[159] the mortgagee at the common law, yet they will ccnsider the real value of the tenements compared with the sum borrowed. And, if the estate be of greater value than the sum lent thereon, they will allow the mortgagor at any reasonable time to recall or redeem his estate; paying to the mortgagee his prin cipal, interest, and expenses; for otherwise, in strictness of law, an estate worth £1000 might be forfeited for non-payment of £100, or a less sum. This reasonable advantage, allowed to Equity of mortgagors, is called the equity of redemption; and this enaredemption. bles a mortgagor to call on the mortgagee, who has possession of his estate, to deliver it back, and account for the rents and profits received, on payment of his whole debt and interest; thereby turning the mortuum into a kind of vivum vadium. But, on the other hand, the mortgagee may either compel the sale of the estate, in order to get the whole of his money immediately; or else call upon the mortgagor to redeem his esForeclosure. tate presently, or, in default thereof, to be forever foreclosed from redeeming the same; that is, to lose his equity of redemption without possibility of recall. And, also, in some cases of Fraudulent fraudulent mortgages, the fraudulent mortgagor forfeits all equity of redemption whatsoever. It is not, however, usual equity of for mortgagees to take possession of the mortgaged estate, unredemption. less where the security is precarious or small; or where the mortgage forfeits mortgagor neglects even the payment of interest: when the mortgagee is frequently obliged to bring an ejectment, and take the land into his own hands in the nature of a pledge, or the pignus of the Roman law; whereas, while it remains in the hands of the mortgagor, it more resembles their hypotheca, which was where the possession of the thing pledged remained with the debtor.b But by statute 7 Geo. II., c. 20, after pay a Stat. 4 & W. & M., c. 16. b Pignoris appellatione eam proprie rem contineri dicimus, quæ simul etiam traditur creditori. At eam, quæ sine (8) The period within which redemption will be allowed after the last acknowledgment of title by the mortgagor is now fixed by statute at twenty years, with a further allowance in cases of disabilities; the rule thus established being in substance the same as that which had previously been acted upon by courts of equity. (Stat. 3 & 4 Will. IV., c. 27, s. 28.) traditione nuda conventione tenetur, proprie hypothecæ appellatione continer dicimus.—(Inst., 1. 4, t. 6, § 7.) second mortgagee shall hold the estate as an absolute purchaser, free from the equity of redemption of the mortgagor. This statute is, perhaps, the most remarkable legislative bull on record; it is intended to prevent fraud on second mortgagees, which fraud can only have been practiced when, by reason of prior con cealed charges, the estate is not of sufficient value to answer the second charge, (9) By the 4 & 5 W. & M., c. 16, if any and the equity of redemption is worth person mortgages his estate, and does less than nothing. When this equity of not previously inform the mortgagee redemption which the act presents to the in writing of any prior mortgage, judg- second mortgagee is of any value, no ment, statute, or recognizance, which he fraud has been committed. Accordinghas voluntarily brought upon the estate, ly, the only case which has arisen on the and does not (in the case of a prior judg- act is one where a second mortgagee ment, &c.), within six months after notice endeavored to defraud the mortgagor by from the second mortgagee under hand means of it, but was not allowed to do and seal, pay off such judgment, &c., the so. (2 Vern., 589.) must reas ment or tender by the mortgagor of principal, interest, and Mortgagee costs, the mortgagee can maintain no ejectment, but may be sign, on noncompelled to reassign his securities. In Glanvil's time, when ey tendered the universal method of conveyance was by livery of seizin or [160] corporeal tradition of the lands, no gage or pledge of lands was good unless possession was also delivered to the creditor; "si non sequatur ipsius vadii traditio, curia domini regis hujusmodi privatas conventiones tueri non solet;" for which the reason given is to prevent subsequent and fraudulent pledges of the same land; cum in tali casu possit eadem res pluribus aliis creditoribus tum prius tum posterius invadiari."c And the frauds which have arisen, since the exchange of these public and notorious conveyances for more private and secret bargains, have well evinced the wisdom of our ancient law.1o 66 c L. 10, c. 8. 