(A) Of the several Kinds of Mortgages.

it became a maxim in law, that the purity of a fee-simple imported a power of disposing of it as the owner pleased; there were two ways of mortgaging lands introduced, which Littleton distinguishes by the names of vadium vivum and vadium mortuum.

The vadium vivum is, where a man borrows 100%. of another, and makes an estate of lands to him, till he hath received the said sum of the issues and profits of the lands; and it is called vadium vivum because neither the money nor the land dieth; for the lands are constantly paying off the money, and the lands are not left as a dead pledge, in case the money be not paid. This seems to have been the ancient way of pledging lands; for they held, that lands could not be hypothecated; and therefore they used to subject the usufructus, which continued originally during the life of the feudiary; but when there was a free liberty given of alienation, then the feudiary could pledge the usufructus of the land at pleasure. But because, in this way of pledging, the lender received his money by degrees, and in small parcels, which was very troublesome; and those that put money to usury are generally willing to receive the whole in a gross sum; therefore this way of pledging is now out of use.

Co. Lit. 205. Vide Mad. Formulare, 136.

The vadium mortuum is so called by Littleton, because it is doubtful whether the feoffor will pay the money at the day limited or not; and if he do not pay, then the land, which is but in pledge upon condition for the payment of the money, is taken from him for ever, and so dead to him; and if he do pay it, then the pledge is dead to the tenant of the land.

Lit. § 332; Co. Lit. 205.

Of these mortgages there are again two sorts: 1st, Of the freehold and inheritance; and 2d, Of terms for years.

Mad. 318, 319.

1st, Of the freehold and inheritance; and here the ancient way was to make a charter of feoffment, on condition, that if the feoffor, or his heirs, paid the sum to the feoffee, or his heirs, he should re-enter and re-possess ; and sometimes the condition was contained in the charter of feoffment, and sometimes it was defeasanced by another charter, as may be seen in the old forms.

For as a man might annex a condition to his feoffment, for cujus est dare, ejus est disponere, so he might annex a condition by another deed, bearing date and executed at the same time; for, being executed at the same time, it is really but one and the same disposition, que incontinenti fiunt inesse videntur. A defeasance or condition annexed indeed after the feoffment executed comes too late, because the livery coram paribus attesting the infeudation, in which there is no condition, the tenant must hold the land according to the tenure of the investiture: but rents, annuities, or warranties, that are things executory, may be defeated by defeasances made at the time of their creation, or any time after; because there is not any necessity of the notoriety of livery to make an investiture; and therefore, being created by deed only, they may be defeated or destroyed by deed alone.

Co. Lit. 226, 227.

These sorts of conveyances were subject to these inconveniencies; that if the money were not paid at the day, so that the estate became absolute, the estate was thenceforth subject to the dower of the feoffee, and all other his real charges and encumbrances; for though if the feoffor performed the

(A) of the several Kinds of Mortgages.

condition, then he might re-enter, and re-possess himself in his former estate, and, consequently, was in above all the charges and encumbrances of the feoffee; yet, if he did not literally perform the condition, by payment of the money at the day, then the estate was legally subject to the charges and encumbrances of the feoffee, though the money were afterwards paid, and the estate re-conveyed to the feoffor.

Co. Lit. 221, 222.

But the courts of equity, as they grew in power, have set this matter right, and have maintained the right of redemption, not only against tenant in dower and the persons who come in under the feoffee, but even against the tenant by the courtesy, and lord by escheat, that are in the post; because the payment of the money doth, in the consideration of equity, put the feoffor in statu quo, since the lands were originally only a pledge for the money lent.

Hard. 465.

As to mortgages by way of creating terms, this was formerly by way of demise and re-demise. As for example: A borrowed money of B, thereupon A would demise the land to B for a term of 500, &c. years absolutely, with common covenants against encumbrances, and for farther assurance, and then B would the day after re-demise to A for 499 years, with condition to be void on non-payment of the money at the day to come: this manner of mortgaging came in after the 21 H. 8, c. 15, for falsifying recoveries, when there was a fixed interest settled in terms for years; and was esteemed best for the mortgagor, to avoid all manner of pretension from the encumbrances and dower of the feoffee in mortgage; and was reputed best for the mortgagee, to avoid the wardship and feudal duties of the tenure, and was only inconvenient in this, that if the second deed were lost, there appeared to be an absolute term in the mortgagee.

