sale. Of mortgages of principal and interest; and on that ground it was distinwith powers of guished from a trust to sell for payment of debts and legacies; in which case there was, it was said, no original mortgage, but the trust was directly to sell, and no one to redeem. And the purchaser, though he contracted and purchased subsequent to the period at which the power of selling was to take effect, was nevertheless considered as acquiring a redeemable estate only; and yet it was fairly contended, that whatever might be the nature of the estate while in the hands of the mortgagee, as between him and the mortgagor, yet, after the time for payment expired as between a purchaser and the mortgagee, he became a trustee for the purpose of sale, and his vendee would, by his sale in pursuance of his power and trust, have an absolute irredeemable estate. [ 19 ] Now, though it be true that there is an obvious difference in point of circumstances, yet there is no difference in substance between the case where the power of sale is vested in the mortgagee, and where it is created by a distinct trust; for if the trust be warranted in point of equity, a court of equity will distinguish and separate the two characters of mortgagee and trustee, though united in one person; and if the trust be not supportable in point of equity, such court will confound the character though branched into two persons; consequently, if the principle be, that the transaction being in its nature a mortgage, the mortgagee cannot avail himself of any collateral contract whereby he may acquire an irredeemable estate, without the subsequent concurrence of the mortgagor, or a decree of a court of equity-Equity, which attends to the material or substantial contract, without considering mere matters of form, will resist the innovation in whatever shape it appears; the validity of such a trust, therefore, seems at present of too doubtful a complexion to be relied upon as the source of an irredeemable title (K). Good title may be made under trusts for sale, in default of payment of mortgage money. (K) This point is now fully settled. Two cases have been decided since the learned author wrote, and they concur in establishing the rule, that trustees for sale, in default of payment of the mortgage-money, are competent to make a good irredeemable title, without the consent of the mortgagor or his representatives, provided that power be communicated to them by the trust-deed. In the first case, a mortgage of leaseholds was made to a trustee, with the usual power of redemption, and it was agreed, that on default of payment of the money, the trustee might sell the estate, pay off the mortgage-money, and refund the residue to the mortgagor. Default was made in payment; the trustee sold the estate by public auction, and the purchaser required the concurrence of the mortgagor, who refused to join, insisting that the sale was made without his consent, and at an undervalue. Upon which the 13 form covenants. If a bond be given by the mortgagor to the mortgagee, con- Bond to perditioned for the performance of all covenants, payments, articles, and agreements, comprised in the mortgage deed, nonpayment of the mortgage-money, according to the proviso in the deed for re-payment at a certain day or days, will be a breach of such condition. [ 20 ] purchaser filed a bill against the trustee, and the mortgagor (who afterwards The plaintiff took an assignment of the first mortgage, and having given the proper notice, agreed to sell the premises to the defendant; and the bill prayed a specific performance of that agreement. Sir Williani Grant, Master of the Rolls, said, that when the cause was opened, he was unable to suggest any principle on which the defendant could properly insist on the mortgagor's being a party to the conveyance. The clause in the deed, whereby the mortgagor undertook to join in the conveyance, was a mere contract between the mortgagor and mortgagee, to the benefit of which the defendant, as a purchaser, could not be entitled; and there was nothing in the nature of the contract between the plaintiff and his mortgagor which prevented the latter giving, and the former exercising, such a power of sale as that on which the question arose. A specific performance was consequently decreed according to the prayer of the bill. Corder v. Morgan, 18 Ves. 344. The case of Croft v. Powell, quoted and commented on in the text, does not appear to have decided any thing contradictory to the preceding cases. On the validity of the power of sale, and the extent of the estate to be derived under it, nothing was determined. It was in that case admitted, that the consideration of what the mortgagee might have done under the trusts, was irrelevant to the question before the court, and therefore speculations on that subject were unnecessary. The case too received its adjudication entirely on another