia not the contract of mortgage, but simply evidence of deposit, 7983. 538 DEPOSIT OF TITLE- DEEDS - coiifd. riot a document, within sec. 17, Registration Act, 81. mere possession of title-deeds by creditor without evidence of contract npon which possession originated, or manner in which it originated, not enough to create an equitable security, 83-84, 87. does not create equitable mort- gage, when no antecedent or existing debt, nor agreement that title-deeds should stand as security for future advances nor niiy money advanced until for- mal mortgage executed, 84 88. summary of decisions, 88-89. tquitable mortgage by, not nn oral agreement within sec. 48, Registration Act, 89-90. (See Equitable Mortgage, Parol Evidence). DESTRUCTION (of pledge) rules of Mahomedan Law, in case of, 4850. of Hindu Law, 41 of the Code Napoleon, 41. of Roman Law, 15. on, by diluvion, mortgagee may at once call for payment of bal- ance of loan remaining unpaid, 205. Transfer of Property Act where mortgaged property is destroyed wholly or par- tially by any cause other than wrongful default of mortgagor or mortgagee, mortgagee may require an- other security, and in de- fault sue for mortgage- money, 457. DISTRESS early law of, 3. orignally unattended with any power of sale or foreclosure, 3. similarity between early history of, and that of pledge, ". DRISTi-BANDHAK^ nature of, 40, 201. DRISTI-BANDHAK-con/d. in, mortgagor remains in posses- sion till default, when mort- gagee enters as absolute owner, 40. EASEMENT cannot be transferred apart from dominant heritage, 411. annexed to property passes to transferee, 415. EJECTMENT when mortgagee may bring, before foreclosing, under Bengal Regu- lation XVI I of 1806, 224. not pei-mitted, where mortgagor would huve a right to relief in equity, 227. ELECTION when necessary, 422 to be postponed during disability, 424. acceptance of benefit constitutes, when, 423. ENGLISH LAW OF MORT- GAGE general view of, 1923. ENGLISH MORTGAGE definition of, 445. form of, 19. resembles the fiducia of later Roman Lnw, 19. compared with conditional sale, 194196. EQUITABLE MORTGAGE by deposit of title-deeds, a kind of implied simple mortgage, 71-72. first recognised in England by Lord Thurlovv, 75. early instance of, in the Sudder Dewany Adnwlut, 72. not common in the mofussil, 72. remedy on, in the mofussil, 73, in the Original Side, 73. in English Law, 73. requisites for creating, 75. distinction between, of English Law and deposit of title-deeds in In- dia, 77, INDEX. 53!) EQUITABLE MORTG AGE-cow/rf. defence of purchase for value without notice valid against equitable mortgagee in Eng- land but not in India, 77. not nn oral agreement within sec. 48 of Registration Act, 89-90. under Transfer of Property Act, allowed only in Calcutta, Mad- ras, Bombay, Karachi, and Rangoon, 448. situation of property immate- rial, 449. no provision in the Act, as to remedy to which equitable mortgagee entitled Eng- lish practice likely to be followed, 449. actual deposit necessary 449. mere oral statement making third person trustee for creditor does not operate as equitable mortgage in Eng- land, 449. probably does in India, 449. (See Deposit of Title' Deeds, Parol Evidence.) EQUITY OF REDEMPTION- what is, 19, 237. an estate, and not a mere right 19, 237-238. can not be restrained or limited, 243-244. by any stipulations entered into attimeofmortgage, 243. but no restrictions on con- tracts entered into after execution of mortgage, 247. qualified restrictions on, allowed as well in this country as in Eng- land, 245-246. first buyer of, entitled to redeem all mortgages, 142. mortgagee not entitled to sell bare equity of redemption under mortgage-decree, 145. purchaser of, entitled to deduct from mortgage-debt only sums received in reduction of it and not moneys owed by mortgagee to mortgagor on some other account, 304. ESTOPPEL instance of, in Roman Law of secu- rity, 15-16. title by, 100, 429-430. may be waived by mortgagee, 100. bare representation sufficient to create, under s. 43, Trans- fer of Property Act, 429. title by, in English Law, positive asser- tion of legal estate neces- sary