But the common method now is this, viz.: by a demise of the land for a term, under a condition to be void on the payment of the mortgage-money and interest; and a covenant is inserted at the end of such deeds, that, till the default shall be made in the payment of the money, the mortgagor shall receive the rents, issues, and profits, without account.

This has been ruled to create a tenancy at will (a) to the mortgagee; but if the mortgagor dies, the tenancy at will is determined till there is a receipt of interest from the heir, which seems to make him also tenant at will to the mortgagee.

Raym. 147. [(a) The mortgagor is only like a tenant at will to the mortgagee; his legal interest is inferior to that of a strict tenant at will. Dougl. 22, 282, 283.] The relation of mortgagor and mortgagee is analogous in many points to other characters known to the law, but differing in some points from all. Mr. Justice Buller has observed, "It is quite sufficient to call them mortgagor and mortgagee, without having recourse to any other description, or to what they are most like." Birch v. Wright, 1 Term R. 383; and vide the observations of the Master of the Rolls, in Cholmondeley v. Clinton, 2 Jacob & Walker, 179, 183. It is decided, that the mortgagor may be described in pleading as the tenant of the mortgagee. Patridge v. Bere, 5 Barn. & A. 604. His legal interest, after default, is that of a tenant by sufferance, not of a tenant at will. Doe v. Maisey, 8 Barn. & C. 767; he may be ejected without notice, Ibid.; as may his tenant, let in after the mortgage; and this either by the original mortgagee, or by his assignee. Thunder v. Belcher, 3 East, 449; whereas a tenant at will cannot be ejected on a demise laid previous to the determination of the will. 4 Term R. 680; and he is not entitled to the growing crops after the will is determined, as is the case of a tenant at will. 1 Term R. 383. There appears no ground for considering him tenant at sufferance before payment of interest, and tenant at will afterwards. See

(A) Of the several Kinds of Mortgages.

Coote's Law of Mortgages, 328, 329. The receipt of interest by the mortgagee has no resemblance to the receipt of rent by a landlord, so as to amount to an acknowledgment of tenancy; and the mortgagor may be ejected without notice, and without the privilege of reaping his growing crops, equally before payment of interest and afterwards. That the mortgagor cannot accurately be called a receiver for the mortgagee, vide 1 Term R. 383; Ex parte Wilson, 2 Ves. & B. 252. Nor are the characters of cestui que trust and trustee strictly analogous; for in general a trustee is not allowed to deprive his cestui que trust of the possession, but the mortgagee may assume the possession when he pleases, and equity will not restrain him. 2 Meriv. 359. It appears, according to the language of the Master of the Rolls, 3 Ja. & Walk. 183, that "the relation is perfectly anomalous, and sui generis.”||

But now the last and best improvement of mortgages seems to be, that in the mortgage deed of a term for years, or the assignment thereof, the mortgagor shall covenant for himself and his heirs, that if default be made in the payment of the money at the day, then he and his heirs will, at the costs of the mortgagee and his heirs, convey the freehold and inheritance of the mortgaged lands to the mortgagee and his heirs, or to such person or persons (to prevent merger of the term) as he or they shall direct or appoint; for the reversion, after a term of 50 or 100 years, being little worth, and yet the mortgagee, for want thereof, continuing but a termor, and subject to forfeiture, &c., and not capable of the privileges of a freeholder; therefore, where the mortgagor cannot redeem the land, it is but reasonable the mortgagee should have the whole interest and inheritance of it, to dispose of as absolute owner.

For the definition of a mortgage, see 1 Watts, R. 140; Erskine v. Townsend, 2 Mass. 493; Cruise, Dig. t. 15, c. I, s. 11; 1 Pow. on Mortg. 4 a, n.; Bouw L. D. h. v.g

There is another species of security which partakes of the nature of a mortgage, as there is an estate due and estate given as security for the repayment, but differs from it, in the circumstances that the rents and profits are to be received without any account until the principal money is paid off, and there is no remedy to enforce the payment, while the mortgagor has a perpetual right of redemption. This is known by the name of a Welch mortgage. It is a species of vivum vadium: strictly, however, there is this difference between a Welch mortgage and a vivum vadium; in the latter the rents and profits of the estate are applied to the discharge of the principal, after paying the interest; while in the former, the rents and profits are received in payment of the interest only.