point, and ought not therefore to be considered as deciding a question at which it merely hinted. The case of Stabback v. Leat, Cooper's Rep. 46, when attentively considered, does not militate against the doctrine laid down in the former part of The report of that case was taken from a hasty note on a brief, and has very little to recommend it, either in terms or in sub this note. stance. The form of a mortgage, with trusts for sale, will be added in the Appendix, No. VI. For further, see the note there. Bond to per form covenants. [ 21 ] This question seems to have been first agitated in the case of Briscoe v. King (x). There a deed of feoffment was made in consideration of 110l. with a proviso, that if the feoffor paid such sums at such a day, the feoffment should be void, and he might re-enter; with covenants to save harmless from incumbrances, and to make farther assurance. And there was also a bond from the feoffor, conditioned for the performance of all covenants, payments, articles, and agreements, comprised in the deed. On an action upon this bond, the breach was assigned, for that the feoffor did not pay such sums upon such days according to the proviso. And thereupon there was a demurrer, and it was contended, that in regard the feoffor was obliged to perform the payments, articles, and agreements, in the deed mentioned, and there was not any payment mentioned but what was mentioned in the proviso, therefore he was obliged to perform that but the court said, for as much as there was not any covenant, it was a proviso in advantage of the feoffor, that if he paid the money he should have his land again; and it was in his election to pay the money, or to lose his land, which would be a sufficient loss unto him; therefore the condition of the bond did not extend thereto, but was confined to the other covenants, namely, to save harmless from incumbrances, and rents and arrearages of rents. But in respect that, if judgment should be entered, the obligee would lose his bond, they gave a day to advise until the next term, that in the interim the parties might compound. But in the case of Tooms v. Chandler (y), in which debt was brought upon an obligation to perform all the covenants and conditions in an indenture of mortgage; in which indenture there was a proviso, that if the mortgagor paid the money at the day, the mortgage should be void. A breach was assigned in non-payment of the money at the day, upon which there was a demurrer. Hale was at first of opinion, upon the ground mentioned in the preceding case, that this was no breach; but Twisden held otherwise, and cited a case of Westbrook, Hil. [ 22 ] 22 Car. 1. B. R. Rott. 116. to have been so adjudged; whereupon the case was adjourned: and afterwards, at another day, Twisden brought the record of Westbrook's case into court, upon which Hale changed his opinion, and gave judgment for the plaintiff. (x) Cro. Jac. 281. Yelv. 206. (y) 2 Lev. 116. 3 Keb. 387.79. 2 Lev. 116. But taking the bond with a condition for performance of corenants, frequently occasions difficulty in the pleadings in assigning the breach, and embarrasses the mortgagee. The better mode seems to be, to take a bond simply conditioned for payment of the mortgage-money (L). (L) The use of the mortgage bond is to enable the mortgagee to recover the deficiency of his debt by an action on the bond, in case the estate, on a foreclosure and sale, should prove inadequate to the burthen of the mort. gage-money. Took v. Hartly, 2 Dick. 785. 2 Bro. Ch. Ca. 125. Perry v. Barker, & Ves. 527. If, however, a mortgagee, having a decree of foreclosure signed and enrolled, afterwards brings an action of debt on the bond given, at the same time as the mortgage for payment of the same money, and for performance of the covenants of the mortgage-deed, such action re-opens the foreclosure, and revives the equity of redemption of the mortgagor. Dashwood v. Blythway, 1 Eq. Ca. Ábr. 317. In the case of Perry v. Barker, 13 Ves. 198, where the mortgagee obtained a decree of foreclosure, and sold the estate for 130l. less than his mortgage debt, and afterwards brought an action on the mortgage-bond for the deficiency, and the mortgagor filed a bill praying a redemption, and also an injunction, for ever restraining the defendant from proceeding on the bond. The Lord Chancellor assented to the rule, that the action on the bond revived the redemption, but said, that as there was no probability of the mortgagee getting the estate back again, it having been sold a considerable time ago, and as the mortgagee's demand was so inconsiderable, the proper decree was an injunction, which was accordingly granted, agreeably to the prayer of the bill. Both at law and in equity, the penalty of the bond is considered the debt, and consequently, although the interest may increase the principal beyond the penalty of the bond, yet no more than the penalty can be