to create, 101-102,429. may not be enforced against bond fide purchasers for value and without notice, 100-102, 429. mortgagee estopped from disputing title of mortgagor, 249. mortgagee who causes a sale of mortgaged premises estopped from denying title of purchaser, 145. mortgagee not estopped by a pre- vious judgment obtained against mortgagor, subsequently to exe- cution of mortgage, 109 112. where mortgagee having carriage of execution proceedings does not insert his mortgage in sale- proclamation, he is estopped from setting it up against purchaser, 178-179. EVIDENCE - of acts and conduct of parties how far admissible to vary terms of written document, 63 68. parol, how far admissible to prove that a deed purporting to be one of absolute sale was really a mortgage, 62-71. true rule formulated in sec. 31 of the Specific Relief Act, 68. (See Purol Evidence, Fraud, Mistake.) EXCHANGE defined, 509. transfer of property under ex- change made in same way as un- der sale, 509. right of party, deprived of thing received in exchange through defect of litle, to compensa- tion or return, 509.. 540 INDEX. EXCHANGE-con^. rights of parties to, generally same as of vendors and purchasers, 509. warranty of genuineness, when. money exchanged, 509. EXECUTION whnt passes at execution-sale, un- der mortgage decree, 154. attachment not necessary, in mort- gage decree, 178, note. purchaser at execution-sale, when a necessary party to a suit for foreclosure, 138. under Continental Law of, sale by first mortgagee passes property free of all incumbrances, 152. desirability of similar rule in India, 152. provisions of sec. 295, of the civil Procedure Code, how construed, 179185. EXECUTOR- of Hindu will, subject to same restrictions as manager of an infant, 93. now governed by Act V of 1881, 93. under English Law and sec. 269, Indian Succession Act, has full power to dispose of assets in his hands and in case of alienation assets cannot be followed by creditors of deceased, 92. EXPENSES of collection how computed, 291- 292. mortgagee in possession entitled to what, 461464. in Mahomedan Ln w, pledgee bound to pay, for custody but not for support of pledge, 48-49. EXTINCTION OF SKCURITIES- (1) by confusion or merger, 369. doctrine of Toulmin v. Steere, 370-371. not applicable to Indian tran- sactions, 372. (2) by discharge of debt for which security was given, 377-378. (3) by renunciation, 378. EXTINCTION OF SECURITIES- contd. (4) by destruction, 378. (5) by sale of pledge, 378-379. anxiety of Courts to prevent, where mortgagee is not to blame, 395- 396. FIDUCIA earliest form of security in Roman Law, 6. history of, 8-9. FORECLOSUUE- not allowed in Muhomedan Law, 44. when allowed in Hindu Law, 36. abolished in later Roman Law, 9. origin of, in English Law, due to form of English mort- ege, 486. abolition of foreclosure, a question of time, 9, 486. bill of, what is, 19. who are necessary parties to suit for, 226. 476. decree for, not binding upon persons not parties to de- cree, 226. action on covenant opens de- cree for, 20, 226. simple mortgagee cannot sue for, 125, 455. former practice of Madras High Court not to allow, in any case, now abandoned, 242. proceedings for, under Bengal Regulation, XVII of 1806, 207 2'25. (See Conditional Sale). in Bombay and Madras, 225. dismissal of bill for redemption operates as decree for, when in English Law, 20, 267. view of Hombay and Allaha- bad High Courts, 267. view of Calcutta and Madras High Courts, 267-268. under Transfer of Property Act, suit for, definition of, 455. who may bring, 455-456. INDEX. 