1 Pow. Mortg. 373, n.; Bouv. L. D. Welch mortgage.

A, being entitled in fee to a freehold estate in remainder, expectant on the decease of B, demised his interest to C for a term of five hundred years, subject to a proviso for redemption on payment of the sum of £1000 and interest, without any time by the proviso for the payment of the money. The deed contained a covenant by A for payment of the money on demand, and also a covenant that it should be lawful for B to enter into the possession of the property, to hold and enjoy the same until the payment of the principal money and interest. Held, that the mortgage was in the nature of a Welch mortgage; and a bill of foreclosure filed by B, against a person. to whom A has conveyed his reversionary interest, was dismissed, but without cost.

Teulon v. Curtis, 1 Young, 610.

POWERS OF SALE. -[Great inconvenience having been suffered by mortgagees, from the difficulty and delay attending bills to foreclose, a mode of contracting has been invented, by which the mortgagee may, after a given

(A) Of the several Kinds of Mortgages.

time, procure his principal and interest, by a sale of the mortgaged estates, without being under the necessity of applying to a court of equity. This is done by taking a conveyance of the fee to trustees in trust for the mortgagee for a term of years subject to redemption, with remainder to the trustees in trust, in default of payment at the time stipulated, to sell the estate, and to apply the purchase-money, after defraying the expenses incurred in discharging the trust, in payment of the mortgage money, and interest, and then to pay over the residue to the mortgagor.

1 Pow. Mortg. 12.] See Van Bergen v. Dumarest, 4 Johns. Ch. 37; Doolittle v. Lewis, 7 Johns. Ch. 45; Brinckerhoff v. Lansing, 4 Johns. Ch. 65. {See 1 East, 293, 294; 1 Hen. & Mun. 29; 1 Cain. Er. 1, 3.}

{The deposit of title-deeds as a security for a debt amounts to an equitable mortgage; and the possession of the deeds is, if no other purpose is shown, evidence of an agreement that the estate itself shall be a security; and that agreement will be carried into execution in equity against the mortgagor, or any who claim under him, with notice, either actual or constructive, of such deposit having been made.

1 Bro. C. C. 269, Russell v. Russell; 2 Dick. 759, Pye v. Daubuz; 2 Anstr. 427, Birch v. Ellames; Ibid. 432, Plumb v. Fluitt; 2 East, 486, Doe v. Hawke; 9 Ves. J. 115, Ex parte Coming; 11 Ves. J. 398, Ex parte Wetherell; Ibid. 403, Ex parte Haigh; 12 Ves. J. 6, Ex parte Morgan; Ibid. 192, Norris v. Wilkinson. See 1 Johns. Ca. 116, Jackson v. Dunlap; 5 Esp. Rep. 105, Doe v. Roe.}

Doubts have been entertained of the validity of these powers of sale without the concurrence of the mortgagor, or the sanction of a court of equity; but these doubts are now removed by two express decisions, which have established that the concurrence of the mortgagor in the sale is unnecessary; that his covenant with the mortgagee to join in a conveyance is not a contract of which a purchaser is entitled to the benefit; that a specific performance will be decreed against a purchaser who refuses to complete his purchase on account of the non-concurrence of the mortgagor; and that if a purchaser make such mortgagor a party to a bill for a specific performance, in order to procure his concurrence, his bill will be dismissed against the mortgagor, with costs.

Clay v. Sharpe, Lib. Reg. Mich. 1802, fo. 66; Sugden, V. & P. App. 20; Cruise, Dig. 2, 105; Corder v. Morgan, 18 Ves. 344; and see Clay v. Willis, 1 Barn. & C. 364.

In New York, mortgages generally contain a power of sale, or summary foreclosure.

Wilson v. Troup, 2 Cowen, 195; S. C. 4 Johns. Ch. 37.

The power to sell on default of payment, contained in a mortgage, is a power with an interest, and does not die with the mortgagor.

