Receiver at suit of equitable mortgagee.

13

deed or parol or deal with the inheritance in any way in which he thought proper. Tenancies created by the mortgagee were held in equity not to be valid against the mortgagor redeeming, unless they were created under a power conferred by the mortgage deed. The necessity for such a power has been removed in ordinary cases by the provisions of the Conveyancing Act (k). As regards the inheritance a mortgagee is not entitled in equity to dispose of any part of it, e.g., by cutting timber or opening mines, unless his security is insufficient; otherwise he is restrained by injunction ().

An equitable mortgagee cannot bring ejectment. He has no legal right, therefore, to take possession. But courts of equity place him, so far as they can, in the same position as a legal mortgagee by granting at his instance a receiver of the mortgaged property (m). Before the Judicature Act the right to a receiver was as a rule confined to incumbrancers who had an equitable estate, e.g., equitable mortgagees or persons who had merely a charge on property. A legal mortgagee was not given a receiver except under special circumstances (n). Since the Judicature Act the court has been more ready to appoint a receiver at the instance of a legal mortgagee, and thereby to relieve him from the necessity of taking possession (o). Where a prior mortgagee is not in possession and declines to take possession, a receiver will be appointed at the instance of a puisne mortgagee without prejudice to the right of the prior mortgagee to take possession. But a receiver will not be appointed at the instance of a puisne mortgagee as against a prior mortgagee in possession unless the prior mortgagee is paid off or refuses to accept what is due to him (p). A receiver

(k) 44 & 45 Vict. c. 41, s. 18.

(1) Farrant v. Lovel (1750), 3 Atk. 723; Millett v. Davey (1862),

31 B. 470.

(m) Garfitt v. Allen (1887), 37 Ch. D. 48.

(n) Special circumstances were held to exist in Fripp v. Chard Rail. Co. (1853), 11 Ha. 241; Lord Crewe v. Edleston (1857), 1 De G. & J. 93, p. 109; Ackland v. Gravener (1862), 31 B. 482.

(0) In re Pope (1886), 17 Q. B. D. 743, p. 749; John v. John, [1898]

2 Ch. 573.

(p) Berney v. Sewell (1820), 1 Jac. & W. 647; Tanfield v. Irvine (1826), 2 Russ. 149; Hiles v. Moore (1852), 15 B. 175.

as a rule is not appointed at the instance of an equitable mortgagee until default has been made in payment of the principal sum secured at the time prescribed by the mortgage deed. In the case of certain securities, especially trust deeds for securing debentures or debenture stock, the principal is often not made payable until a far distant date. In these cases the incumbrancer has a primâ facie right to a receiver if his interest is in arrear although the principal is not yet payable, or if, although the interest is not in arrear, his security is in jeopardy (9).

(g) Strong v. Carlyle Press, [1893] 1 Ch. 268; Edwards v. Standard Rolling Stock Syndicate, [1893] 1 Ch. 574.

14

CHAPTER XIV.

REDEMPTION AT LAW AND IN EQUITY.

Legal right of THE mortgage deed generally provides for the re-conveyance redemption. of the mortgaged property by the mortgagee if the mortgagor pays the principal money with interest at a specified dategenerally six months after the date of the mortgage. The right to redeem at law by payment on the day named is very seldom exercised in the case of an ordinary mortgage. In an ordinary mortgage, if it is desired that the mortgage shall continue for a period of years, it is customary to insert the usual power of redemption at the expiration of six months, and to add clauses providing either that the mortgagee shall not foreclose if interest is punctually paid, or that the mortgagor shall not redeem for a fixed period of years. In such a case, the rights of the parties after the expiration of the six months are determined in equity. A mortgage may contain no provision for the repayment of the loan. The loan then is repayable on demand; and the mortgagee has perhaps a legal right of redemption until demand made by the mortgagee for payment and default by the mortgagor in complying with that demand (a).

Differences between legal and equitable right of redemption.

The legal right of redemption differs in many respects. from the equitable right. First, if the mortgagee dies before the time fixed for payment at law, then, where the condition of the mortgage mentions neither heirs nor executors, payment should be made to the executors (b). Where both heirs and executors are mentioned, but disjunctively, then, if the mortgagee pay the money precisely at the day, he may, according to the old authorities, elect to pay it to the heir or executor as he pleases; but it would probably

(a) This seems to follow from Fitzgerald's Trustee v. Mellersh, [1892] 1 Ch. 385, where CHITTY, J., held that a mortgagee of title deeds by deposit was not entitled to six months' notice or interest in lieu of notice. And see p. 261.