10 (10) The principles upon which courts a lease and release, or by a bargain and Mortgages of equity interfere with and control the sale, or by demising the land for a long legal rights of mortgagees became set- term of years; and sometimes, instead tled about the commencement of the of a condition, an agreement was in17th century; since which time mort- serted that, on repayment on a certain gage transactions (so frequent and im- day, the estate should be reconveyed. portant in this commercial country) have Whatever form the transaction assumed, become a considerable head of equity the letter of the deed was strictly enlaw, and have ceased to depend upon the common-law doctrine of conditions. As, however, the arrangement of the Commentaries does not afford any more convenient place, this opportunity is taken for stating very briefly some of the more important incidents of a modern mortgage. A mortgage is a security for a subsisting or future debt, by a transfer of real or personal property, or of some interest in or power over such property, redeemable at law (if the legal estate be transferred) by payment of the debt and interest according to the condition expressed in the instrument, and redeemable in equity according to certain rules observed in courts of equity, without regard to any restrictions which the parties may attempt to impose upon the power of redemption. forced at law; but equity soon establish- A mortgage of freehold land at common law was usually a feoffment in fee upon condition to be void if the feoffor or his heirs should, on a fixed day (and if no day was fixed, the feoffor had his whole life, Co. Litt., 208, b), pay the debt and interest to the feoffee or his No agreement between the parties, at representatives; and at law the effect of the time of making the mortgage or aftperforming the condition was to defeat erward, so long as the debt is allowed the feoffment and restore the mortgagor to subsist, can limit or control this equity to his original estate, while non-payment to redeem, the maxim of equity being, on the day gave the estate to the mort- "once a mortgage, always a mortgage;" gagee forever discharged of the condition. It afterward became usual to effect the security by a conveyance called and whether the conveyance of the es- IV. Estates IV. A fourth species of estates, defeasible by statute condition sub staple and sequent, are those held by statute merchant and statute staple ;" statute merchant. deeds, and even where from fraud or Mortgages. otherwise no proviso for redemption has ever been executed (2 Vern., 84; Prec. Ch., 526), courts of equity, upon proof that the transaction was originally a mortgage, and that its character has not since been altered, will always allow the mortgagor or his representatives to redeem the estate, if not barred by lapse of time or by a previous decree of foreclosure. "In the case of a mortgage, you shall not by special terms alter what this court says are the special terms of the contract." (7 Ves., 273.) All that is necessary to constitute a mortgage is a subsisting debt, and a transfer of property in consideration of and by way of security for, and not in satisfaction of, such debt. And this constitutes the distinction (as to which there was formerly much uncertainty and doubt) between a mortgage and a conditional or defeasible purchase. If A. sell and convey an estate to B. in consideration of £100, and it is agreed that A. may repurchase the estate again on a certain day, upon payment of £150; but that, if he do not repurchase on that day, B. shall keep the estate forever, this is a conditional sale, and equity will not interfere with the condition; but if A. at the same time give to B. a bond for payment of the £100 and interest, or if the £100 were a debt already owing from A. to B., and which, from the circumstances, appears to be regarded as still subsisting, or if for any other reason it appears that the primary character of the transaction was not a sale of the estate, but a loan of money upon the security of the estate; if, in short, it appear that at the same time that A. has this option to repurchase, B. has a right to sue for the original consideration money as a debt, this is a mortgage, redeemable upon the usual terms. (Williams v. Owen, 10 Sim., 386, reversed, on appeal, by the lord chancellor, 5 Jur., 114; 4 Beav., 197.) Unless both parties are at liberty to treat it as a mortgage, neither of them can do so. Again, if, after a mortgage has been made, the parties agree that the mortgagee shall keep the estate as his own, (11) As to these securities in general, see 2 Saunders, by Wms., 70, c. n., and but that the mortgagor may repurchase it at a given day, and at the same time the mortgagee releases the mortgagor from the debt, this changes the relation of the parties, and extinguishes the mortgage; but wherever there has once been a mortgage, courts of equity look with great suspicion on any transactions of this kind, in which advantage may be so easily taken of the indebted and embarrassed situation of the original owner of the estate. The characteristic of a mortgage, then, is, that it is a security for a debt; and in equity the debt is always considered as the principal, and the mortgaged estate as the accessory. Therefore, the right to the benefit of the security