Bergen v. Bennett, 1 Caines' Cas. Exr. 1.7

MORTGAGES BY DEPOSIT OF DEEDS.-A peculiar species of mortgage has been allowed in modern times, and is now in frequent practice, viz.: a mortgage by deposit of title-deeds. The case of Russell v. Russell, 1 Bro. C. C. 269, is said to be the first case (a) in which it was decided that a mere delivery of the deeds of an estate, as a security for a loan, had the full effect of an equitable mortgage. The same principle was acted on by Lord Thurlow in the cases of Featherstone v. Fenwick, and Harford v. Carpenter, and is now the settled doctrine of courts of equity. The principle has, however, been repeatedly and strongly disapproved by subsequent judges, as being in direct contravention of the statute of frauds, 29 Car. 2, c. 3, § 4, in

(A) of the several Kinds of Mortgages.

letting in parol testimony as to the terms and intention of the deposit, and opening a door to all the fraud and perjury which the statute meant to exclude. Lord Eldon has considered the decisions on the subject as amounting to a repeal of the statute; and Sir William Grant has expressed strong disapprobation of them; and both these judges, in admitting the doctrine to be now settled, have expressed their determination not to extend it beyond its present limits.

1 Bro. C. C. 269; 1 Rawle, 328; 5 Wheat. 284; 1 Cox, R. 211; 2 Story, Eq. Jur. § 10, 20. (a) Fitzjames v. Fitzjames, Finch, 10, (1673) is earlier; 1 Bro. C. C. 269, note (a); Ex parte Whitbread, 19 Ves. 212; 1 Rose, 300; Ex parte Haigh,

11 Ves. 403.

The deposit must be made for the purpose of a present and immediate security, and not for any other object; and therefore, where the deeds were deposited merely for the purpose of a mortgage being prepared, and it was prepared but not executed, by reason of the death of one of the mortgagors, Sir William Grant held, that the deeds not being delivered by way of immediate pledge, this was not an equitable mortgage.

Norris v. Wilkinson, 12 Ves. 192; et vide Ex parte Hooper, 1 Mer. 7.

The deposit will create an equitable mortgage for the debt actually due, although not a word passes at the time of the delivery.

Ex parte Mountfort, 14 Ves. 606; Ex parte Langston, 17 Ves. 230; Ex parte Kensington, 2 Ves. & B. 83; Monkhouse v. Corporation of Bedford, 17 Ves. 381.

But a written agreement is always advisable.

Norris v. Wilkinson, 12 Ves. 197.

And if it appears clearly upon evidence, or oath uncontradicted, that such was the agreement, the deposit may be a security for future advances, as well as for the sum actually due. But Lord Chancellor Eldon disapproved of his decisions in thus extending the original doctrine, and said, that at all events it is not to be further enlarged.

Ex parte Langston, suprà; and see Reid v. Tait, Powell, Mort. 1052 b, (6th ed.;) Ex parte Lloyd, 1 Glyn. & J. 391; Ex parte Hooper, 1 Mer. 9.

The deposit may be made either with the creditor himself, or with some third person over whom the depositor has no control; but it is not sufficient to deposit the deeds with the wife of the depositor, although they remain in a trunk of which the key is kept by her. Nor must they remain in the possession of the debtor, although he give a memorandum of deposit to the creditor; and deeds deposited with one person cannot be made a security for money due to another, unless the person holding the deeds be merely a trustee, and have not himself made any advance.

Ex parte Coming, 9 Ves. 115; Ex parte Whitbread, suprà.

An equitable mortgage by deposit of title-deeds shall have preference over a subsequent purchaser or mortgagee of the legal estate, with notice; and a purchaser was held affected with notice where the vendor had acknowledged that the deeds were in possession of another; for it was crassa negligentia that he did not make inquiry; and in this case the lord chancellor said, that so much was the equitable title from the possession of the deeds recognised at law, that if a man having made the deposit previously, makes a title accordingly, only two minutes before he absconds, it is a legal title, and cannot be impeached; for though the legal act was done in contemplation of bankruptcy, it is protected by the previous equitable title.

Hiern v. Mill, 13 Ves. 114.

VOL. VII.-5