541 FO KECLOSURE contd. not allowed until default made by mortgagor, 478. form of decree, 477. none, till term expires, when there is an absolute covenant not to cull in the money during a cer- tain time, 478. but when covenant subject to re- gular payment of interest, there may be foreclosure after default in payment of interest, 478. order absolute for, when obtained, 487490. decree for, determines respective priorities of the several iucuin- brancers, 486. order for foreclosure absolute operates as discharge of mort- gage-debt and precludes action on covenant, 488. but not of costs, 488. decree for, does not preclude ac- tion of ejectment against a defendant who refuses to deliver up possession, 490. decree for, according to English practice, does not relate back to the judgment for account, 488. order for foreclosure absolute, ob- tained in England on motion supported by affidavit of due attendance, 488. in India, defendant may either pay to plaintiff or into Court and attendance of plaintiff* or agent not absolutely necessary, 488. in action for, prudent, though not absolutely necessary, to join a claim for possession, with a prayer for foreclosure, 490. in suit for, Court may decree sale, when, 490-491. when obtained, under decree for redemption, 495. (See Conditional Sale, Limitation, Mortgagee, Mortgagor, Notice). FORFEITURE- determines lease, 506. how waived, 507. effect of, on under-leases, 508. FORFEITURE -contd. difference between effects of, and surrender, 508. relief against, for non-payment of rent, 507-508. FRAUD effect of fraudulent transfer, 435- 436. when presumed, 436. neither mortgagor nor mortgagee can take advantage of his own, 102-103. interest of mortgagee cannot be defeated by, of mortgagor, 113. when causes forfeiture of prior- ity, 387394, 468-69. right of Court to restrain mort- gagee from fraudulently throw- ing burden of entire debt upon portion only, 178. means contemporaneous and not subsequent fraud under proviso (1), sec. 92, Evidence Act, 66. parol evidence when admissible in case of, 66-67. parol evidence of acts and con- duct equally admissible with that of agreement itself, when fraud proved, 67. when a ground for rectification, 68. FURTHER CHARGE when language of deed does not create a, but only amounts to covenant to pay all existing debts before payment of mort- gage-debt, mortgagor may re- deem without paying other debts due to mortgagee, 244. deeds of, rarely executed outside Presidency towns, 394. mofussil practice of including, in a second instrument for the con- solidated sum, 394. danger of, 394. FUTURE ADVANCES mortgage to secure, 470. when maximum expressed, 470. subsequent mortgagee with notice postponed, 470. rule of English law, 382 84, 470. 542 INDEX. FUTURE ADVANCES con til. not clear whether sec. 79 of the Transfer of Property Act applies only to cnses in which mortgagee is bound to make the advance, 470. G AH AN -LA HAN meaning of, 521. Bombay form of mortgage by con- ditional sale, 201, 521. GIFT definition of, 509. acceptance by donee in lifetime of donor necessary, 509. how made, of immovenble property, 509 of moveable property, 509. of existing and futnre property fails as to latter, 510. to several, of whom one does not accept, void as to interest re- fused, 510. may be revoked or suspended when, 510. transferees for value without notice not affected, 510. onerous, must be accepted witli beneficial if in the form of a single transfer, 510. secus, if iriven separately, 510. when donee incompetent to contract, 510. acceptance by conduct after removal of incompetency, 510. universal donee liable for all debts of donor, to extent of gift, 51 1. donations mortis causa not affected by TransferofProperty Act, 511. nor rules of Mahomedan Law, or of Hindu or Buddhist Law, save as to form of in- strument of gift, 511. "GOOD CAUSE" what amounts to, for enlarging time to redeem under s. 87 of the Transfer of Property Act, 489. GOVERNMENT REVENUE- mortgagee in possession bound to pay, 302. GOVERNMENT REVENUE payments of, credited to account- ing mortgagee, 302. GROSS NEGLECT deprives mortgagee of his priority, when, 38894, 468 470. meaning of, 469. GUARDIAN ad litem appointed to receive notice or tender from mortgagor, 502. of property of minor mortgagor may sue for redemption on behalf of such minor, 493. of minor, not appointed by Court is not fettered by restrictions imposed by Minor's Act and has authority to mortgage his ward's estate under certain conditions, 94. HINDU LAW development of law of security in, 3539. conflicting texts of, as to necessity for delivery of possession of pledge due to their relative antiquity, 32 34. prohibits accumulation of interest exceeding principal, 36. prioiity of mortgages, rules about, 40. rule of, when pledge destroyed, 41. general hypothecation not recog- nised, 40. rights of mortgagor, 41-42. character of, of mortgage, 42. foreclosure when allowed, 36 39. when mortgagee allowed to sell, 36 39. sale by judicial process not wholly unknown, 39. no distinction between pledge of moveables and immoveables, 53- 54. oral agreements valid, 56-57. but mortgage in writing pre- ferred to parol mortgage, 40, 57. HINDU WIDOW purchaser of equity of redemption from, must prove necessity, 249. 