(b) Litt. s. 339; Goodale's Case (1597), 5 Rep. 95

now be held that, even if payment to the heir discharged the mortgagor, the heir took the money as trustee for the executor. The mortgagor redeeming in equity must always pay the executor (c). Secondly, at law, tender at the day named is to this extent equivalent to payment, that it determines the mortgage in cases where the mortgage does not provide for a reconveyance, but merely that the feoffment shall be void. It does not, however, discharge the mortgage debt (d). Tender must be made to the mortgagee, unless he is out of England (e), or unless a special place be appointed for payment (f). Tender and receipt at any time before the day is a good payment (g), but the mortgagee is apparently not bound to receive the money before the day (h). Tender after the day named neither discharges the mortgage debt nor determines the security (i). The only effects of tender in equity are to stop interest running upon the mortgage security (k), and to throw upon the mortgagee who resists redemption the costs of the redemption action (). Thirdly, where the mortgagor has a right to redeem at law, the mortgagee cannot insist upon any of the terms which are imposed upon mortgagors who are obliged to come into equity to recover the property which they have forfeited at law (m). Thus, where a mortgagor comes into equity to redeem two estates mortgaged to the same mortgagee, a court of equity will not allow him to redeem one without redeeming the other. So a mortgagee may foreclose two estates mortgaged to him after the day for redemption has passed, unless the amount due on both

(c) Thornborough v. Baker (1675), 3 Swans. 628, p. 629.

(d) Co. Litt. 209 b; Ratcliff v. Davis (1610), Yelv. 178; Eider, [1893] P. 119. Litt. s. 335, must be understood of cases where there was no antecedent debt.

(e) Co. Litt. 210 b.

(f) Litt. s. 342.

(g) Co. Litt. 212 b.

(h) COTTON, L.J., however, says in Selwyn v. Garfit (1888), 38 Ch. D. 273, p. 283, that the mortgagor may, if he pleases, repay the money before the date fixed for redemption.

(i) Bank of New South Wales v. O'Connor (1889), 14 App. Cas. 273, p. 282; Johnson v. Diprose, [1893] 1 Q. B. 512.

(k) Manning v. Burges (1663), í Ch. Cas. 29; Lutton v. Rodd (1675), 2 Ch. Cas. 206; Garforth v. Bradley (1755), 2 Ves. sen. 675, p. 678; Kinnaird v. Trollope (1889), 42 Ch. D. 610.

(1) Greenwood v. Sutcliffe, [1892] 1 Ch. 1.

(m) Crickmore v. Freeston (1871), 40 L. J. Ch. 137.

Right of redemption in equity.

is paid.
But where a mortgagor of two estates to the same
mortgagee has a legal right to redeem one on certain terms,
and only an equitable right to redeem the other, the mort-
gagee cannot foreclose the estate in respect of which the
legal right exists in default of redemption of the other
one (n).

The right of redemption in equity (o) can be exercised at
any time after the day fixed for redemption at law. It can
only be put an end to by the operation of a statute of
limitations, or by the order of the court foreclosing the
mortgagor. A suit cannot be brought in equity for redemp-
tion before the day fixed in the mortgage deed (p) unless
that day is fixed at a far distant date (q), or unless the
mortgagee has taken possession (r). Courts of equity, in
determining whether a right of redemption exists, consider
not the outward form which the transaction assumes upon
the documents, but its real and inward substance.
"No
mortgage by any artificial words can be altered, unless by
subsequent agreement" (s). Wherever there is a loan upon
the security of property which is transferred to the lender,
that property may be redeemed in equity. In dealing with
this question, therefore, it is necessary, as a preliminary,
first, to consider what evidence is admitted by a court of
equity for the purpose of showing that a transaction which
appears on the documents not to be a mortgage is in reality
a mortgage; and, secondly, to distinguish contracts of loan
on security, to which these principles apply, from certain
other contracts resembling them in form, but widely
differing in their legal consequences.

(n) Cummins v. Fletcher (1880), 14 Ch. D. 699.

(0) Courts of law, in one case, gave effect to an equitable right of redemption. By 7 Geo. 2, c. 21, the courts of common law were directed in any action for recovery of a mortgage debt or for the possession of mortgaged land, unless proceedings were at the same time depending in equity, to give effect, upon the defendant's application, to his right of redemption and re-conveyance, in much the same way as a court of equity would have done.

(p) Brown v. Cole (1845), 14 Sim. 427; 14 L. J. Ch. 167.

(9) Talbot v. Braddill (1686), 1 Vern. 183, 394.

(r) Bovill v. Endle, [1896] 1 Ch. 648.

(8) Jason v. Eyres (1680), 2 Ch. Cas. 33.