belongs to the person who is entitled to the debt; and in case of the death of a mortgagee in fee, although the estate devolves upon his heir, he takes it for the benefit of the executor, who is entitled to the debt, and who, in case of foreclosure or bar by lapse of time, may claim the absolute benefit of the estate itself. (3 Swanst., 628; 2 Vern., 193, 367.) As soon as the debt is extinguished by either of these means, the estate resumes its prop er character, and becomes transmissible in equity as well as at law to the heirs of the mortgagee or of his representative. (4 Madd., 483.) On the other hand, as the mortgage is merely a collateral security for the debt, if the mortgagor die, his personal assets are liable, in the first instance, to be applied in satisfaction by the executor; and in case of a mortgage of an estate of inheritance, the heir or devisee of the mortgagor is entitled to have such assets as are primarily appli cable for payment of debts applied for that purpose, so as to exonerate and redeem the mortgaged estate. (1 P. W., 290; 2 Id., 386; 3 Id., 358; 1 Atk., 621; 7 Ves., 336; 3 Myl. & K., 358.)* But if the equity of redemption is conveyed away by the original mortgagor to another person, as such person did not contract, and is not personally liable for the debt to the mortgagee, the estate in his hands is no longer a collateral secu rity, but is primarily liable for the debt, and on his death the heir can not call index, Statute Merchant and Statute Staple: 8 Price, 316. * In New York, an heir must discharge the mortgage out of his own property. So, also, must a devisee, unless there be an express direction in the will that the mortgage be otherwise paid.-(1 R. S., 749, § 5.) which are very nearly related to the vivum vadium before mentioned, or estate held till the profits thereof shall discharge a upon the executor to redeem the estate for his benefit. (2 P. Wms., 664; 5 Madd., 96; 3 Myl. & Cr., 763.) But by dealings with the mortgagee, even an alienee of an equity of redemption may so take upon himself the debt as to restore to the estate its privilege as a mere collateral security. (7 Ves., 333; 14 Id., 423; 1 Sim., 453; 3 Myl. & K., 607. See 1 Y. & C. N. C., 688.) In order, as it seems, to prevent a multiplicity of suits, courts of equity have long acted upon the rule, where two mortgages have been made by the same mortgagor to the same mortgagee, to refuse to allow the mortgagor to redeem one, if the mortgagee insists on having both redeemed, although the mortgages were made at different times, of different estates, and to secure distinct independent debts; so that, if one of the estates is more than sufficient to secure the debt charged on it, it may be used in aid of any deficiency in the other security. Under this rule the mortgagee is said to tack one security to the other. (2 Vern., 286; 2 Ves Jun., 376; 2 Gl. & Ja., 47.) And this right to tack a second mortgage debt to a prior mortgage may be exercised to the exclusion of the claims of any third person to whom, in the mean time, the mortgagor has mortgaged the equity of redemption in the first estate, provided the mortgagee, when he took his second mortgage, was not aware of such mesne encumbrance. (Ambl., 733; 6 Ves., 229, n.)* Some account of the rules by which equity regulates the priorities of several encumbrancers on the same fund will be found in a note to p. 383, infra. A few remarks may be made, in conclusion, on the forms of mortgages. Formerly it was much the custom, where the mortgagor was tenant in fee-simple, not to part with the freehold, but to grant or demise the land for a long term of years, with a proviso for redemption; this plan had the advantages of economy (the conveyance being shorter and cheaper), and of leaving to the mortgagor all the privileges of a freehold, while the term, being personal estate, devolved upon the same class of representatives as were entitled to the money secured, Mortgages instead of vesting, as sometimes happens, in an infant heir; and where the property is of much greater value than the sum to be secured, this form is still occasionally resorted to. But if the mortgagee is obliged to have recourse to his remedy by foreclosure, he can not, under such a mortgage, acquire more than an absolute term of years; an estate which is not of so much value as the inheritance. Even under a mortgage in fee, the mortgagee, in order to realize his security, was obliged to resort to the slow and costly remedy of a foreclosure suit, a remedy of which the evil was chiefly felt in those cases where it was most often required to be put into operation-in cases of deficient security. To obviate these inconveniences, it has now become common to insert in the mortgage an authority or power enabling the mortgagee, at any time after default in payment of the principal or interest, to sell the estate to a fair pur. chaser, and to repay himself his debt, interest, and costs out of the