1NDKX. 543 HINDU WIDOW contd. purchaser from, must use reason- able cnre to ascertain the exis- tence of necessity, J 25, 426. whether claim for:: itenance of, constitutes an equitable lien, 426428. whether donee from, of equity of redemption, may redeem, 248. "HOLDING OVER" by lessee, meiniog of, 508. if assented toby lessor creates a tenancy by presumption, 508. duration of tenancy by, 508. varies with nature of property, 508. HYPOTHECATION origin of, in Roman Law, 7. how extinguished, 14. instances of tti'cit, 14. by public deed, effect of, 13. general, not recognised in Hindu Law, 40. not allowed in early Mahomedan Law, 4446. but common among Mahome- dans when earlier Regula- tions on mortgages enacted, 53. of moveables, how far allowed in India, 357-358. not generally recognised in the Bombay Presidency, as against third parties, 521. general hypothecation will not be recognised as valid by Indian Courts, 90-91, 412. ILL AD WAR A MORTGAGE- what is, 273. Madras Regulations regarding interest held not to apply to, 273. IMMOVEABLE PROPERTY definition of, 405-406. transfer of, when subject to charge for maintenance, 426, 428, IMPROVEMENTS- mortgagee not entitled to costs of, unless made with sanction of mortgagor, 300302. qualification of rule 301, note. I M P RO YEMEN TS could. lien allowed in English Law in respect of, when, 326, 327, 337. by bond fide holders under defec- tive titles must be paid for at estimated value at time of evic- tion, 432. if mortgagee intends toset up claim for, or substantial repairs, mate- rial facts in support of claim should be stated in the plaint, 487. seats, with regard to just allowances, 487. (See Accounts, Repairs). INSTALMENTS when mortgage debt payable by, and on default of one instalment mortgagee sells portion of mortgaged property, he is en- titled to a lien on surplus sale proceeds for any subsequent in- stalments, 165, 498. INSURANCE right of mortgagee in posf : on to insure against loss or damage by fire, 462, premiums paid may be tacked to principal sum, at same rate of interest, 462. application of moneys received, under policy, 465. INTEREST rate of, after institution of suit, was in the discretion of the Courts in the Mofussil, 126. practice on the Original Side of the High Court embodied in a. 86, Transfer of Property Act, 126, note. interest allowed at rate specified in mortgage down to date of decrep, 126, 483. no implie-1 contract to pay a certain rate of interest as such, but interest rany be recovered as damages, though there is no express contract, 479. distinction between interest pay- able on a mortgage as such, and damages recoverable by reason of default, 479, 480. INDEX. INTEREST contd. distinction between, and penalty, 480. agreement to pay a higher rate of interest on default, 481. effect of s. 74, Contract Act, 481. mere exorbitancy of interest no ground of relief, 480, 481. when mortgagee may sue for, with- out suing for principal, 128. when mortgagee entitled to sue for foreclosure, on default of payment of, -208211, 478. same period of limitation for re- covery of, as of principal secured on mortgage of land, 236. if deed silent as to, payment of bnre principal sufficient to bar foreclosure, 260, 261 note, 263, 264. if deed of usufructuary mortgage silent as to, presumption that profits are to be received in lieu of interest, 271, note. JENMI mortgagor called, in kanam and otti mortgages (q. v.), 517. JOINT-FAMILY effect of mortgage of share in pro- perty belonging to, 105 108. JOINT-MORTGAGE in, by two or more mortgagors jointly, mortgagee ought to bring his