recovered. White v. Sealy, Doug. 49. Wilde v. Clarkson, 6 T. R. 303. Mackworth v. Thomas, 5 Ves. 329. Clark v. Seaton, 6 Ves. 415. Notwithstanding a mortgage might have been given for securing the same debt, and it might have been the case of a surety. Clarke v. Abingdon, 17 Ves. 106. Doug. 49. But although equity cannot carry interest higher than the penalty of the bond, yet when it is tacked to another security, as where there is a mortgage from the obligor to the obligee for securing other sums of money, equity will not suffer the mortgagor to redeem, unless he will pay the interest which is over and above the penalty of the bond. Peers v. Baldwyn, 2 Eq. Ca. Abr. 611. pl. 4. The learned author adds a quære to this case, in p. 405, postea, n. (u), on the ground that tacking is an equity merely to avoid circuity of action. But the ease seems to have turned on another point. The mortgage was for securing further advances, and the excess of interest above the penalty could easily be considered as accumulations from time to time in the nature of additional sums lent. The reporter also considers it a very equitable case; for certainly (says he) it is agreeable both to reason and conscience, that the interest should be paid when the obligor has so long neglected payment. It is a rule, that when a party is suing in a court of equity, he shall not be allowed to sue at law for the same debt. But the case of a mortgagee is an exception to this rule; he has a right to proceed on his mortgage in equity, and on his bond at law at the same time. But the mortgagor is not compellable to pay the money on his bond, if he is in danger of not getting back his title deeds, and therefore, where a mortgagee, having possession of the mortgagor's title-deeds, lodged them with an attorney, who claimed a lien on them for business done, the mortgagee was restrained from proceeding at law on his collateral security, until the title-deeds were secured and a re-conveyance could be had. Schoole v. Sall, 1 Sch. & Lef. 176. So where the mortgagee died without an heir, the court restrained his executor from proceeding at law to compel payment of the money, there being no heir who could recover. The money was ordered into court, and after some time an act of parliament was procured, on an allegation that the heir could not be found. Ibid. The condition of a bond is to be construed by its own terms, and no evi- Construction of dence can be received to explain its import; but although the language be mortgage bond. Money to remain for a given time. Covenant for payment of money, and mortgage bond, compared. It is not unusual, for the party lending the money, to stipulate that it shall lie on the land for a given period of time, which agreement is made part of the deed, and hath been considered by the best authorities as binding upon the parties (M). not clear, if there be enough to shew the intention of the parties, the court will give it effect; as where, upon a second advance, it appeared that the parties intended there should be a further security, the court construed the condition to be operative as an agreement for a further mortgage. Hearn Ex parte, 1 Buck's Bank. Ca. 165. Some gentlemen consider a mortgage bond as taken ex abundante cautela, and they rely on the covenant for payment of the money which is in troduced in the mortgage deed, thereby saving the expence of the bond. As often as economy shall be an object, this mode of security seems entitled to sufficient confidence to be adopted; but with respect to bankruptcy, and facility in recovering the mortgage debt, a bond is a very useful and necessary appendage to a mortgage security. Indeed, it has been holden in one case, that as every mortgage implies a debt, the mortgagor's personal estate will be liable, although there be neither a bond nor a covenant for payment of the mortgage money. King v. King, 3 P. Wms. 361. This is an extreme case, and no one on the authority of it would omit to insert a covenant for payment of the money, or neglect to take a mortgage bond, unless the poverty of the parties required it. The form of a mortgage bond will be added in the Appendix, No. VII. (M) This stipulation is for the most part introduced in the proviso. Sometimes it is introdnced by way of covenant, at the end of the mortgage covenants; and the insertion of it in that part of the deed is preferred. Forms for each case will be found in the Appendix, No. VIII. [ 23 ] Mortgage, must be free from fraud, 1 CAP. II. OF THE POSSESSION OF THE THING MORTGAGED, AND A MORTGAGE being, as has been stated, a contract of An essential circumstance necessary to the validity of every conveyance of property, whether real or personal, is, that it be perfectly free from fraud or collusion; which are things the common law universally abhors, and, therefore, makes void all acts that depend upon them, though otherwise in themselves good. |