proceeds. (See the form in the Appendix to this volume.) This power is always made exercisable without the mortgagor's consent; but in order to prevent any surprise upon the latter, and to enable him to seek for the means of redemption, it is often provided that the mortgagor shall be entitled to three or six months' notice of the sale. The mortgagee, having the conduct of the sale, is, of course, disabled from purchasing the estate, either directly or through the intervention of a trustee; under the general rule of equity, that the interest of a buyer, who seeks to pay as little as possible, and the duty of a trustee for sale, who should endeavor to obtain as much as possible, being conflicting and incompatible, can not be allowed to coexist in the same person. And the rule can not be relaxed even in favor of a sale by auction, supported by every evidence of fairness. (3 Meriv., 200; 8 Br., P. C., 42, Toml. ed.; 8 Cl. & Fin., 265.)t In Ireland foreclosure is never allowed, the courts invariably directing a sale; and, in this country, a sale is often * In New York, where priority is given to the first registered mortgage, the doctrine of tacking mortgages is exploded.-(4 Kent's Comm., 177.) + In New York, sales of mortgaged premises under powers of sale are regulated by statute. The sale must be at public auction, after twenty-four weeks public notice by advertisement. Mortgagee, and those claiming under him, may be come purchasers.-(2 R. S., 546, § 3−7.) debt liquidated or ascertained. For both the statute merchant and statute staple are securities for money; the one entered into before the chief magistrate of some trading town, pursuant to the statute 13 Edw. I., De Mercatoribus, and thence called a statute merchant; the other pursuant to the statute 27 Edw. III., c. 9, before the mayor of the staple, that is to say, the grand mart for the principal commodities or manufactures of the kingdom, formerly held by act of Parliament in certain trading towns,d from whence this security is called a statute sta ple. They are both, I say, securities for debts acknowledged to be due; and originally permitted only among traders, for the benefit of commerce; whereby not only the body of the debtor may be imprisoned, and his goods seized in satisfaction of the debt, but also his lands" may be delivered to the creditor, till, out of the rents and profits of them, the debt may be satisfied; and during such time as the creditor so holds the lands, he is tenant by statute merchant or statute staple. There is also a similar security, the recognizance in the nature of a statute staple, acknowledged before either of the chief justices, or (out of term) before their substitutes, the mayor of the staple at Westminster and the recorder of London; whereby the benefits of this mercantile transaction is extended to all the [161] king's subjects in general, by virtue of the statute 23 Hen. VIII., c. 6, amended by 8 Geo. I., c. 25, which directs such recognizances to be enrolled and certified into Chancery. But these, by the Statute of Frauds, 29 Car. II., c. 3, are only binding upon the lands in the hands of bona fide purchasers, from the day of their enrollment, which is ordered to be marked on the record. 13 d See Book i., c. 8. Mortgages directed, even where the legal estate is mortgaged, and more frequently where the mortgage is nothing more than a mere equitable charge on the property, or where the property is stock, or other personal chattels. (2 Myl. & K., 417; but see 2 You. & C., 730; 2 Myl. & Cr., 419; 7 Sim., 439, 669; 8 Id., 470; 1 Hare, 422, 533.) An equitable mortgage may be constituted by any writing which shows an agreement that the property in question is intended to stand as a security for the debt (2 Salk., 449; 11 Ves., 626); and even without writing (notwithstanding the Statute of Frauds), if the debtor deposit the title-deeds relating to the property with his creditor as a security. And where no other object or intention can be shown, it will be presumed that title-deeds delivered by a debtor to his creditor are so delivered as a security. (19 Ves., 202, 258; 3 You. & J., 150; 1 You. & C., 303.) And parol evidence is admissible to show that advances made subsequently to the deposit were made on the same security. (2 Ves. & B., 79; 2 Mon., D. & D., 124.) These mort gages by deposit are very much in use among bankers and mercantile men, be ing recommended by the secrecy, quick ness, and economy of the transaction; but an equitable mortgagee, so consti tuted, is liable to have his security defeated by many contingencies, against which a regular legal mortgage would have secured him. (See Cr. &. Ph., 323.) (12) That is to say his freehold lands, and lands in ancient demesne, but not his copyholds. (2 Inst., 397; 4 Id., 270; 3 Rep., 80; 8 Ves., 394.) (13) The statute 33 Hen. VIII., c. 39, s. 50, enacts, that all obligations and specialties, concerning or for the benefit of the crown, shall have the force and |