action against all his mortgagors jointly, 166. otherwise he might lose benefit of security as against those not joined, 166. rule not followed by the Madras High Court in later decisions, 167. JOINT-MORTGAGEE one of several joint- mortgagees may sue for foreclosnre, 169. he may sue to enforce security as a wbole, making the others co- defendants, 167169, 170. position of plaintiff, 167. JOINT-MORTGAGOR one of several, may sue for re- demption of his share only, when, 251260, 456. in usufructuary mortgage entitled to redeem whole mortgage ex- cept where debt satisfied out of usufruct, 286. JUDGMENT-CREDITOR may redeem, when he has obtain- ed execution by attachment of mortgagor's interest in such property, 493. JUMMA BUNDI PAPERS- prima facie evidence of profits of estate, as against mortgagee in possession accounting, 467. JUMMA WASIL BAKEE PA- PERS uot per se, sufficient account by mortgagee, 292. JURISDICTION pecuniary, depends on value of subject-matter, 192, 193. subject-matter of redemption-suits how to be valued for purposes of, 528. in applications under Beng. Reg. XVII of 1806, where properties situated in two districts, 214. when one of several mortgagors sues for redemption, 251, 5:26. suit to enforce mortgage on land, must be brought in Court with- in whose jurisdiction land lies, although remedy on covenant lies in different forum, 191. decree for sale or foreclosure not made in Indian Courts with re- gard to lands outside jurisdic- tion, 191, 192. different rule in England, 191. KANAM Madras form of mortgage, 517. difference between, and Otti, 517, 518. by custom not redeemable before twelve years frcm execution, 517. INDEX. KANAM contd. but right of mortgagee to hold for customary period may be forfeited if he re- pudiates title of mortgiigor, 518. on redemption, mortgagor pays not only amount of mortgage debt but also value of improve- ments made by mortgagee, 519, 527. distinction between, and a lease proper, 519. analogy between, and zuripeshgee, 278, (note). KIVIDU OTTI Madras form of mortgage, 521. incidents of, 521. not an absolute transfer, but a mortgage, and therefore liable to be redeemed, 521. KUT-KOBALA Art. 147 of Limitation Act, 1877, not applicable to, 525. (See Bye-bil-wufa.) LANDLORD lien of, on crops of tenant over- rides claim of transferee from tenant, 414-15. (See Lease, Lessor and Lessee.) LEASE by mortgagor not necessarily void- able by mortgagee or purchaser, 158. on renewal of, by mortgagee, mort- gagor upon redemption has benefit of new lease, 453. definition of, 502. agricultural leases not under Transfer of Property Act unless notified, 508. duration of, when uo contract or local usage, 502. how mside, 503. time limited begins from date of, 506. day on which term expressed to begin excluded, 506. if determinable before expiry of term, and not mentioned at whose option, terminable at option of lessee, 506. LEASE contd. how determined, 506. by efflux of fixed time, ib. by fulfilment of condition, subsequent, ib. by merger, ib. by surrender, express or im- plied, ib. by forfeiture, ib by notice to quit, or of inten- tion to quit, 507. LEGAL REPRESENTATIVES OF MORTGAGOR who are for the purpose of service of notice of foreclosure under Beng. Keg. XVII of 1806, 215 219. LESSEE not bound by mortgage-decree to which he is not a party, 143. may be required to redeem by purchaser under mortgage-de- cree. 143. under beneficial lease entitled to redeem, 248. zuripesligee, could not before Act XXVIII of 1855 get rid of liability to account for actual profits, but may since, 283, (See Lessor and Lessee, Lease ) LESSOR AND LESSEE definitions, 502. implied covenants by lessor, 503. (a) to disclose latent material defects with reference to intended use of pre- mises, ib. (6) to give possession, ib. (c) to secure possession cove- nant passes with term, ib. implied covenants by lessee (a) to disclose latent facts increasing value of les- sor's interest, 504. (ft) to maintain the property, 506. reasonable wear and tear excepted, also damage by irresistible force, ib. 546 INDEX. LSSSOll AND LESSEE contd. (c) to give notice of encroach- ments, &c., 505. (